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i'HE 
 
 BAM ACT AND THE CDRRENGI. 
 
 OOKEESPONDENCE 
 
 &ETWBEH 
 
 THE RIGHT HON. LORD OVERSTONE 
 AND HENRY BROOKES, ESQ. 
 
 THE BANK ACT OF 1844 
 
 AND 
 
 FREE TRADE IN GOLD. 
 
 BY HENRY BaiQOE&S. 
 
 bea:sons 
 
 FOR AN ALTERATION IN im LEOAL TENDER, 
 
 BY ROBERT SLATER, ESQ. 
 
 MANN .NEPHEWS, 39, OORNHILL. 
 JPrice Eighteenpence, 
 
LORD OVERSTONE ON THE BANK ACT AND 
 THE CURRENCY.* 
 
 CORRESPONDENCE 
 
 BETWEEN 
 
 THE RIGHT HON. LORD OYERSTONE, 
 
 AJTD 
 
 HENRY BROOKES, ESQ., 
 
 Secretary to the Bank Act and Currency Committee, 
 
 Eeprinted from the Special Supplements of the Money Market Review. 
 
 " NEXT TO BELIGION, THE KNOWLEDGE MOST DBPORTAHT TO A LABOtJRINO MAN IB THAT OF 
 THE CAUSES WHICH REGULATE THE AMODNT OF HIS WAGES, THE BEGULABITY OF HIS EMPLOY- 
 MENT, AND THE p&iCES OF WHAT HE CONSUMES." — Report of the Ed/ucatxon Commimon, 1861. 
 
 LONDON : 
 EFFINGHAM WILSON. KOYAL EXCHANGE. 
 
 186?. 
 
(3 16 
 
 LONDON : 
 
 PRINTED BY D. P. OAKET, CANNON EOW, 
 
 WESTMINSTER, B.W. 
 
PREFACE. 
 
 The publication of these letters in the Money Market Review, though, very 
 large impressions were sold, failed to satisfy the public demand, and therefore, 
 in compliance with numerous applications, they have been reprinted. 
 
 The correspondence arose out of an application made to Lord Overstone for 
 a, copy of his pamphlets on the Currency, which ai-e printed for private distribu- 
 tion only; so that copies can be obtained only tlu-ough his Lordship. The 
 object of thus shielding them from public perusal and discussion, I do not know 
 and will not hazard a remark upon. 
 
 It has been industriously set about, that my application was made in my official 
 capacity as Secretary to the " Bank Act and Cuekenct Committee j" and a 
 writer in the Bankers' Magazine, circumstantially states that as a fact. Such is 
 not the case; but the allegation served as a sort of pretext for his Lordship, when 
 the controversy became too wai-m, again to shrink from the discussion of his 
 principles. I say again, because this is not the &st time. Mr. Gilbart, the 
 late excellent manager of the London and Westminster Bank, and one of the 
 most philosophical, as well as able aijd experienced writers on the subject, thus 
 adverts to this tendency of his Lordship in 1841, before the Bank Act was passed: 
 " Mr. Loyd states that he is not prepared to propound any plan for carrying 
 his own principles into effect. He stated this several times and Mr. Norman 
 made statements to the same effect." "Thus we find " continues Mr. Gilbart, 
 " that Mr. Loyd and Mr. Norman, give to their own theories the name of 
 'principles' and assume that those principles are unquestionably ^ sound,'' and that 
 all other opinions are to be condemned or approved according to the degree in 
 which they conform to those ' sound principles ; ' but when asked to show 
 how these sound principles can be applied so as to produce any practical good, 
 they tell us that they have never considered the subject. What a convenient way 
 this is of getting rid of all practical objections ! " 
 
 Mr. Hamee Stansfield, in a very able commentary upon this correspondence, 
 (see Appendix V), brings to light (on the authority of the late Mr. Hume) 
 a rema,rkable instance in which his Lordship not only broke down in the 
 exposition of \^%- principles, but evinced such utter want of confidence in them, 
 that he "refused to appear again and finish his examination until Mr. Hume 
 consented to limit his questions." 
 
 Years of practical experience as " a writer on the Times," seems to have 
 induced his Lordship to assume a much bolder position before partial and packed 
 committees of the House of Commons, and ultimately to ventui-e even upon a 
 public discussion. It is not to be supposed that the distinguished honor of his 
 Lordship's gauntlet was conferred upon me as a private individual, but as a 
 public writer on the subject, whose pamphlets were not withdrawn from pub- 
 lication, but were at that time being circulated by thousands throughout the 
 country, hy a committee of City men, who, independently of his Lordship's 
 favourable opinion, are universally recognised as " men of great practical ex- 
 perience," of "undoubted intelligence" and of "high position and influence." 
 In replying to Lord Overstone, I was not writing a Treatise on the 
 
ly PREF 
 
 Currency, and therefore, except in a few instances in which I had another 
 object in view, I have confined myself to exposing the fallacies of the 
 present system, rather than developing any other. If great knowledge 
 and experience ought to have any weight, the astute and cautious Mr. 
 Weguelin, M.P., after twenty years experience as a Director and Governor of 
 the Bank, admits and avows radical defects in the principle of the Bank Act; 
 Mr. Bonamy Dobree, another Director and Governor of the Bank, is clear precise 
 and emphatic in his opinion that gold should be left to find its market value, and 
 that the Bank should not be compelled to take it at a fixed price: and Mr. 
 J. C. Wright (the banker and a brother-in-law of Lord Overstone), has been a 
 consistent and uncompromising denouncer of the Bank Act, as a measure of 
 injustice and spoliation, fi-om the period of its first inception down to the present 
 
 - time. 
 
 The letter on " the inequalities in the distribution of wealth," it has been 
 said is too strongly drawn and too highly coloured. I entreat any reader who 
 may think so, to reflect whether his opinion may not be founded upon inadequate 
 knowledge. We are all of us but too much disposed to look upon " the bright 
 side." We have the Poor Law and the union workhouse it is true, and we have 
 thousands of good Samaritans always on the look out for poverty; and we have 
 societies innumerable, with funds almost inexhaustable, and paid officials and 
 numbers of unpaid volunteers as administrators: — and yet the fact is undeniable 
 that all these means and appliances fail to reach immense numbers of the poor 
 and suffering, and every year as these organizations become more widely ramified 
 and penetrate more deeply, that melancholy fact is only the more clearly demon- 
 strated. And this sad truth excites amazement but for the passing moment only. 
 " The country is so prosperous " " wealth is increasing so rapidly " and " the 
 people are so contented " and the Lord Overstones are so zealous in looking 
 out for poverty and destitution from the plate-glass windows of gilded saloons, 
 overlooking charming lawns and stately parks — where assuredly they see it 
 
 ■ not; and the middle classes are so intensly preoccupied in realising their own 
 uncertain gains; that very few exactly see how these things can be true, or 
 what can be the cause, or how they are to be prevented. To many it appears 
 to be simply a question of work to, do and wages to be earned, and they 
 don't see what Banks and Bank Acts, and the Currency question, and the 
 market price of Gold can have to do with it. In fact they know little or 
 nothing of these things themselves, and therefore it would be wonderful if 
 they could. But the time is coming when they will see it, and must. Public 
 writers are already alive to it, and in one day, the Press, the Da% News, 
 the Morning Post, and the Morning Chronicle, had articles or paragraphs, 
 and the Morning Advertiser had one of a series of letters, upon it; though, 
 another paper records the deaths, in one night, of two human beings from 
 starvation, in one short paragi-aph, and with less comment than would have been 
 given to the discovery of a couple of " dead donkeys." 
 
 HENRY BROOKES. 
 25, Birchin Lane, E.G. 
 
 Feb. 13th, 1862. 
 
CORRESPONDENCE, &c. 
 
 1. 
 
 Lockinge House, Wantage, Berks, Sept. 19th, 1861. 
 
 SiE, — I regret that it is not in my power to comply with the request con- 
 veyed to me in your note of the 16th inst. If I have any remaining copies of 
 the publication to which you allude, they must be in my house in London, and, 
 that being now dismantled, they are inaccessible until the spring of next year. 
 
 The principles which I have always supported, and upon which the Act of 
 1844 is founded, are entirely opposed to those indicated in the printed paper 
 enclosed in your note; and to which I observe with regi-et, the uames of parties of 
 undoubted influence are appended. It is to free discussion and enlightened 
 experience we must all look for the solution of om- difficulties, and the final 
 establishment of truth. By these means I have reason to know that many 
 intelligent converts to the principles of the Act of 1844 are being made year by 
 year; and in full confidence of the farther extension of that result, I am most 
 desirous that the course of our monetary affairs under the present law should 
 be carefully observed and discussed with intelligence." 
 
 As regards practical experience, the gentlemen whose names are appended to 
 the printed paper will surely admit that the wealth of this country has under- 
 gone an immense increase between 1844 and the present time, a fact utterly 
 inconsistent with the astounding statement that during that period " the country 
 has again and again sustained losses of hundreds of millions," and that in each 
 of the two years 1847 and 1857, the " losses sustained by the country were three 
 hundred millions." I presume that I must misunderstand a paper in which I 
 conceive that such an assertion is contained. Theoretic reasonings may admit of 
 opinions diverging to any extent ; but facts are stubborn things and admit of 
 more accurate verification. 
 
 A country which, within the last fourteen years, has " again and again expe- 
 rienced the loss of hundreds of millions," and which on each of two specified 
 occasions within that period has lost three hundred millions, but which, never- 
 theless, is at this moment the most prosperous and most wealthy country in the 
 world, and whose surplus annual savings during the last ten years were estimated 
 by the Chancellor of the Exchequer in a recent debate (if I mistake not) at fifty 
 millions a year — this surely is a somewhat imaccountable fact. , 
 
 A careful and accurate ascertainment of facts is the essential foundation of all 
 philosophic reasoning ; and on this account I venture to make these imperfect a,nd 
 passing remarks (I trust they will not be deemed impertinent remarks) on the 
 paper which you have submitted to me. Such statements, in contrast- with the 
 obvious and undeniable wealth and progressive prosperity of the country, remind 
 me of Lord Macaulay's just but sarcastic remark — " I hear of nothing but ruin ; 
 I look around me, and I see nothing but prosperity." 
 
 I have the honour to be, your obedient servant, Overstone. 
 
 H. Brookes, Esq. 
 
4 COERESPONDENCE ON THE CUEIiENCY. 
 
 2. 
 
 25, Birchin-lanc, London, E.G., September 24, 1861, 
 My Lord, — I am greatly obliged by the courtesy of yom- lordship's reply, 
 although much disappointed, because my bookseller informs me that there is no 
 possibility of getting a copy except through your lordship. Your lordship has 
 done me the honour to comment freely upon some of the statements in the docu- 
 ment I had. enclosed in my note. So far fi.-om deeming those comments 
 impertinent, I am obliged to your lordship for having made them, because, as I 
 had something to do with the preparation of that document, it affords me the 
 opportHuity of defending those statements, and of showing, as I hope to do, that 
 your lordship's reasoning upon them is fallacious. Your lordship will permit me 
 to do so with freedom, and will believe, nevertheless, that I do it in the same 
 spirit of frankness and courtesy which, I am sure, actuated your lordship. . Your 
 lordship contends that, " the wealth of the country having undergone an immense 
 increase between 1844 and the present time," that fact is utterly inconsistent 
 with the astounding statement that " during that period the country has again and 
 again sustained losses of hundreds of millions," and that " in each of the two years, 
 1847 and 1857, the losses sustained by the country were three hundred millions." 
 
 I beg your lordship to observe that the first part of this statement is general, 
 and that the second pai-t is not cumulative, as your lordship seems to have 
 inferred, but only particularizes the periods indicated by " again and again," 
 which, of course, mean the yeai's'1847 and 1857. 
 
 All such statements are, and, of course, can be only estimates, which may he 
 made with more or less knowledge, ability, and care, and may be therefore 
 entitled to more or less of authority and weight. 
 
 It might have been as well (perhaps better) if your lordship had observed 
 that the statement in question is not given on the authority of this committee, 
 but is distinctly mentioned as "an estimate given in evidence before a committee 
 of the House of Commons," and that the estimate is not of " losses sustained " 
 but of " depredation " in the prdperty of the country caused by the panic of 1847. 
 
 The estimate was made by Mr. Nathaniel Alexander, who may be presumed 
 to have had some knowledge of the subject, and as the committee passed it 
 without question or controversy in then- report, it may be fairly presumed that 
 they believed it to be a probable and reliable estimate. In that sense, and in 
 that belief, it is adopted in our circular. 
 
 So much for the statement itself. Your lordship evidently does not believe it 
 entitled to that character. You impugn its accuracy, and, inferentially,, at least, 
 deny its truth, without giving any reasons, except .reasons that do not at all 
 apply. Your lordship fails to see, that admitting the fact to its fullest extent, 
 "that the wealth of the country has immensely increased since 1844," that fact 
 is not "utterly inconsistent" with the estimate. Both statements may be 
 (jjfirfectly true, and If true are in perfect consistency with each other. They go 
 to show how great must have been the progi-ess and gains of the country to have 
 sustained so much loss, and yet to have had so large a remnant of gain in the end. 
 Your lordship might just as well contend that the statistical returns of the 
 Registrar-General of so many deaths per annum, from so many prevalent diseases, 
 must be inacciirate, because the census returns demonstrated that, notwithstanding 
 those deductions, the gi-oss population had greatly increased. The cases would 
 be precisely parallel. It would be just as logical in the case of a large banking 
 or;mercantile house' reputed (o have sustained heavy losses, to contend that those 
 
CORRESPONDENCE ON THE CURRENCY. 5 
 
 losses could riot have been sustained, because the annual balance-sheet for a series 
 of years showed progressive gains, notwithstanding. But I need not give further 
 illustrations,, as youi- lordship must see that the argument is utterly fallacious. 
 
 But why raise an argument on that small point at all, my lord ? At the best 
 it could only give you the advantage of having demolished an exaggeration. 
 Even your lordship must admit that the depreciation and loss sustained in the 
 years '47 and '57 was enormous. The Circular attributes those disastei-s mainly 
 to the operation of the Act of 1844, and so does the Report of the House of 
 Lords, and so do great numbers of the most intelligent, experienced, and observ- 
 ant men in the kingdom ; and all the facts seem to prove, beyond question or 
 dispute, that they were at least greatly aggravated by its operation. ' Is it 
 possible that your lordship can fail to see that it was so ? And if not, is it 
 possible that your lordship can still defend the " principles " on which that Act 
 is founded? It is hard to believe — it is difficult even to hope — that after so 
 many years devoted to the maintenance of these " principles," anything I can say 
 can have the eifect of modifying your lordship's views ; yet, if your lordship will 
 bear with me, I will, in all sincerity, try. 
 
 "Facts," as your lordship observes, "are stubborn things." What does 
 yonr lordship say to the" "fact" that in 1847, and again in 1857, the 
 " principles " of yom- system brought the country to the verge of utter bank- 
 ruptcy, from which it was saved only by the violation of those "princi- 
 ples" — the suspension of that "system?" I am told that your lordship 
 explains those events. My lord, sound principles do not require explana- 
 tions of their failm-e, because thei/ do not fail. If they are sound, it is not 
 possible for them to fail ; if they do fail, it is a proof that they are not sound. 
 Will yom- lordship think of that? Your lordship speaks of " converts to the 
 principles of the Act of 1844 being made year by year," and you look to " free 
 discussion " and " enlightened experience " for more converts. My lord, you 
 may rely upon it, you do but deceive yourself in that confidence. Yom- lordship 
 may live in a chai-med circle, into the vortex of which a few stray converts may 
 now and then be drawn, but I live in a wider world, and have a better appre- 
 ciation of the effects of " free discussion," and I venture to tell your lordship that 
 the days of the Bank Act are numbered. The day is not far distant when 
 " fi^e discussion " and " enlightened experience " will teach men to look back 
 with wonder and amazement that so monstrous an abortion should have been 
 tolerated for eighteen long years. 
 
 A si/stem of cm-rency, my lord, is a thing, an institution, which a statesman or 
 philosopher would expect to last, with occasional modifications, for a century or 
 centuries. Your lordship's system has broken down or been broken through twice 
 within ten years. Is it possible for your lordship to realise the force of that contra st ? 
 
 Your loi-dship sgeaks of " the principle of the Act," and " the principles upon 
 which the Act is founded." I confess I should like to see those principles stated^ 
 in scientific terms, so that each proposition could be logically dealt with. 
 
 Your lordship thinks Macaulay's remarks "just but sarcastic." It strikes me 
 as more disingenuous than just, and quite as heartless as it is sarcastic. Lord 
 Macaulay knew that if he saw nothing but prosperity, it was because he looked 
 where the prosperity was and the ruin was not. Like your lordship, Macaulay 
 saw nothing but " the obvious and undeniable wealth and prosperity " around 
 him, because he cared not to look beyond, where alone the ruiri was to be seen. 
 The contrasts put by your lordship, and Macaulay's remark, are not inapt 
 illustrations of that which constitutes the gist of the whole Currency Question.' 
 
6 CORRESPONDENCE ON THE CURRENCY. 
 
 It is not the vast accumulation, but the circulation and distribution of wealth 
 which renders a country truly prosperous. If your lordship will follow out this 
 inquiry it will be found as follows : — 
 
 1. That the wealth of this country is increasing. 
 
 2. That the numbers of the wealthy and independent are diminishing. 
 
 3. That the numbers of the poor and dependent are increasing. 
 
 4. That the poverty of the poorest is becoming more intense. 
 
 These four items may constitute the first page in the history of the " Decline 
 and Fall of the British Empire." Christianity could not save Rome when it had 
 entered upon that declivity. Will it save England ? The next century will 
 answer that. — I have the honour to remain, my lord, your most obedient servant, 
 
 The Right Hon. Lord Overstone. H. Bbookes. 
 
 3. 
 
 Lockinge House, Wantage, Berks, 28th Sept., 1861, 
 
 Sir, — I beg to acknowledge your reply to my former letter. It was not my 
 intention in addressing you to enter into a general discussion of the principles on 
 which the Act of 1844 is founded. Those principles have been abundantly set 
 forth in plain language, and also in scientific terms, through Parliamentary evi- 
 dence, and in other publications by men far superior to myself. To these I must 
 refer you for the opportunity you wish for of " dealing with the subject logically." 
 I shall rejoice to see the attempt made, not doubting the beneficial result which 
 must ensue. 
 
 The only purpose of my letter was to draw your attention to a statement, so 
 wild and extravagant, that I felt confident that when noticed it would at once 
 be corrected or modified. Your reply, however, leaves it doubtful how far that 
 statement is still adhered to by you. 
 
 You observe that the statement in question is " not given on the authority of 
 your Committee, but is an estimate given in evidence before a Committee of the 
 House of Commons." The statement, however, is adopted by your Committee 
 and is circulated in print under their authority ; being so circulated, of course 
 as a h-nth from which, in their judgment, useful instruction is to be derived. ~ 
 
 What, then, is this statement ? That on two separate occasions since the 
 passing of the Act of 1844 the property of the country has'suffered a depreciation 
 of at least three hundred millions (that is, taking the two occasions together six 
 hundred millions), and the statement adds further, that " the chronic state of 
 pressure and fluctuation which has existed since has probably involved the sacri- 
 fice of profits and property to an incalculably gi-eater amount." 
 
 According to this, we must at least double the six hundi-ed millions on account 
 of the sacrifice of profits and property since involved. We have therefore a 
 sacrifice of profits and property since 1844 to the amount, at least of twelve 
 |iundred millions. A sacrifice, no doubt, abundantly sufficient, if it be really 
 sustgjned, to insure the ruin of any country which has ever existed. Those who 
 can bring themselves to believe in the accuracy of such an esthnate may well be 
 fi-ightened with the delusion that they have before them the first page of the 
 " Histor^of the Decline and Fall of the British Empire." That sad event no 
 doubt, lies congealed in the womb of time ; but the authors and supporters of the 
 Act of 1844 will not be found responsible for having caused its prematm-e birth 
 At present the patient is apparently in full vigour of health and strength. 
 
 Statements or esj^mates of a wild or extravagant character are sometimes most 
 
COERESPONDENCE ON THE CURRENCY. 7 
 
 effectually dealt with by the application of the argument commonly called reductio 
 ad ahsurdum. 
 
 Accordingly, I ventured to contrast the undoubted wealth and prosperity of the 
 country at the present moment, with the " chronic state of pressure and fluc- 
 tuation involving gigantic sacrifices of profits and property " under which the 
 country is represented In the printed statement of your Committee as suffering 
 for some time past. Your explanation of this apparent contradiction is indeed 
 full of encouragement to those who place theh- confidence in the wisdom and 
 efficiency of the provisions of the Act of 1844. 
 
 These facts, you say, " go to show how great must have been the progress and 
 gains of the country to have sustained so much loss, and yet to have had so large 
 a remnant of gain in the end." I thank thee for giving me that fact. Progress 
 and gain sufficient, not only to obliterate the imputed loss of twelve hundred 
 millions, but to leave the cotmtry in a very advanced state of wealth and 
 prosperity, must indeed be of a very extraordinary character. In vain should 
 we search the history of the world for a parallel case. 
 
 This progress and these gains, let me beg you to observe, have been effected 
 under the provisions and restrictions of this very Act of 1844, which you seem to 
 think are " utterly inadequate for our present trade," and must finally involve the 
 ruin of the country. Is it, then, really the fact that we have during past years 
 been gathering these splendid grapes from thorns, these rich figs from thistles? 
 
 Let us pause for a moment and consider a few of the prominent facts which 
 characterise the progress of the country during the last twenty years, and 
 which give encouragement to the hopes of those who are sanguine as to the 
 future. You indeed draw a rather discom-aging, but I venture to believe a very 
 incorrect picture, under four heads, in what you term the first page of the 
 " Decline and Fall of the British Empire." All looks jaundiced to your jaundiced 
 eye ; let me endeavour to throw over it a film of somewhat brighter hue : — 
 
 1. Has not the trade of the country expanded wonderfully during the exist- 
 ence of the Act of 1844 — imports and exports increasing from forty-five 
 millions to one hundred and twenty millions per annum? 
 
 2. Has not the taxation of the country exhibited wonderful buoyancy — the 
 loss of revenue from taxes repealed being to a very great extent compensated by 
 the increased productiveness of the remaining taxes ? 
 
 3. Has not the railroad system, exhibiting a fixed capital of four hundred 
 millions, developed itself during this period ? 
 
 4. Have not the poor-rates diminished ? 
 
 5. Have not wages risen — whilst the prices of provisions, and of the clothing 
 of the labourer, has fallen? This fact duly considered may suggest the 
 reflection that depreciation (e. e. fall of prices) does not necessarily, and in all 
 cases, represent absolute loss to the country. 
 
 6. Is not the land better cultivated — the produce of the soil largely increase^ 
 — are not farming buildings and labourers' cottages throughout the country 
 undergoing extensive improvements ? 
 
 7. Has not our shipping increased, and are not our docks and harbours improved? 
 
 8. Look at the increased number and improved condition of our churches and the 
 parochial-schools springing up in every quarter of the country; th^sm-e evidence 
 and the best guarantee of the progressive improvement and comfoft of the people. 
 
 9. Listen to the expressive judgment of the people themselves as set forth in 
 their eloquent silence, in the absence of political excitementf or of popular dis- 
 content. 
 
8 COHRESPONDENCE ON THE CURRENCY. 
 
 These facts, I presume, you will look upon as the shadows which the great 
 coining event, " the decline and fall of the British Empire " casts before it. / 
 look upon them as satisfactory evidence that national prosperity, increase of trade, 
 accumulation of wealth, a wide diflfiision of social comfort, and a general spirit of 
 cheerful contentment, may exist under the provisions of the Act of 1844. 
 
 Recurring periods of disturbance in trade (of which you so loudly complain as 
 a chronic state of pressure and fluctuation), with interruption of credit, temporary 
 fell of prices and distress, more or less severe, aifecting the classes which are 
 engaged in business ; these are the inevitable accompaniments of a progi-essive 
 state of national prosperity. It is a stationary country only which can reason- 
 ably hope to escape them. They are the necessary result of that enterprise and 
 competition which makes this country prosperous and powerful as it is. These 
 convulsions cannot occur withoxit causing temporary inconvenience and distress, 
 the extent and intensity of which is seriously increased when the calm sense of 
 the public gives way to unreasoning alarm and panic : new and unnecessary 
 causes of conftision and embarrassment are thus introduced. These panics have 
 their origin in imperfect knowlege and consequent misconception ; for the 
 removal of which I gladly welcome eveiy proper opportunity for the public 
 discussion of the subject. The disasters thus aiising are not the unnatural result 
 of any special law peculiar to this country ; they have been experienced in much 
 more intense fprce in the United States where no Currency Act of 1844 prevails, 
 and in that coimti-y these disasters have been rendered more severe and embar- 
 rassing by an additional misfortune ii-om which this country has been protected, 
 a general suspension of specie payments. To obviate this one calamity is the 
 object and pm-pose for which the Act of 1844 was passed. It is idle, therefore, 
 to talk of the failm-e of that measure until we shall have been subjected to the 
 calamity which has abeady " again and again " occurred in the United States, of 
 being compelled to suspend our specie payments, notwithstanding a faithful main-, 
 tenance of the provisions of the Act. 
 
 In these remarks it has been my intention to restrict myself to an examination 
 of the asserted fact as to the sacrifice of profits and property to an incalculable 
 amount upon which, in the printed paper forwarded to me, the objections to the 
 Act of 1844 are foimded. This does not seem to me the appropriate occasion 
 for entering upon a comprehensive discussion of the principles of monetaiy science. 
 
 The application of those principles to the provisions of the Act of 1844 has 
 been fully discussed and subjected to every possible form of hostile criticism, in 
 the Parliamentary inquiries of 1847 and 1857. 
 
 I will now trespass upon that wider and more important branch of the subject 
 so far only as to direct your attention to the fact, that the Act of 1844 in no way 
 attempts to interfere with or to determine the quantity of money in the country, 
 or the circulation of it. That is left to the free discretion of the whole commu- 
 nity ; each member of it being at full liberty to add to, or to diminish the 
 amount of money in the country by importing or exporting gold. The Act of 
 1844 interferes only to the extent of determining what part of the total money 
 of the country shall cuxulate in the form of gold, and what pai-t in the form of 
 bank notes. A clear perception of this distinction will dissipate many erroneous 
 Conceptions and. protect us from much unnecessary alai-m. 
 
 Again, the aggravating effects attributed to the provisions of the Bill dm-ing a 
 period of unfavourable foreign exchange and export of gold, will be found, when 
 " logically," which' I presume means scientifically, " dealt with," to be strictly- 
 analogous to the supposed aggravating effects of the sui-geon's bandage, or of any 
 
GOKUESPONDENCfi ON THE CUKKENCY. 9 
 
 of those teinporaiy restraints or painfiil processes by which modern science does 
 so much in removing or alleviating the causes of human suffering. 
 
 Who but the maniac tears away those bandages, or breaks loose .from those 
 temporaay restraints, sacrificing permanent health and life for immediate relief 
 from a painful, but salutary, discipline ? 
 
 The " artificial schemes and contrivances " of which your Committee complains 
 as the cause of such formidable losses, were not in force at the period of the crisis 
 of 1825 ; and the country has not yet forgotten the difficulties in which, never- 
 theless, it was involved, or the imminent danger to which it was exposed at that 
 time. 
 
 Neither have these " schemes and contrivances " been resorted to in the United 
 States, where, consequentlyj the banks have on several occasions been driven to 
 suspension of specie payments, and the country been involved in great confusion 
 and distress. It is sufficient to observe that, as regards this country, no such 
 calamity, nor any reasonable apprehension of such calamity, has occurred since 
 the Act of 1844 was passed. This is the simple but conclusive reply to all the 
 declamatoi-y assertions of the failure of the Act. It was passed as a measure by 
 which the just and honest value of the money of the country might be maintained, 
 and the danger of the suspension of specie payments be eifectually obviated. No 
 one can tndy affirm that it has failed to accomplish this result. But you say 
 that, under the provisions of this Act, the country was brought in 1857 to the 
 '-' Yerge of utter banki'uptcy." Another instance of loose or random assertion. 
 The transition from the ^' verge of utter bankruptcy" to the condition of wealth 
 and prosperity which this country has recently enjoyed, is not to be effected in 
 the short period of two or three yeai's. But this question I must leave you to 
 settle with the Chancellor of the Exchequer, again directing your attention to 
 his estimate, that during the last ten years, the bankruptcy year of 1857 of 
 course included, the country has been accumulating savings at the rate of fifty 
 millions a year. 
 
 I must allude to one other point of vital importance to this matter. Yom* 
 committee say, "It is sought to render these bank notes apparently convertible, 
 whilst they also are really inconvertible (there being no gold to meet them)." 
 I presume that the meaning of this passage is, that the bank notes are really 
 inconvertible, because the amount of gold actually held by the issue department 
 is not equal to the total amount of bank notes in circulation, and which the issue 
 department is under an obligation to pay in gold, whenever it may be demanded. 
 It is difficult to believe that such a statement has received the sanction of men 
 experienced in business, of whom your committee undoubtedly consists. Do 
 they believe that their respective bankers retain in their tills money equal to the 
 whole amount of the deposits which they undertake, nevertheless, to pay on 
 demand ; or, are they themselves provided with money in hand equal to all their 
 outstanding debts? 
 
 It is sufficient, as they well know, that their obligations and their m^ns of 
 meeting them are subject to such restrictions and regulations as shall' render 
 certain the punctual discharge of every legitimate demand. 
 
 The convertibility of the bank notes rests upon the same principle ; and it is 
 the purpose, and the special merit, of the Act of 1844, that, so^ong as its pro- 
 visions are faithfully maintained, every holder of a bank note may be assured 
 that his claim for gold in exchange, whenever made, will be punctually met. 
 
 This measure, founded upon scientific principles, sanctioned by the ablest 
 statesmen of our time, and directed to the most honest and legitimate purpose, 
 
10 COKEESPONDENCE ON THE CURRENCY. 
 
 you, writing as the Secretary of a great Committee, have thought fit to designate 
 as " a monstrous abortion." To this 1 will not reply in my own words, as it is 
 not my habit to substitute abusive terms for arguments ; but I will submit to 
 your consideration the words of a living writer : — " We do not expect that while 
 the world lasts ignorance will cease to take itself for knowledge, and to denounce 
 what it cannot understand." 
 
 Before I close this discussion I must make one observation in defence of a great 
 name which I have been the means, perhaps unwai-rantably, of bringing under 
 your criticism. The -b ards of Lord Macaulay, quoted in my former letter,^! 
 described as true, because I believed it to be the fact, that in this country a 
 thoughtless cry of dissatisfaction and complaint is sometimes heard on occasions 
 when well-being really prevails. I called them sarcastic, because, in these 
 pointed and condensed words, our attention is dii-ected to the wide distinction 
 between random and exaggerated assertions, and the facts — the unequivocal, 
 authentic facts — irom which. alone sound argument is to be derived. 
 
 In the conclusion of your letter you refer to the next century for the decision 
 of the question whether England is to be saved. This is rather a long period of 
 suspense. May I venture to hope that we may both live to know the result ; 
 and that, during the intervening period, we may have our share in the general 
 progress and prosperity which at all events characterise the foreground of the 
 scene, whatever may be the mysterious future, concealed in the cloud, at present 
 not so big even as a man's hand, which lies upon the distant horizon of a future 
 century. — I have the honour to be, sir, your obedient servant, 
 
 H. Brookes, Esq., Secretary. • Oveestone. 
 
 4. 
 
 25, Birchin-lane, E.G., 7th Oct., 1861. 
 
 My Lord, — I have to acknowledge the receipt of your lordship's letter of the 
 28th ult. 
 
 In war it is said, " all advantages are good against an enemy," but I cannot 
 recognise the propriety of such tactics in controversies of this description, where 
 the elimination of truth is the object in view. Your lordship's reply, I regret to 
 ■perceive, is not characterised by the candid and ingenuous spirit which the osten- 
 sible simplicity of its object gives one a right to expect. That object was to 
 correct what your lordship deemed " a wild and extravagant estimate," but your 
 first letter endeavoured to render it more wild and more extravagant, by doubling 
 it in one way, and your present letter seeks to double it in another way. In my 
 reply I reminded your lordship that the estimate in question appeared in the cu- 
 cular as "an estimate given in evidence before a Committee of the House ot 
 Commons," a fact which yom- lordship had failed to notice, and I naturally expected 
 that the reminder would have elicited some expression of regret for an omission 
 jp^ich could not be deemed unimportant. But instead of any expression of 
 regretjj^yoiir lordship retorts in a style which seems to impute a disposition on 
 my part to shrink from the responsibility of the statement. My lord, my reply 
 could have left you in no doubt on that head. It states distinctly, that as the 
 " Committeiteof the House of Commons had passed it without question on contro- 
 versy in their r^ort, it might fairly be presumed that they believed it to be a 
 probable and reliable estimate," and I added that " in that sense, and in that 
 belief, it was adopted in our circular." 
 
 Let us now see what that estimate is. It affirms that in the crises of 1847 
 1857 the property of the country was depreciated to the extent of not less than 
 
COEEESPONDENCE ON THE CCEEENCT. 11 
 
 three hundred millions, and dm-ing the chronic state of pressure and fluctuation 
 which had prevailed since the latter period " to even a greater extent." 
 
 Your lordship denounces this estimate as " wild and extravagant," but no 
 attempt is made to show why or wherefore, except that during, and subsequent 
 to, those periods, " the country has enjoyed a state of unexampled wealth, pro- 
 gress, and prosperity." 
 
 That is absolutely and positively all that your lordship attempts to urge against 
 the validity of Mr. Alexander's estimate, or in support of your own denunciation. 
 And this your lordship is pleased to designate the argument commonly called 
 " reductio ad absurdum." I beg leave to correct your lordship. It is not a 
 reductio ad absurdum at all, but there is another term used in logic, which aptly 
 and exactly describes it, and that is commonly called a subterfuge. 
 
 But to the estimate : Mr. Alexander explained in his evidence that it was 
 founded upon a document issued by the House of Lords in 1848, showing a de- 
 preciation between 1st February and 23rd October, 1847 : 
 
 In Government Securities alone of £93,824,217 
 
 In Dock Shares 1,094,714 
 
 In Canal Shares 252,574 
 
 In Kailways 19,579,820 
 
 But Mr. Alexander goes on to say, " there was a general depreciation of all 
 the property in England ; every sort of mercantile commodity fell in the same 
 proportion." The items given amount to neaily a hundred and fifteen millions, 
 and he adds, " If you take the fall of other descriptions of property as double 
 that, I think it is the very least. Therefore, I should say that between January 
 and October, 1847, there was a contraction of credits, represented by a fall in 
 prices of three hundred millions." 
 
 Yom- lordship will pai-don me if I am unable to see anything wild or extrava- 
 gant in this. I do not know the data on which Mr. Alexander based his 
 calculations, and I am not sure that the facts which occur to my own mind, in 
 coiToboration, are the best and strongest; but I do not feel called upon to institute 
 an elaborate statistical investigation to verify his conclusions. It is sufficient for 
 my purpose to quote a few of the facts, which appeared to me to invest those 
 conclusions with a reasonable degree of probability. 
 
 The figures quoted from the Parliamentary Return give a depreciation of 
 nearly a hundi'ed and fifteen millions in Government, and a few only of other 
 public securities, and for a period of only nine months after the panic, leaving 
 a hundred and eighty-five millions for the depreciation " in the mercantile and 
 all the other property in England." 
 
 As to the absolute amount of mercantile and other property in England, liable 
 to depreciation, only a rude and proximate opinion can of course be formed, but 
 I have before me a paper, deducing from another document issued by the House 
 of Lords, in 1848, the probable amount of mercantile bills of exchange always » 
 afloat, which is no less than two hundred and fifty millions. Assuming, that 
 these change hands only foui- times each, that would show transfers of mercantile 
 property to the amount of a thousand millions per annum. This amount, how- 
 ever, represents only such branches of commerce as are conducted by bj" 
 '"--re, and I take it that those branches in which transfers are daily efl 
 , by cheques, through two or three thousand banking estaiblishment; 
 it amongst hundreds of thousands of traders, including in these all 
 ^keeping transactions, must amount to very much m^e than a tho 
 but say only a thousand millions, that is, together, two thousand mil 
 
X2 CORRESPONDENCE ON THE CURRENCY. 
 
 Now, your lordship knows as well as I do, and perhaps a great deal better, the 
 probable percentage of depreciation in mercantile commodities and other property, 
 and will see that only a very moderate percentage upon such enormous amounts 
 would verify the statement. This may be a somewhat rude and unscientific 
 method of amving at the conclusion, but to my mind it appears sufficient to 
 divest the estimate of the character of " wild and extravagant " which your lord- 
 shjp has so gratuitously sought to fasten upon it, and to relieve this Committee 
 from the imputation of having given additional publicity to a statement of that 
 character. 
 
 Your lordship argues, that a country that pays seventy millions in taxes, and 
 saves fifty millions a year besides, could not have sustained such reverses. It 
 might just as well be argued that a country which had sustained such losses, and 
 paid such an amount in taxation, could not have saved fifty millions a-year 
 besides ; and, therefore, that the estimate of such savings must be " wild and 
 extravagant." From the same premises I arrive at the opposite conclusion. I 
 infer that a country capable of paying seventy millions a-year, and of saving 
 fifty millions a year besides, must have such enormous wealth-creating capacity — 
 such an immense income, and such a corresponding expenditure, as to render its 
 ability to sustain such losses not impossible, but more than probable ; because a 
 reduction of 10 per cent, upon its annual income or expenditui-e would probably 
 be equal to the amount. Would your lordship deem a deduction of 10 per cent, 
 as the result of that terrible crisis in 1847, "wild and exti-avagant ?" 
 
 Your lordship puts this question correctly in words as a depreciation in prices, 
 but youi- ai-gument would seem to lead to the false inference that it is a total loss 
 to the countiy. It is a total loss to the toiling millions who have created all this 
 wealth, no doubt, and, as to a large portion of it, an absolute loss to the commu- 
 nity, because it is a transfer of that portion to the foreigner, who buys up our 
 depreciated stocks, securities, and goods. But, as to the other portion, it is 
 merely a transfer of property and gains from the productive hands of the people 
 to the non-productive hands of the capitalist. When I spoke of the ruin of the 
 country, and of the country being brought " to the verge of bankruptcy," I meant 
 the bulk of its people, not its millionaires, because I knew that the loss of the one 
 is the gain of the other. I knew that amid the most appalling ruin and distress 
 which prevailed over the whole country in 184:7, and which your lordship thinks 
 so perfectly natural, there was one class who could contemplate it all with the 
 most philosophic serenity, as the inevitable concomitant of " progress and prospe- 
 rity." I knew that at such a time the capitalist would be realising and absorb- 
 ing many of those millions of wealth which were then passing away fi-om the 
 holders of Government and other secm-ities, and fi-ora the desperate and straight- 
 ened, if not ruined, holders of mercantile goods. And I knew that when the 
 tide turned, when the crisis was past, the capitalist would be ready to pom- those 
 uinillions into the joint stock banks and discount houses, for the use of traders 
 and manufacturers, again to stimulate the production of more wealth, to be 
 gathered, in due season, into the same teeming garners by some futui-e crisis. 
 And I knew that they might then point to these accumulated stores of wealth as 
 your lordship now does, "as imdeniable evidences of the progi-ess and prosperity 
 of the country." But to my mind this proof of the wealth of a class proves, also, 
 the comparative |)overty of the masses, and demonsti-ates the tendency of these 
 ci'ises to reduce the whole of the productive classes of this country to the condition 
 of the mere tools, instruments, and dependants of the capitalist. 
 
 Yom- lordship renews the progress of the country during the last twenty years; 
 
COEBESPONDENCE ON THE CURRENCY. 13 
 
 the " wonderful expansions of its frade under the Act of 1844, and the increase 
 of its. imports and exports," " the wonderful buoyancy of the taxation of the 
 country, the development of the railway system, exhibiting a fixed capital of 
 four hundred millions ; the diminution of the poor-rates " (a very questionable 
 fact), " the rise of wages " (which is equally so), " the fall in the prices of pro- 
 visions and clothing" (which is not questionable at all, for all except bread 
 have risen), " the improvements in agriculture, the increase of shipping, and of 
 docks and harbours, chmxhes and schools," &c?, &c. And all — all this your 
 lordship, either in mocking or infatuation, attributes to the Act of 1844. 
 
 This is but a repetition, with slight variations, of the glowing eulogium which 
 yom- lordship addi-essed to a Committee of the House of Commons in July, 1857, 
 when you congi-atulated them upon the " regularity and ease" — (such regularity! 
 such ease! !) " with which the pressure of that period had passed off." "The 
 monetary system," your lordship said, " was safe and unshaken, the prosperity 
 of the'country undisputed, and public confidence in the wisdom of the Act daily 
 gaining strength ;" and the committee were told " if they wanted further illus- 
 trations of the soundness of its principles, or the beneficial results it had insured, 
 to look around them, to look at the present state of the trade of the country, at 
 the prosperous condition of the revenue, the contentment of the people, and the 
 wealth and prosperity which pervaded every class of the community." And your 
 lordship finally (with as little respect for a body of English gentlemen sitting in 
 committee as they appear to have had for themselves) warned them "against 
 taking upon themselves the disgrace of destroying so great a work." The sound 
 of yom- lordship's voice had scarcely died away, and the committee had scarcely 
 recovered from their amazement at yom- lordship's boldness and theii" own humi- 
 liation, ere the first faint murmurs of a coming storm were heard. 
 
 Within a few short weeks of that time the whole country was in the agony of 
 another crisis ; the object of all this fulsome laudation was again suspended to 
 save the country from all but universal bankruptcy ; and the capitalist was again 
 nibbing his hands with glee at the prospect of another harvest from depreciated 
 stocks, depreciated shares, depreciated goods, and a general fall of prices. 
 
 To attribute the enormous increase in the wealth and progress and prosperity 
 of this country during the last twenty years to the Bank Act of 1844, is about 
 the most preposterous of all the preposterous and arrogant assumjptions by which 
 the promoters and defenders of that Act have attempted to practise upon the cre- 
 dulity of the country. It had nothing to do with that wealth, but to deprive the 
 owners and creators of it, by transferring it to the tills and strong boxes of 
 another class. It had nothing whatever to do with that progress and prosperity 
 except to mar and retard it. All that wealth and all that prosperity are due to 
 other causes, as I will immediately show ; the poverty, bankruptcy and ruin are 
 alone due to the Bank Act. 
 
 Fu-st amongst those causes was a large increase in the flow of gold to thjrt 
 country, chiefly from Eussia, which commenced in 1841, three years befo|e» the 
 Bank Act was passed. Then we had three good harvests in successioi^ in the 
 years '42, '43, and '44. Mark the results, as exhibited by the increased amount 
 of bullion in the Bank : — r; 
 
 In 1840 the maximum was £4,800,000 
 
 1841 „ 5,600,000 
 
 1842 „ 11,100,000 
 
 1843 „ [14,900,000 
 
 1844 „ ..". 16,400,000 
 
14 COKEESPONDENCE ON THE CUEKENCY. 
 
 With this increase of bullion in the Bank there was, of course, a con-esponding 
 increase of the bank notes in cii-culation. The country had obtained what it 
 wanted — the means, the tools to work with — an adequate circulation, and the 
 energy of the people supplied the rest. Trade and commerce ilom-ished, produce 
 increased, manufactures, exports, imports, all went on increasing rapidly, and the 
 development of the railway system was commenced and had ah-eady made 
 immense progress. Yet the Bank Act was not in existence then. The people 
 were industrious, prosperous, and contented, rapidly gi-owing rich, easy and con- 
 fiding. What did they want with a bank to insure the convertibility of the 
 bank note? Who doubted or distrusted the bank note then? Not the people, 
 not the merchant and trader. But the usury laws had been repealed. Money 
 was plentiful and reasonably cheap, and the interest of the money dealer lay in 
 making it scarce and dear, that it might bear a higher price and yield a larger 
 profit to its possessors. And regulating the currency by the foreign exchanges 
 was a very pretentious problem, and securing the convertibility of the bank note 
 a very innocent and seductive proposition. 
 
 In an evil hour, when the people were ignorant and quiescent, the parliament 
 supine, and the press pre-occupied and indifferent, a newly-converted minister 
 launched this mischievous product of the science of millionaires, and it was im- 
 posed upon the country without opposition, and almost without discussion. 
 
 What was its first and immediate effect? Cheap money! And the operation 
 of that? Rampant speculation ! The effect of that? Ungovernable greed of 
 gain ! And the first fruits? Prodigal expenditure ! And the last? Speedy 
 reverse and ruin ! for the country was plunged into the terrible crisis and panic 
 of 1847. 
 
 Yom- lordship never knew, your lordship could not know, and must be inca- 
 pable of appreciating all the human agony, the life-long misery and deprivation, 
 the broken fortunes, the severed ties and the broken hearts, the desolated homes, 
 and the utter demoralisation which sprung from that fearful period. By your 
 lordship it is doubtless remembered only as one of those natural and ordinary 
 vicissitudes which are the invariablo and inevitable concomitants of " progress 
 and prosperity," when the common people murmur and complain, and good 
 people mourn and grieve ; when stocks and securities naturally come down very 
 low, and a rich harvest may be reaped by those who have realised capital well 
 _ in hand for loan and investment, and that is all — ^what more? 
 
 If the Bank Act did not create the wealth which had been accumulating since 
 1841 ; it effectually transferred it, swept it wholesale from the possession of the 
 entei-prising and laborious millions who had created it, to the warehouses of the 
 foreigner and the coffers of the shai-p-witted capitalist at home. 
 
 Slowly and painfnlly the country einerged fi-om the crisis of 1847, and the 
 stript and defi-auded millions stood in gaping wonderment at the result, but igno- 
 rant of the financial legerdemain by which it had been effected. 
 
 Then came the long-coveted fi-eedom of trade, and this, with the aid of the 
 railway system, gradually stimulated the benumbed energies of the people, and 
 again revived a spirit of enterprise. This was speedily followed by the gold 
 discoveries in California, and subsequently those of Australia. And the gold ot • 
 California and Australia, with freedom of trade and railway facilities, and the 
 increased intelligence and energy which each brought to bear upon the other, 
 and all contributed to the natm-al aptitude of the people, gave such an impetus 
 to the creation of produce, the manufactm-e of commodities, and the spread of 
 commerce, as the world had never seen before. 
 
CORRESPONDENCE ON THE CURRENCY. 15 
 
 The gold discoveries and the railways and free trade were not the offepring of 
 the Bank Act, and yet these were the causes of the wealth which now rapidly 
 accumulated up to 1857. 
 
 The bullion in the Bank steadily increased in 1850, 1851, and 1852, until in 
 the latter year it attained the enormous amount of twenty-two millions. Glorious 
 result this of the immaculate wisdom of the Bank Act ! — for even the increased 
 amount of the bullion in the Bank is claimed by its advocates. Nothing is too 
 great, or too small, or too far-fetched for the insatiate audacity of its pretensions; 
 Trade, commerce, railways, docks, harboiu's, shipping, churches, schools, even 
 the labourers' cottages, and the peaceful contentedness of the people, all spring 
 from the prolific and beneficent operation of the Bank Act. It is wonderful that 
 it has not yet claimed the penny postage, the cheap press, and the penny papers, 
 as, doubtless it would do if they were things that were capable of being confis- 
 cated by the operation of a crisis and a panic. 
 
 Year by year the gold fields continued to send us supplies of gold, a portion of 
 which was absorbed into our circulation, and so continued to preserve the exist- 
 ence of the Bank Act itself. It was mainly indebted for its existence to the 
 prosperity engendered by the gold from Eussia, &c., previous to 1844, and 
 nothing but the influx of gold in after years could have rendered its continued 
 existence possible. It is to that gold that the country is indebted for all the 
 wealth and prosperity we enjoyed up to 1857; the Bank Act did nothing to 
 create, nothing to aid it. But if it did not create, it again effectually transferred 
 it. When the pear was ripe and ready to fall, when the tide tui-ned and grim 
 adversity set in, then it swooped down and fell with all the crushing and fatal 
 destructiveness of an avalanche, burying all in wide-spread ruin — all, except the 
 serene and scientific capitalist, who, perched upon his naiTOw rock of restricted 
 gold, escaped. As was the panic of 1847, so was that of 1857 the legitimate 
 offspring of the Act of 1844. 
 
 I am quite aware, my lord, that periodical alternations of prospei'ity and ad- 
 versity in trade, are in the natural and ordinary course of things ;,but I deny, 
 emphatically, that there is any natm-al or inevitable necessity for these periodical 
 monetary panics. They ai-e the results generally, if not invariably, of vicious 
 systems of currency, and in our case, since 1844, have indubitably been the 
 results of the Act of that yeaiv 
 
 Your lordship alludes to the case of America, where they have no such Bank 
 Act, and where, in consequence, they have suffered the additional " calamity " of 
 a suspension of cash pa3Tnents. I do not think there is much instruction to be 
 derived from these comparisons with America, the country and its natm-al 
 resources, the commerce, the monetary system, the people, are all so different ; 
 but I will remai'k, in reference to the " calamity " alluded to, that, so far as I 
 am informed and can judge, the confusion and distress in America did not arise 
 from the suspension, but were most acutely felt during the approach to it, anjj 
 ceased on arriving at it. When the bankers met and agreed to a general suspen- 
 sion, it was a relief, just as the suspension of the Bank Act in 1847 and 1857 
 was a relief to us, and just as I believe the suspension of specie payments in 
 1797 was no calamity but a relief. 
 ' Your lordship boasts " that the Bank Act has saved us fromihat calamity.'' 
 It has done no such thing. It preserved the convertibility of the bank note up 
 to a certain pointy and then it was itself suspended. You cannot tell, and it is 
 impossible for you to say, that if it had not been suspended it would have con ' 
 tinued to preserve the bank note, for within twenty-four hours there might have 
 
16 CORRESPONDENCE ON THE CURRENCY. 
 
 been, and in all human probability there would have been a general run for gold, 
 and then it is certain that it could not have saved the bank note. When, there- 
 fore, your lordship says, " it is idle to say that the Act has failed," I am com- 
 pelled to reply that it is a delusion or a pretence to argue the contrary. 
 
 Youi" lordship's allusion to " the aggravating effects attributed to the Bill as 
 strictly analogous to the surgeon's bandage," I cannot help thinking a very 
 unhappy one. It is calculated to remind one of another surgical operation, much 
 more analogous, which modern science has pretty well discarded, viz., the practice 
 of bleeding, depriving the patient of his life blood in order to preserve his life. 
 This bygone practice, as porti-ayed in Dr. Dickson's " Fallacies of the Faculty," 
 and the remedies he suggests " for promoting a more equal distribution of the 
 circulation," may suggest some other interesting and useful analogies which your 
 lordship may study with advantage. 
 
 Your lordship also alludes to the many able statesmen who have sanctioned 
 the scientific principles of this Act. Who were they? Will yom- lordship name 
 and enumerate them? Permit me at the same time to remind your lordship of 
 the many learned, able, and scientific men, and men of the largest practical 
 knowlege and experience in banking and monetary affairs, who have not 
 sanctioned those principles, but who, on the contrary, from the first moment of 
 their promulgation have never ceased to oppose and denounce them as " false," 
 " unsound," " pedantic," " pernicious," as fraught with evil, monetary pres- 
 sm-es, panics, ruin,, and every sort of " national evil." In monetary science 
 whom can you oppose to such names as J. Stuart Mill, Tooke, author of " The 
 History of Prices," and his pupil and colleague, Newmarch? In practical 
 banking, whom would you quote against Gilbart, Pollard, Glyn, Cayley, 
 J. C. Wright, &c., and for statesmen whom would you oppose to the 
 statesmen of the House of Lords, the authors of that masterly Report so utterly 
 condemnatory of your system, its principles, its operation, and its results? 
 
 In considering the principles on which a currency should be based, I wonder 
 it never occim-ed to yom- lordship and those other able statesmen, that inasmuch 
 as a steady and equable cnn-ency was the thing desiderated by the commerce 
 and interests of the country, the attempt to regulate it in the way that we have 
 attempted to regulate oiu-s, by the cmTencies of other countries, was not the most 
 likely way to obtain it; and whether an endeavour to regulate the price of gold, 
 the basis but not the sole component of our currency, would not have been a more 
 natural, obvious, and effectual way. 
 
 Your lordship makes much of the crises which occun-ed previous to 1844, and 
 but little of those which have occun-ed since, and advantage is taken of the con- 
 trast. The crisis of 1825 had its own causes, originating in the policy of 1819; 
 and the Act of 1844, if it had then been in being, could no more have controlled 
 them than it could conti-ol those of 1847 and 1857; and the reply which your 
 (lordship considers " simple and conclusive to all the declamatory assertions of 
 the ^ilure of the Act " is no reply at all ; because, as I have already shown, it 
 is impossible to afiirm that it has even secured the convertibility of the bank note. 
 The besti^iroof that there was no danger of a suspension of specie pajanents was 
 afforded by the actual suspension of the Act which was to save us from that 
 danger. 
 
 Your lordship sneers at the idea of the country being on " the vero-e of bank- 
 ruptcy." I have already explained the appai-ently easy transition from that state 
 to the condition of prosperity with which your lordship is so well satisfied and I 
 should imagine that your lordship stands almost alone in j^our incredulity as to 
 
UUKKESrOMDlSMOK ON THE CURRENCY. 17 
 
 the sad reality of the former state. Does your lordship imagine that anything 
 less than a grave conviction of the imminence of such a catastrophe would have 
 induced an English ministry to set aside a special Act of Pai-liament to save the 
 country from it? 
 
 'Tour lordship expresses some (may I say well affected) astonishment that men 
 of business could have given their sanction to the statement in the circulai', " that 
 the artificial schemes and contrivances by which it is sought to render these bank 
 notes apparently convertible, whilst they also are really inconvertible (there being 
 BO gold to meet them), have again and again inflicted losses upon the community," 
 &c. The passage is literally and strictly true. It means that the fourteen millions 
 of bank notes which have no gold to meet them, cannot be met by gold, and con- 
 sequently that notes which cannot be converted ai'e really inconvertible. Is it not 
 so? It means also that the schemes and contrivances of the Bank Act are 
 designed to preserve the appearance of convertibility by so restiicting the issues 
 that the notes that ai-e not convertible can never be brought in to be converted. 
 Is not that so likewise? Is it not the main object of this letter of your lordship's 
 to show that it is so, and that the excellence of the measure consists in the per- 
 fection with which it has accomplished that object? Does not the Act say in 
 effect to the Bank Dh-ectors, " you shall limit your issues ; however much the 
 public may want money they must not have it, because if too many notes are 
 issued some of those notes may come in which you have no gold to meet and 
 cannot pay?" Yom- lordship knows that this is so ; why, therefore, this affected 
 astonishment? 
 
 Your lordship alleges that " the convertibility of these notes rests upon the 
 same principle as the banker's reserve." Permit me again to correct your lord- 
 ship ; it is not so, the cases are not at all analogous ; that of the merchant's 
 reserve is still less so. These notes are the national cuiTency, are a legal tender, 
 are payable to the bearer on demand, and are in constant circulation from hand 
 to hand. The deposits with a banker ai-e a special trust, payable only on his 
 customer's cheque specially di'awn, and not cm-rency or passing from hand to 
 hand at all. The outstanding debts of the merchant ai-e still less analogous, in 
 fact bear no analogy at all. These notes "do not rest upon that principle, nor 
 were the provisions respecting them based upon that principle, nor could they be, 
 for the issue of these notes is limited, fixed by the law. You do not compel the 
 banker to maintain a fixed amount of liability beyond his reserve, hut leave him 
 to incur any amount of liability, and to hold such a proportionate amount in 
 reserve as he may deem fit. The issue of those notes and the limitation of the 
 amount was based, I believe, upon another and different hypothesis. 
 
 When I asked about " the principles of the Act," I knew of those originally 
 put forth, but I wanted to know which of them had not notoriously failed, or been 
 varied, or abandoned by its authors as untenable, and which one, if any one, 
 still remained on which your lordship would now be content to rest its defence. 
 And I want to know that still. 
 
 Your lordship complains of my designating the Act a " monstrous abortion." 
 I believe I am justified in so designating any measure of which I entertain no 
 better an opinion without incun-ing the reproach of using " abusive terms." If 
 your lordship thinks otherwise, I regret it. I called it a monstrous abortion, 
 because it was false in its conception and was begotten of principles, which it has 
 belied from the first moment of its birth and thi'oughont its existence. It has done 
 nothing which its authors promised it should do, and everything which they 
 pledged themselves it should not do. It has verified none of the predictions 
 
18 CORRESPONDENCE ON THE CURRENCY. 
 
 which heralded its coming, except those which foretold its pernicious and malig- 
 nant influence, and those it has verified to the letter. It has procreated all the 
 evils it was called into existence to extii-pate, and has endowed its progeny with 
 original vices of its own ; but even in that it has dishonoured its parentage, for 
 it has operated on principles diametrically opposed to the principles of those t^o 
 were the authors of its being. 
 
 I called it a monstrous abortion for brevity. In legal and gentler phraseology 
 it should be entitled " An Act for promoting the rapid creation of wealth by the 
 aid of cheap money, and for the periodical transfer of the profits and accumula- 
 tions of the industrious classes to foreigners abroad and capitalists at home, upon 
 new and scientific principles." 
 
 I cannot but admire the fastidious delicacy of taste and the refinement of habit 
 which will not reply to abusive terms in its own words, but culls the most insult- 
 ing passage it can find " in a living wi-iter " to speak for it. It is not my habit 
 to reply to insults at all ; but if I should ever meet one worthy of being made an 
 exception, I shall not be wanting in befitting words of my own nor shrink from 
 applying them. 
 
 Your lordship will see that it is impossible for me to consult a committee of 
 business men upon every point in such lengthened and discursive communications 
 as these are becoming, and, therefore, your lordship ,will be so good as to hold 
 me only responsible for them. — I have the honour to remain, your lordship's 
 most obedient servant, H. Brookes. 
 
 5. 
 
 Lockinge House, Wantage, Berks, 7th October, 1861. 
 
 Sir, — I now propose to enter, somewhat more fully than I did in my former 
 letter of the 28th ult., upon the subject under discussion between your committee 
 and myself. I am induced to do so, because yom- committee, whilst it under- 
 takes to give " a popular and intelligible view of the evils of the present system,'' 
 is itself under the misguiding influence of many erroneous views, both as regai-ds 
 general principles, and the present condition, social and economical, of the differ- 
 ent classes of the community. Moreover, by thus enlarging to some extent the 
 field of discussion, I may perhaps afford to you the opportunity you so much 
 desire of " dealing with the subject logically." 
 
 The paper circulated by your committee opens with the statement that " ques- 
 tions having reference' to the nature, quantity, and cii'culation of money, the rates 
 of interest and discount, govern not only the larger transactions of the banker, 
 the merchant, and the manufactm-er, but also vitally afiect the daily operations 
 of the small trader and the petty shopkeeper, the employment of the working man 
 and the rate of his wages, and the price of every article of food and clothing they 
 pm'chase for themselves and their families." As I do iiot dissent from this view 
 of the importance of all questions which afiect the money of a coimtry, I claim 
 permission to make a few remarks upon the principles by which we ought to be 
 guided in all measm-es touching the "nature, the quantity, and the circulation" 
 of money. 
 
 1. MTien a standard of value is first introduced amongst civilised nations, it is 
 almost always a coinage of the precious metals. Money thus constituted has an 
 intrinsic value, by reference to which the relative value of all other things is 
 measured and determined. 
 
 But when public (predit has been firmly established, a paper currency is usually 
 permitted to mix itself with the coinage of precious metal. This paper money, o^ 
 
CORRESPONDENCE ON THE CURRENCY. 19 
 
 iourse, has no intrinsic value. It may be issued to an indefinite extent, if subject 
 to no legal regulations ; and thus uncertainty as to the standai-d of value, and 
 great confusion and injustice in the transactions bet^^en man and man, will be 
 introduced. As this paper money costs nothing, there is necessarily a constant 
 and most dangerous tendency to the over issue of it. The disastrous consequences 
 of this tendency we haA^e experienced in this country in times not very distant — 
 witness the crisis of 1825 ; and other countries afford us pregnant examples of 
 warning and instruction. 
 
 This tendency to over issue can only be controlled by legislative restrictions ; 
 hence the justification, indeed the necessity, for laws to regulate the management 
 of the circulation. But mark— the justification of euch legislative interference 
 cannot go beyond the necessity of the case. The metallic money wUl regulate 
 itself by virtue of its intrinsic value ; it must, therefore, be left to circulate freely 
 under the influence of those natural laws which regulate the distribution of the 
 precious metals, without artificial legislative interference. The paper money 
 alone, having no intrinsic capacity of self-regulation, becomes a proper subject for 
 legislative interference. 
 
 The FIRST TEST, then, of a sound management of the circulation is, that it 
 leaves the metallic money undisturbed by any legislative interference as to nature 
 or quantity, and the circulation of it through all classes unimpeded by any 
 artificial device. 
 
 The next question is — upon what principle, and with what purpose ought the 
 interference with the paper money to be conducted ? 
 
 The legitimate pm-pose of money is to act as a standard of value and a medium 
 of exchange. Metallic money, and metallic money only, fully accomplishes that 
 pm'pose. Paper money is a mere conventional medium of exchange, a substitute 
 for metallic money, in itself worthless, and adopted only from considerations of 
 convenience and economy. The legitimate value of the raoney of the country, 
 which it is essential to uphold, can, under a system of paper issues, be main- 
 tained by one means only. The paper money must at all times be kept the same 
 in amount as would have been the metallic money which it displaces; and it this 
 be done, we may be assured that it will at all times be convertible into metallic 
 money. By this means paper money may cii'culate simtdtaneously with metallic 
 money, without in any degree disturbing the quantity or the circulation of money, 
 as these are determined by the fi-ee action of natural causes. 
 
 Here, then, we arrive at a second test of a sound management of the circu- 
 lation. The paper money must be preserved at all times equal in amount to the 
 metallic money which it displaces, and be convertible into metallic money. 
 
 Let me now beg your committee to apply these tests to the Act of 1844. 
 That measure was framed for the purpose of satisfying these tests ; and I ven- 
 ture confidently to aflSrm that it has not failed to do so. Fourteen millions of 
 notes are issued in place of that amount of gold. This being done, the fluc-^ 
 tuations in the amount of money, and the circulation of it, are subjected tg. no 
 control beyond that which is exercised by the unrestrained action of th& whole 
 community ; each member of it is free to bring in the precious metals-j^lhat is, 
 money — or to take them out without let or hindrance. If the existing quantity 
 of metallic money be really " inadequate for our increased trade," as your com- 
 mittee affirms, it is open to the members of your committee, or to any other 
 person, to increase our metallic money by importing the precious metals. The 
 state of the exchanges will determine that question, and in the only sound »aS 
 legitimate way. If the demand for more metallic raoney be stronger in this thSa 
 
 c 
 
20 CORRESPONDENCE ON THE CtlERENCY, 
 
 in Other countries, the exchanges will be affected accordingly, and the requisite 
 additional supply will come to us. If the exchanges be not so affected, we may 
 be assured that we are in possession of our fair proportionate share of the 
 precious metals. When this principle is understood and appreciated, it will be 
 seen that there is no intelligible meaning in the assertion of your committee, that 
 "even if the provisions of the Act were adequate for the trade of 1844, those 
 provisions are utterly inadequate for the trade of 1861.'' If- such be the case, 
 how Is it that, under these utterly inadequate provisions of the Act, the trade of 
 1844 has expanded itself into the trade of 1861 ? That under this restrictive 
 and utterly insufRcient law exports and imports of forty-five millions have grown 
 into exports and imports of a hundred and twenty millions ? And again : If it 
 be the fact, that the " quantity of gold which the Bank is enabled to conmiand 
 is quite insufficient for the increased trade," why is it that this intense demand 
 for more gold does not produce its legitimate effect — an increased supply of gold ? 
 "Why are not the exchanges affected, and an increased amount of the precious 
 metals brought into the country, by virtue of the only sound principle, that of 
 demand and supply? I cannot suppose that your committee would countenance 
 the attempt to force the precious metals into the country by an unnatural and 
 empirical process ; and were that done, it would be found impossible to retain 
 them. 
 
 II. I have thus endeavoxu-ed to present a slight outline of the principles ap- 
 plicable to the regulation of paper issues, and to show in what manner those 
 pi-inciples are embodied in the provisions of the Act of 1844. Let us now proceed 
 to trace the practical operation of these provisions through one of the trading 
 convulsions which periodically occur in this country; and which, indeed, as they 
 are the direct result of high credit and enterprise, will be found to occur, at no 
 long intervals, in every country which is progressing in prosperity and wealth. 
 The philosophy of any one of these crises is the philosophy of all. They may 
 appear to vary in their external accidents, but they really originate in the same 
 general cause, and the varying phenomena which mark then- progress are regu- 
 lated by the same fixed principles. Fades non omnibus una, nee diversa 
 tamen. 
 
 They are invariably preceded by a state of tranquillity, of confidence, and of 
 apparent general prosperity; the exchanges are favourable, the precious metals 
 are in course of transmission to this country, and the amount of money in the 
 country is increased. The consequence of this is, that credit is easily obtained, 
 prices rise, enterprise and speculation are powerfiiUy developed, and production 
 in every form experiences an unusual stimulus. 
 
 Oui- home products are increased far beyond the legitimate demand for them, 
 whilst the high range of prices in this country prevents the export of this excess 
 to other countries. The same high range of prices here which checks our ex- 
 ports tends also to cause a large increase of imports. Thus the balance of trade 
 ■is seriously deranged ; our imports' become lai-gely in excess of om- exports ; a 
 debt becomes due to foreign countries which can only be discharged by an export 
 of the precious metals ; the exchanges then become unfavourable ; the precious 
 metals leave the country ; and the quantity of money is thus inevitably dimi- 
 nished. Now comes the retrograde movement ; in consequence of the diminished 
 quantity of money, prices fall, and this effect is further stimulated by the exces- 
 sive accumulation of commodities being thrown abruptly upon the mai-ket. This 
 fall of prices tends to produce an effect, the opposite to that which had arisen 
 from the rise of prices ; it checks imports, it increases exports, and thus the 
 
CORRESPONDENCE ON THE CURRENCY. 21 
 
 balance of trade is again turned in our favour. At the same time the temporary- 
 value of money, as indicated by the rate of interest, rises. 
 
 These two causes, if not interrupted by any extraneous interference, must in a 
 very short time rectify the exchanges, cause the precious metals to return to the 
 country, and thus secure the re-establishment of a proper equilibrium in the 
 quantity of money. 
 
 This is the true explanation of the fall of prices, of the temporary depreciation, 
 and the alternations of inflation and depression, which cause to you so much 
 alarm ; they arise in the natural course of events : they occur to an equal or 
 even gi-eater extent in other coimtries in which enterprise is active, but which 
 are free from the restrictions, of a Bank Act ; they have no tendency to bring 
 the country to the " verge of utter bankruptcy," because they carry in themselves 
 the certain cause of their own correction. Prosperity will generate excess, 
 over-trading and over production will cause a fall of prices, accompanied by 
 temporary depression and despondency ; this fall of prices will, in its turn, check 
 production, increase consumption, augment the exports, cause the precious 
 metals to return to the country, the quantity of money will thus be increased, 
 prices will again rise, and the counti'y will in the end find itself very far removed 
 from the verge of utter bankruptcy. Such is the " constant rotation of the un- 
 wearied wheel that Nature rides upon;" it is for man to take care that he does 
 not disturb the movements of the machinery by artificial and ignorant interference. 
 It is the varying quantity of money circulating from time to time in the country, 
 which regulates the due and certain succession of these movements; and if paper 
 notes be substituted for true money, the substitution must be placed under such 
 regulations as shall render the fluctuations in the amount of the mixed money 
 strictly coincident with what would be the fluctuations in the amount of the true 
 money. The neglect of this essential rule, a temporary issue of paper money 
 beyond what would have been the amount of metallic money, has subjected the 
 United States to a general suspension of specie payments more than once ; and 
 in the year 1825 it very nearly involved this country in a similar calamity. 
 
 To render this occurrence impossible is the purpose of the Act of 1844, and 
 this purpose it has efiectually accomplished. But when was the depreciation the 
 most severe, and the process of recovery the most difficult ? Was it before the 
 Act, or under the restrictions of the Act ? Let the price of the Government 
 securities decide this question : — 
 
 Lowest price of Consols in 1825 ... ... ,.. 75 
 
 „ in 1857 86i 
 
 Highest price in succeeding year 
 
 „ » „ in 1826 841 
 
 „ „ „ in 1858 9.8| 
 
 Through both the periods 1847 and 1857 the management of the circulation, 
 under the provisions of the Act of 1844, conformed strictly to the true and cer-. 
 tain tests of sound monetary legislation. The fluctuations in the amount of 
 metallic money were subjected to no legislative interference, and the circulation 
 of it was not inteiTupted by any artificial device. At the same time, t|ie paper 
 money was so regulated that the mixed money of gold and paper never: deviated 
 In amount from what would have been the amount of money had it consisted 
 exclusively of gold. 
 
 The result was, that on both occasions we were effectually protected, not only 
 from a suspension of specie payments, but from all reasonable apprehension of 
 such a catastrophe.* 
 
22 CORRESPONDENCE ON THE fiURRENCT. 
 
 To one remarkable phenomenon connected with these successive crises I must 
 direct your special attention. 
 
 The price of the public securities of the country is usually considered to afford 
 a good criterion of the soundness of our general condition, and of the public 
 judgment as to the state of our national credit and resources. 
 
 The lowest price, then, to which Consols fell was — 
 
 In 1825 75 
 
 „ 1847 78| 
 
 „ 1857 .., .86i 
 
 You will not fail to observe how much greater was the depreciation of our public 
 securities in 1825, when no Bank Act was in existence, than in 1847 and 1857, 
 when the Bank Act was in force. You will also observe thai the depreciation i^ 
 confined within narrower limits on each successive occasion, and that in 1857 the 
 lowest price of our public securities was 86-|, although at that time the countiy, 
 according to your view, was on the " verge of utter bankruptcy." 
 
 Another test of the extent and depth of a disaster may be found in the rapidity 
 and certainty with which the recovery is effected. 
 
 The highest price to which Consols rose in the years which immediately suc- 
 ceeded these periods of depression was — 
 
 In 1826 ... 84i 
 
 „ 1848 90 
 
 „ 1858 98| 
 
 Again I beg you to observe the rapidity with which the public credit recovered 
 itself, and tlie high point which it has attained under the provisions of the Bank 
 Act, compared with that which it reached before the Act was in force. 
 
 What, then, is the lesson to be derived from these facts ? The superficial and 
 transient character of these temporary derangements of trade and credit. They 
 are the periodical overflow of a healthy and vigorous constitution ; not the chrome 
 disease which indicates something essentially unsound, and leads by slow but 
 sure steps to destruction. 
 
 The uninstructed savage when he first meets the thunderstorm, attributes it to 
 the energy of a malignant spirit, and believes it to indicate the coming destruc- 
 tion of the world. He is unable to appreciate the causes from which it proceeds, 
 or the beneficial results which it is destined to effect. Educated and reasoning 
 man forms a more rational estimate of the solenln scene around him, and gives 
 way to no such unfounded alarm. The occurrences which we have been dis- 
 cussing ai-e, I fear, your thunderstorm, and the Bank Act, with its authors and 
 supporters, are the malignant spirit, from whom the imaginary destruction of all 
 things is to proceed. 
 
 III. But it was deemed expedient to relax temporarily one of the important 
 provisions of the Act in 1847 and 1857, and, therefore, it is said the Act has 
 failed. Failed in what respect ? All the principles upon which the Act was 
 founded were strictly verified by the coui-se of monetary events through those two 
 periods, and the object for which alone the Act was passed was fally and satis- 
 factorily secured. Can that be deemed failure in any rational meaning of the 
 word ? The temporary relaxation of the Act was necessitated, not in consequence 
 of any failure in the principles on which it rests, or any fallacy detected in the 
 reasoning by which the provisions of the Act are justified, but solely by the over- 
 whelming force of unreasoning panic. 
 
 You observe that " sound principles do not fail," and the temporary relaxation 
 of the Act is considered by you as a failure, which affords conclusive evidence of : 
 
COEHESPONDENCE ON THE CURRENCY. 23 
 
 some unsoundness of principle. The reply to this is direct and distinct. There 
 has been no failure of principle whatever; on the contrary, the effect of the panic 
 has given strong confirmation to the principle on which the Bill is founded. It 
 is held that a Qontinued decrease in the amount will necessarily produce an in- 
 crease in the value of money sufficient to correct the exchanges and to cause the 
 precious metals to return to the country. 
 
 This principle, however, acts gradually; and time, therefore, is requisite for 
 developing its influence. Now, panic, paralysing the circulation, and therefore 
 the efficiency of money, is in its effect tantamount to a reduction of the amount 
 of money. It ought, therefore, according to the principle upon which the Act is 
 founded, to cause an increase in the value of money, tending to bring back the 
 precious metals to this country. This is precisely the effect which the panic did 
 produce. The exchanges were immediately rectified, and the gold began to re- 
 turn to this country. If the provisions of the Act had not been in force, render- 
 ing it impossible to supply the place of the exported gold by increased issues of 
 paper money, and thus to keep the amount of money in the country undiminished, 
 this result would not have been accomplished. But the action of the panic, and 
 therefore the virtual decrease of the amount of money, was instantaneous; whilst 
 the corrective influence, which it necessarily brought into play, required some 
 short time in which to act. The precious metals, though they were under the 
 process of daily remittance, could not be brought back into the country with the 
 same instantaneous rapidity with which the panic had pai-alysed the efficiency of 
 the existing money. To meet this temporary difficulty, which was purely 
 technical and not depending upon any principle, an important provision of the 
 Act was for a short time suspended. A firm adherence to the provisions of the 
 Act had previously brought into action all the corrective influences which were 
 anticipated, or wiich were requisite; and they were then suspended during the 
 ^ort period in which those influences, brought by the provisions of the Act into 
 strong and powerful operation, might produce their practical results. 
 
 This explanation I trust will have been sufficient to make it clear that during 
 periods of commercial pressure and heavy drain upon the money of the country, 
 the provisions of the Act may be safely relied upon for putting a sufficient re- 
 straint upon the progress of that drain, and ultimately recovering for the country 
 its due share of preciious metals. 
 
 And fm-ther, that the temporary suspension of the Act, when the circumstances 
 under which it has occurred axe properly understood, affords no ground for im- 
 puting to the Act failure of its purpose, or unsoundness in its principle; but that 
 it is purely an abnormal occun-ence, caused by panic, which is subject to no 
 fixed laws, and is not susceptible of regulation by any fixed principle. 
 
 Now panic is the child of ignorance. A panic-stricken public give way to 
 every unreasonable alarm, and seek refiige in the most suicidal precautions. 
 They are unable to comprehend the phenomena in the midst of which they find 
 themselves involved; and if persons as weak and uninformed as themselves 
 assure them that the country is on the verge of utter banfauptey, they give ready 
 credence to the tale. So strangely will imagination assist belief in the,, wildest 
 absurdities. I have lived through several of these panics. I speak of what I 
 know and have seen; quce ipse miserrima vidi, et qubrum pars rmgna fui. 
 Thus, although the quantity of money may be sufficient, the circulation of that 
 money, when panic supervenes, is utterly paralysed, and, for a passing moment, 
 becomes as inefficient for its proper purposes as would a panic-stricken army, 
 which, though sufficient in its numbers and under the ablest command, shotfld 
 
24 COURESPONDENCE ON THE CURRENCY. 
 
 ""emain motionless, instead of advancing to the charge or performing the requisite 
 manoeuvres. 
 
 IV. I now come to a practical question, undoubtedly of the most vital import- 
 ance. Be the principle upon which the Act of 1844 is founded sound or unsound, 
 3'ou maintain that, at all events, under the influence of the provisions of the Act, 
 the country is rapidly degenerating;' and you imagine that the phenomena now 
 before you and around you constitute, in fact, the " first page of the History of 
 the Decline and Fall of the British Empire." You admit the increasing wealth 
 of the country, but in the vicious distribution of that wealth you find the fatal 
 soui-ce of our supposed impending ruin. That wealth, and the annual increase 
 of it, is, in your estimation, not the succession of fertilising showers, spreading 
 vegetation over the whole surface of the soil, but rather the overwhelming and 
 desolating outburst of the waterspout. There is truth, no doubt, in the words of 
 the poet : — 
 
 " HI fares the land, to coming ills a prey, 
 Where wealth accumulates and men decay." 
 
 It is, therefore, most important that we should ascertain what trath there is in 
 the assertion that our increasing wealth is accompanied by a general and alarm- 
 ing degeneracy in the condition and comforts of all classes of the community, 
 except the naiTOwing circle of a few in whom alone, according to your view, the 
 increasing wealth of the country is concentrated. 
 
 This disheartening view of our present social condition is set forth by you in 
 four short, but very distinct, propositions. 
 
 1. The wealth of the country is increasing. 
 
 2. The number of the wealthy and independent is diminishing. 
 8. The number of the poor and dependent is increasing. 
 
 4. The poverty of the poorest is becoming more intense. 
 
 The first remark which I make upon this statement is, that if the first proposi- 
 tion be true, the three following propositions must, almost of necessity, be false; 
 and if the three last be true, the first is impossible. 
 
 The concentration in fewer hands of a given fixed amount of wealth may pos- 
 sibly involve a diminution of the general weUbeing of the community; but this 
 cannot be the result with an increasing amount of wealth. Wealth does not 
 now, as in former times, exist in an unproductive state; it is not buried in the 
 earth, in the useless form of precious stones, or precious metals; all increase of 
 wealth is now necessai-ily an increase of that general fund by which production 
 is promoted, and the demand for labour in increased. If the wealth of a country 
 is really increasing, the fund for the maintenance of labour is increasing, and 
 whether that fund be in the hands of a few rich persons, or it be more widely 
 diffused amongst many, so long as the amount of that fimd is mcreasing, the 
 (' omand for labour and the remuneration of labour cannot fall ofi". When, there- 
 for e, you admit that the wealth of the country is increasing, you in fact concede 
 the whole case; the truth of your first proposition necessarily involves the inac- 
 curacy of those which follow. Let us test this by reference to a few facts. Is 
 the niiinber of the independent and wealthy diminishing? or the number of the 
 poor and dependent increasing? 
 
 The Middle Classes, — Are they diminishing in number or in wealth? Look 
 at the innumerable houses and villas which are yeai'ly springing up around every 
 tcgivn in the kingdom, all of an improved order, and exhibiting every sign of 
 increasing comfort and affluence upon a greater or smaller scale. Look at such 
 a case as the town of Birkenhead, the creation of the last twenty years, and 
 
COEEESPONDENCE ON THE CUERENCY. 25 
 
 which, on account of the wealth diffused amongst its multiplied inhabitants, has 
 ah-eady established its claim to be admitted into our representative system. Look 
 at our railways, the creation of the last thirty years. Who are the proprietors 
 of the four hundred millions invested in that form? Certainly not a limited 
 number of overgrown rich, but an unlimited number of industrious and enter- 
 prising men who ai-e growing in affluence. But enough on this head. Let those 
 that have eyes to see, see. 
 
 Agriculturists, including Proprietors and Tenant Farmers. — Are they dimi- 
 nishing in number or in prosperity? I will refer to a high authority. A meeting 
 was lately held at Derby, at which 500 agriculturists of all classes were present. 
 The Duke of Devonshire, the president, made the following statement, to which 
 not one of the 500 present expressed any dissent: — " Agriculture has certainly 
 not stood still in the intei"val (the last thirty years). That interval has been a 
 period of unexampled progress in every department of national industry, and 
 agriculture has not been behind its sister employments of commerce and manu- 
 factures. I believe there never was a period in which greater improvements 
 have been made in agriculture, both by scientific and practical men, and at present 
 we do not see the slightest cessation in that advance, for it is going on with as 
 much zeal and energy as ever." 
 
 The Classes which live hy daily or weekly wages. — It is a notorious fact that 
 there has been a general tendency to a rise of wages, accompanied by a ten- 
 dency to a fall in the price of provisions and clothing, upon which those wages 
 are principally expended. Take one fact. I am unfortunately engaged in 
 builcUng a house. Not long since I received the following announcement: — 
 "Seventy masons have suddenly, and without notice, sti-uck work, although 
 they were receiving none less than 4s. 6d., and most of them 5s. a-day as wages." 
 Does not this aflford a striking illustration of the fact that wealth, however con- 
 centrated, must permeate through the mass of the labouring classes in the form 
 of good wages? And does not this contemptuous rejection, by a large body of 
 labourers, of 5s. per day wages, go far to show that the labouring class does not 
 form part of that body of poor and dependent persons which you afSrm to be 
 seriously increasing in number? 
 
 Lastly. Let us look to the condition of what is ordinarily called " the poor 
 man," that is, the man who receives the lowest rate of wages. Is the condition 
 of this class degenerating, and are they descending year by year into a lower 
 state of dependence? With a view to the benefit of this class, a measure was 
 passed at the end of the last session of Parliament to facilitate the deposit of 
 savings of the smallest amount in every part of the country. 
 
 What has already been the result? In the Morning Post of the 30th Sep- 
 tember is this statement: — " Although the Act only came into operation on the 
 16th Sept., more than three hundred of these banks have been established, and 
 are already doing a large business." 
 
 It would be easy to accumulate proofs under each of these heads. But it is 
 not necessary; enough has been adduced. 
 
 The same conclusion may be established by a different process of reasoning. 
 
 The increase has been enormous during the last twenty years in^U those 
 articles which are consumed or used by the mass of the people. Food of all 
 kinds, either through improved cultivation at home or through imports from 
 other countries, tea, sugar, coffee, cotton goods, arljples of clothing generally, in 
 shortj a very large proportion of our immense imports. The consumption of 
 these articles cannot be confined to a limited circle of very rich persons; they 
 
26 COEEESPONPENCE ON THE CUREENCY. 
 
 cannot themselves consume food, tea, sugar, clothing, &c., in quantities mcreas- 
 ing in the same ratio with their increasing wealth. What hecomes, then, of this 
 immense increase of commodities, resulting from production at home, and in- 
 creased imports from foreign countries? It is clear that it must be distrihuted 
 throughout the people at lai-ge, increasing their command of all that concerns 
 their general comfort and physical well being. 
 
 Be assured, that in the present state of society, and under the influence of the 
 natural laws by which the distribution and application of capital is determined, 
 it is impossible that " wealth can accumulate " and at the same time " men 
 'decay." Wealth is but another name for capital; capital is the fund by which 
 the labourer is maintaiiied, and the amount of which must determine the demand 
 for his labour. Increase of wealth must cause an increase in the demand for 
 labour, and a tendency to an increased remuneration^ for labour. Distress, par- 
 tial and comparative distress, in some classes, is, under the laws of Providence, 
 an inseparable condition of national progress. In the eager race of intense 
 enterprise and competition, some must be left behind; to prevent this is 
 not within the scope of the wisest legislation; to alleviate this distress, which is 
 necessarily incident to a course of general and progressive improvement, becomes 
 the special aiid individual duty of all who share the blessings of that improve- 
 ment. But be of good cheer. If in the survey of our social condition your 
 associations lead you to dwell exclusively on the phenomena of distress, real or 
 supposed, beware that you do not mistake the handbreadth of your limited 
 observation for a comprehensive survey. With an immense increase in all the 
 products of our soil, and an equally immense increase on all the supplies to be 
 obtained by imports from other countries, how is it possible that the people of 
 this country can be suffering under a diminished supply of the necessaiies or 
 minor luxuries of their existence? Abundance cannot thus become the mother 
 of want, nor increasing wealth become the cause of general dependence and 
 poverty. 
 
 Old Benjamin Franklin, so remarkable for his shrewd practical sense, said 
 of himself, that he was born with a disposition to look on the bright side of 
 things, which he always considered to be as good as an income of ten thousand 
 a-year. 
 
 I regret that you have not been endowed with a larger share of this best of all 
 wealth; more especially as it would have been beyond the reach of the blasting 
 influences of the Bank Act of 1844. — I have the honour to-be, your obedient 
 servant, - Overstone. 
 
 H. Brookes, Esq., Secretary to the (Anti) Bank Act and Currency Committee* j 
 
 6. 
 
 25, Birchin-lane, E.G., 17th October, 1861. 
 
 Mt Loed, — I have to acknowledge the receipt of your lordship's letter of the 
 7th inst., in which you " propose to discuss the principles by which we ought to 
 be guided, in all measures touching the nature, the quantity, and the circulation 
 of money." 
 
 Before entering on these topics, permit me to advert to another subject. In 
 commenting upon yom- lordship's quotation from Lord Macaulay, I remarked 
 upon the growing tendency to inequality in the distribution of wealth, and its 
 possible results at a remote peijiod. It was a thought thrown off for reflection 
 rather than criticism. Your lordship has been pleased to ridicule and make 
 
WttBEBl-OSDENCB ON THE CUEEENCY. 27 
 
 merry -with it. Be it Bft — I do not complain. I aee my indiscretion in intro- 
 ducing so large and debateable a topic iiito a diaoiisBion on the currency, tc 
 which it has only a remote relation; -and the demands upon my time being 
 a,lready so onerous, your lordship will permit me to defer its fturther consideration 
 until this discussion shall have been terminated. 
 
 I wiU, then, resume it, and make good my positions. 
 
 I. I see nothing to question in.tlje first paragraph of this proposition, and 
 little in the second, except the looseness with which you speajt of " a paper cur- 
 rency being permitted to mix itself up with thp. coinage of the precious metals," 
 &c. I admit the dangerous tendency of a, paper currency to excessive issue, 
 and that it must be regulated by legislation; but I object to the witness you 
 summon from 1825. I admit also " th^t metallic money will regulate itself by 
 virtue of its intrinsic value," provided it be free. A metallic currency I regard 
 as the perfection of barter, but it is barter. It is the exchanging of all sorts of 
 commodities, of varying valjies, according to the demand for them, or the supply 
 of them, for some one commodity which is in itself the least vai-ying in value. 
 The precious metals being found to be commodities of that character, would na- 
 turally become of frequent use for that purpose; and the facility with which gross 
 quantities could be subdivided into smaller quantities would tend to bring them 
 into general use. General use would natm-ally suggest their legal recognition, 
 and would requu-e that the quality and weight of those subdivisions should be 
 ascertained and authenticated by the State, in order to giv,e them general cur- 
 rency. But the transfers or exchanges of property effected by them would still, 
 be barter transactions — the exchange of one commodity of value for another 
 commodity q£ equal and authenticated value. Such a currency,. I apprehend, 
 could be adequate only in a community where property was stagnant, and trade 
 in a very incipient state, because the quantity of it would be limited by the 
 quantity of produce, or other commodities, which they could affprd to convert 
 into, say, gold; and the limited quantity of gold they could thus obtain 
 would always keep the quantity of their cuiTency below the necessities of the 
 community. 
 
 This constant want of more money would naturally lead to the suggestion, of 
 expedients to accomplish transfers of property without its intervention. A. B. 
 would say to C. D., "Let me have this ox or this horse, or th^t bale. of wool, 
 for I can find a market for them, and make a profit by them. I have not the 
 money or gold now, but I will pay thee within three months," If A. B. were 
 known to be a man of his word, 0. t). would let him have them, and wait for 
 the money, that is, would give him credit. But to save all doubt or question as 
 to the amount, and the time when to be paid, the C. P.'s would soon find the 
 expediency of saying to the A, B.'s., "put your promise in writing," and thus 
 would arise the promissory note; and then, the C. D.'s. would speedily discover 
 that they could make use of those promises to, pay, in the purchase of other com- 
 modities, by handing them to other sellers, and. guaranteeing tlw promise and the 
 payment, by indorsing their own names thereon. Merchants and money dealers, 
 bankers, and States, would further improve these convenien,t representatives of 
 property by making, theip, payable to the bearer on demand, wl(ich would, of 
 course, soon bring them into universal use, so thatthjcy 'Wfouldcpass current fvova. 
 hand to, hand as currency. And by means of t^ieae instruments an immense 
 number of transactions, sales, p.i,Trphases,i and transfers, would take, place, which 
 never could have taken place without them, and in that way they became the 
 stimulators and creators of trade and, commerce, and wealth and prosperity. 
 
28 CORRESPONDENCE ON THE CURRENCY. 
 
 In some such way, I presume, we obtained our metallic currency; and by 
 some such steps we permitted a " paper currency to mix itself up with it. 
 
 These bank notes were really the representatives of produce and commodities, 
 although they were nominally and ultimately payable in the one legalised com- 
 modity, gold, because it was in that measure of value that they were originally 
 created. But, in fact, they would very rarely be actually paid in gold, but 
 would be ultimately settled in account, against other notes, produce, or commodi- 
 ties. That fact, however, would not impede their circulation. The currency of 
 the realm would still be the measure of their value, the standard to which they 
 would have relation, and if the great bulk of them were never actually paid in 
 gold, it is easily conceivable that the whole of them might have been made 
 cm-rent without being paid or payable in gold. Nor is it difficult to suppose 
 that if, during the time they were in fiill and free cu-culation, and the trade and 
 commerce of the country were being transacted through their instrumentality, 
 the whole of the metallic currency had been exported, and had left the countiy, 
 they would still have continued to perform all the legitimate purposes of cmTency , 
 notwithstanding. That, in fact, was the case of the bank note from 1797' 
 to 1819. 
 
 In the period we are proposing to discuss, we had a great number of bank 
 not«s in circulation, some issued by country bankers, entirely upon their own 
 credit, and a much greater number issued by the Bank of England upon its own 
 credit; all of which were payable on demand, in gold of a certain weight and 
 fineness, in the current coin of the realm; and the notes of the Bank of England 
 were, by law, a legal tender for the payment of all taxes and the discharge of 
 all debts and obligations. • 
 
 One word as to your definition of money. " The legitimate purpose of 
 money," you say, " is to act as a standard of value and a medium of exchange." 
 I should define money -as " a medium of exchange " only. It must of course be 
 a measure of value, but the standard may be something else. " Metallic money " 
 is not the only money that folly accomplishes that purpose; bank notes will, and 
 do accomplish the purpose just as well. " Paper money," you say, " is a mere 
 conventional medium of exchange." Why, so is metallic money, only in a 
 larger sense. Nor is " paper money a mere substitute for metallic money " only. 
 It may. be an original and independent medium, representing property, ' or 
 representing a standard of value, with or without being convertible into it. And 
 that standard need not necessarily be gold; it may be silver, or it may be some- 
 thing else, if something else can be found. 
 
 I now proceed to examine what your lordship propounds as the " First test 
 of a sound management of the cu'culation," and that is, in your own words, 
 " that it leaves the metallic money undisturbed, by any legislative interference, 
 as to nature or quantity and the cu-culation of it through all classes, unimpeded 
 by any artificial device;" or, as you had previously explained, "it must be left 
 to circulate /reeZy under the influence of those natural laws which regulate the 
 distribution of the precious metals thi'oughout the world, without artificial 
 legislative interference." 
 
 I admit, for the sake of argument, the validity of that test. By that test I 
 have tried, and by that test I find it is impossible not to condemn, the authors 
 and promoters of the Bank Act of 1844; they are obnoxious to condemnation 
 as well for what they did as for what they did not do. They knew that our 
 metallic money was not free, that "it was not undisturbed by legislative inter- 
 ference," and that " it was not unimpeded by artificial devices." They found 
 
eOEEESPONDENCE ON THE CURRENCY. 29 
 
 the influx and eflux of gold under the bondage of the law, and they left it so, 
 nay, confirmed it bondage; and, so far as they could accomplish it, have made it 
 perpetual. 
 
 You were not Currency Eeformers of the common and vulgar order, but were- 
 men of science, and philosophers too; and you proposed to efiect your reforms 
 upon " scientific principles." Where was the philosophy and science you brought 
 to bear upon this fundamental question, the question which you are now content 
 to take as a first test? You knew that any excess or reduadancy in the 
 currency had the effect of raising prices; and that any permanent rise in prices 
 had the effect of turning the exchanges against us, and of leading to an efflux of 
 gold; and you knew that, if you looked back to the antecedent panics, from which 
 the country had suffered so much (your famous panics of 1825 and 1839, of 
 which you love to make so much, among the rest), you would find that the pre- 
 cursors of all of them were cheap money, and high prices, and an efflux of gold. 
 In the teeth of all this knowledge and experience, what did you do? Anything 
 to prevent, to regulate, or to moderate these evils, and causes of evil? No! not 
 a tittle! but, on the contrary, all that you did was du-ectly calculated to ensure 
 their more frequent and certain recurrence, and with greater intensity. You 
 knew it was the excess at one period which caused the rise in prices, and 
 necessitated the subsequent contraction and fall. You had therefore only to 
 regulate the excess, and you would prevent the rise, and obviate the necessity for 
 the fall, and so obtain the equability required. That was what you might have 
 done; and I will now show what you did do. 
 
 By the provisions of your Act you compel the Bank of England to take in all 
 the gold that may be offered to it, from any part of the world, at thQ fixed price 
 of £3. 17s. 9d., whether it be worth that price in the other markets of the 
 world or not. 
 
 And you compel it to issue bank notes for all that gold, whatever the quantity 
 may be, and however much it may be in excess, of the requirements of the trade 
 and commerce of the country; and without making any provision for the regula- 
 tion of that excess, and without making any provision for moderating the 
 influence which you knew it must have upon prices, and the tendency it must 
 inevitably have to turn the exchanges against us and lead to a crisis. You 
 knew that whenever that time came the Bank of England would be compelled to 
 supply for exportation any amount of that gold which any other country in the 
 world might want at the fixed price of £3. 17s. lO^d. (leaving the country to 
 pay the expense of the coinage), however much more than that price it might be 
 worth in the other markets of the world. 
 
 You knew that whenever the fixed price here was lower than the market price 
 elsewhere, the gold must and would go fi-om us, and that by the same law other 
 gold could not be then coming to us to supply its place; and that as this gold 
 slippled away our circulation must contract, and those prices which our people 
 were trading, living, and reljdng upon, must come toppling down, and bring down ■ 
 all sorts of disaster in their train. You knew all this, and also that these 
 "legislative devices" were in flagi-ant violation of those natural laws "for the 
 distribution of the precious metals," of which your school have said so much. 
 Yet you did riot attempt to alter, amend, or modify them. Why did you not ? 
 Are they not " artificial legislative devices, limiting the quantity, disturbing the 
 distribution, and impeding the circulation of the precious metals?" And above 
 all, are they not in utter violation of this your first test ! 
 
 It is in vain to tell us that the exchanges regulate these things. It is for us 
 
30 OOERESPONDENCE ON THE CUHEENCT. 
 
 to regulate our own currency, according to the necessities of our own commerce, 
 in harmony with the exchanges, if you please, but not in blind and ignorant 
 subjection to them. Man was not made for the exchanges, nor was trade and 
 commerce either; on the contrary, the exchanges are their mere offspring — in- 
 struments ordained for our use, to be our ministers and sei-vants, not our masters, 
 as you would make and hitherto have made them. 
 
 But the allegation is not true.- The exchange would settle these things by 
 the natural law, if the imnatural laws, to which I have alluded, did not prevent 
 their natural operation. It is not true in another sense. The natural laws wilt 
 regulate the fluctuations of the natural commodity — gold, which would not affect 
 our circulation; but your "legislative devices," bring the laws of exchange to 
 bear, with all their grinding effect, upon the artificial commodity — coined gold; 
 and by that device it is that the circulation is diminished, prices reduced^ and 
 pressure and panic produced. 
 
 I now come to your lordship's second test, the grand fallacy — " that paper 
 money must be kept equal in amount to the metallic money "it displaces, and be 
 convertible into it;" or, as your lordship states it-, in the preceding paragraph, 
 " The legitimate value of the money of the country, which it is essential to 
 uphold, can, under a system of paper issues, be maintained by one means only. 
 The paper money must, at all times, be kept the same in amount as would have 
 been the metallic money which it displaces; and if this be done we may be 
 assured that it will at all times be convertible into metallic money." Ay, " if 
 this be done, we may well be assured " of anything. But what is the thing to 
 be done? It is impossible to understand this jargon, — ^pardon- the word, — ^it is 
 so exactly what that word imports. It is quite unintelligible. I can make 
 nothing of its literal interpretation, nor even gather any rational sense or meaning 
 from it. If this be a specimen of the precision used in " scientific discussions 
 on currency," commend me to the logic of common sense. I would answer it if 
 I could comprehend it, and I would ask your lordship to explain, if it were not 
 evident from the subsequent passages that you do not understand it a bit better. 
 
 Having thus propounded, two tests, one of which, as I have already shown, is 
 utterly condemnatory of the Act of 1844 and its authors, and the other absolutely 
 incomprehensible, you call upon us " to apply them to the Bank Act," which 
 you say " was framed for the purpose of satisfying these tests." A.nd you lead' 
 the way by a statement that "Fourteen millions of notes are issued, in the^toc«'- 
 of that amount of gold," and " this being done," yon say the control of the 
 currency is left to the "unrestrained action of the community; each member being 
 free to bring in the precious metals, if the exchanges will permit." Now, in 
 the first place, as your lordship knows, those fom-teen millions of notes are not 
 issued in the place of so much gold withdrawn from the circulation; that it is a 
 mere idle pretence to say so; and that there is not even a scientific necessity for 
 assuming any such thing; and that the^oiea! issues of notes were grounded upon 
 other and different considerations. 
 
 You lordship has evidently fallen into a little series of blunders. In endea- 
 vouring to state the proposition so astutely that it should not be controverted, 
 because it could not be understood, you have mystified it to such a degree that 
 you are unable to understand it yourself, or to illustrate its application without 
 committing other blunders. Permit me to do the friendly office of extricating 
 your lordship from this scientific muddle. The proposition which, doubtless, 
 yom- lordship wished to argue, has been set forth by other members of the school, 
 in the following termSj viz.: — " That a mixed circulation of paper and gold 
 
CORRESPONDENCE ON THE CURRENCY. 31 
 
 ought to fluctuate precisely in the same manner as it would have fluctuated if it 
 had been a purely metallic circulation." 
 
 That is, I believe, the chief doctrine, the fundamental principle- of your 
 school. It is a doctrine which, as I need not tell your lordship, many regard as 
 not new, even if true; which others regard as impracticable, if not impossible, 
 and if possible, only pernicious, and many others as a mere scientific absurdity, 
 I propose to show that it is all this, and more — a mere dogma, resting upon a 
 bare hypothesis— composed of a series of assumptions, apparently supported by 
 facts, which have no real bearing upon it, and which do not support it at all. 
 
 It rests upon the hypothesis, that the natural laws under which a purely 
 metallic curaeucy would fluctuate are knowti or are capable of demonstration, 
 though no such thing as a, purely metallic cm-rency has ever existed alone in any 
 commercial country, and your school has never demonstfated them " scientifically." 
 AU you have attempted to demonstrate has been the fluctuations of a gold 
 currency such as ours, which, as I have shown, and, as you know, is not a purely 
 metallic, but a law b'ound and restricted currency. Even if you had proved how 
 a purely metallic currency would fluctuate, if free, under the natural laws, it 
 requires to be proved, and with equal precision, how those fluctuations would be 
 modified hj fixing, the price of gold in violation of the natural laws. It would 
 be requisite to prove, also, why it is, for what reason, a mixed currency must 
 fluctuate in precisely the same manner as gold? I know that you assume that a 
 paper currency must correspond in quantity with an assumed quantity of the 
 metallic, because, as you assvmie, without that it cannot be equivalent in value; 
 and you assume that, if not equivalent in value it cannot be converted into the 
 metallic, which convertibility you assume to be essentially necessai-y; but all 
 those are assumptions which require to be proved, which you have not proved, 
 and which you cannot prove; for all of them (except one) are not true, though 
 the converse is so. Such is the scientific principle ; let us now look to its 
 application. 
 
 For this purpose I give to your lordship the benefit of all your assumptions, 
 and in my turn I will assume that all of them have been proved, and that you 
 have established your propositition that " a paper currency ought to fluctuate, 
 precisely as it would have fluctuajbed if it had been, gold." And now I want to 
 know how or by what means or provisions this Bank Act affects to carry out and 
 enforce your doctrine? I want to know how it ascertains, or proposes to ascer- 
 tain, the proportions of paper to gold which are necessary to insure that coinci- 
 dence of fluctuation? and how it provides for the due maintenance of that 
 proportion during the ever-varying state of the circulation? And then, my lord, 
 you will perhaps tell us how it has happened that, notwithstanding the paramount 
 importance of this so-called doctrine and its alleged embodiment in this Act, and 
 the boldness with which its triumphant success has been trumpeted forth, it has, 
 in fact, not succeeded at all? How it has Jiappened that the bank note issues 
 have not fluctuated in accordance with the fluctuations of gold, but have re- 
 mained almost stationary, whilst gold has been fluctuating to the extent of many 
 millions? Will your lordship tell us these things? It is foUy to ask it, because 
 we know you cannot. 
 
 The fact is, that this much-vaunted principle is no principle at all, but a mere 
 " bottle of smoke," under the cover of which a law was obtained for limiting the 
 issues of the Bank in order to make money scarce and dear. The Bank Act 
 contains no provisions whatever for carrying any such doctrine or principle into , 
 efiect. You found that previous to 1844 bank notes were issued against securities 
 
32 COnKESPONDENCE ON TlBE CnEEENCY. 
 
 to the amount of fourteen milliona and upwards which the Bank held no gold to 
 meet. You found that, like any other bank of issue, it kept a certain amount of 
 gold in reserve, proportioned to the amount of notes in circulation, and that at 
 some times (1839 for instance) it did not reserve enough; but you found that at 
 least fourteen millions of notes were always thus in circulation and were never 
 brought in for gold. All that you did therefore was to limit the Bank issues 
 against securities to that fourteen millions, and to bind them to keep five 
 sovereigns locked up in the issue department against eveiy five pound note issued 
 beyond that amount, whether those latter notes were ever likely to come in for 
 payment or not. That is all that the Bank Act does in this respect. It is 
 simply an Act to limit the issues of the Bank upon securities to that arbitrary 
 amount, and upon the specific grounds I have stated. It deprives the Bank of 
 the discretionary power, exercised by all other banks of issue, by fixing the 
 amount it shall issue against securities which must remain the same at all times 
 and under all circumstances; and whilst it thus robs the banking department of 
 its natural and legitimate resources, in order to protect the "bank note it deprives 
 the banking department, whenever the exchanges turn against us and a pressure 
 for money ensues, of all power to relieve that pressure, however expedient or 
 safe, or however necessary it might be to do so. Money must, therefore, rapidly 
 become very scarce, and rise in value, and panic approach with giant strides at 
 eveiy turn of the screw, until the worst comes to the worst, and the capitalist 
 may rush in to realise. If there be any philosophy in all this, it is very worldly 
 philosophy; if there be not much science in it there is some " cunning device;" 
 and if there be not much of principle, it is only the more unprincipled. 
 
 It is astonishing beyond measure that the country and the legislature could 
 ever have been seduced into the belief that there was any philosophy, or science, 
 or principle in it. It is in reality nothing more and nothing less than a clever 
 scheme for making money periodically scarce and dear, at the cost of the mercan- 
 tile and working communities, and for preventing the possibility of the Bank of 
 England aiding commerce, relieving pressure, or averting a crisis. The thing is 
 transparent in the Act itself, and is demonstrated by its operation. The only 
 thing that is really marvellous about it is, the masterly cleverness with which the 
 legislature and the public have hitherto been mystified, and prevailed upon not 
 
 TO SEE IT. 
 
 Such, my lord, are the tests which your lordship has submitted to me, " of a 
 sound management of the circulation." I believe they involve the whole philo- ' 
 sophy of the new school of cuiTency, of which your lordship was the first great 
 apostle and promulgator, and of which you still continue to be the one great 
 head and teacher. I have shown that the truths enunciated in your ^rst test are 
 directly opposed to the whole of your system. I have shown that your second 
 test is one mass of unproved and unprovable assumptions and illogical conclu- 
 sions; and that your pretended doctrines have not been embodied in the Act, 
 and have not been developed in its operation, because neither were possible. 
 
 The essence of your lordship's system is the government of our currency by 
 t\i& foreign exchanges, I submit that such a system can never be otherwise than 
 most unjust and destructive to our mercantile interests, until the influx and 
 efflux of gold, the basis of that currency, be regulated by the natural law of 
 demand and supply only. 
 
 I submit that the amount or quantity of the cmTency ought to be regulated by 
 the requirements of the trade and commerce of the country alone ; and that if 
 ought not to be dependent upon the value of the currencies of other counti-ies. 
 
COKRESPONDENCE ON THE CUERENCY. 33 
 
 Youi" lordship, I know, will contend that, unless the amount of our cun-ency be 
 regulated by the currencies of other countries", the excess in quantity of our cur- 
 rency will depreciate it in comparison with other currencies; that our prices will, 
 thereupon, be raised, and that the exchanges will thus be turned against us. 
 My answer to that is: — 
 
 1. That it is possible to regulate our currency hy, or according to, the value of 
 the cuiTencies of other countries, without making ours dependent upon them. 
 
 2. That if our currency be duly regulated, on the basis of the natural laws, 
 there need be no excess. 
 
 3. Therefore there need be no depreciation ; 
 
 4. And, consequently, no excessive rise of prices; 
 
 5. And the exchanges need not, therefore, be turned against us. 
 
 6. But my further answer is, that even if this could not all be accomplished, 
 the adverse exchange would be only nominal, would involve inconvenience only, 
 to a few foreign merchants, but no real evil either to them or to the community ; 
 
 7. Or, at all events, no evU at all to be compared with the terrible amount of 
 evil incurred in order to protect us against it. 
 
 Yom- system places the metallic cm-rency under the natui'al laws, bound hand 
 and foot, in the bonds of your own legislative devices. Gold cannot come freely 
 and naturally to us; but you not only permit, you compel it to depart freely and 
 unnaturally from us. Variations in the value of currencies and in the exchanges 
 may be only temporary; there may be no corresponding variations in the capital 
 of the country, or only such vai-iations as could be rectified with the least possible, 
 and almost imperceptible, disturbance of the circulation. Your restrictions on 
 gold, and your government by the exchanges, render these temporary variations 
 as disastrous to commerce as if there were an absolute loss of capital and dis- 
 tm'bance of the equilibrium to the extent of ten or a hundred times the amount. 
 
 You admit that panic, the child of ignorance and um-easoning feai-, is ungo- 
 vernable, and that it leads to hoarding, and excessive contraction of the circula- 
 tion, &c. ; and the heaviest of the many heavy charges to which your Bank Act 
 is justly obnoxious, is, that its inevitable tendency must be to precipitate 
 panic, by inducing a premature, excessive, and indiscriminate controction of the 
 circulation. 
 
 You do not appear to deny this, but to glory in it; to welcome a panic, with 
 all its fearful concomitants, as a kindred spirit would welcome a brother in some 
 great and spirit-moving enterprise; as a worthy aid, a gallant rescue in the time 
 of need, to speed and complete the triumph over a nation prostrate, and a people 
 wailing in anguish. 
 
 II. I need not follow your lordship through all the long detail of the rise, pro- 
 gress, and termination of the trading convulsions which periodically occur in this 
 and other countries. Your lordship could scarcely imagine one could be ignorant 
 of them, and therefore it was scarcely necessary to occupy so much time and 
 space upon the history. The great objection to the Bank Act is, not only that it 
 tends to cause the oi-dinary " oscillations " of trade, but that it has the inevitable 
 tendency to exaggerate their natural intensity, to the degree of extreme pressure 
 and ultimate panic. That tendency your lordship seems rather to approve 
 than to repudiate; and if so, it reailly narrows the question down to this — • 
 " Whether it is better to have the ordinary oscillations of trade, in which the 
 honest trader and manufacturer may continue to hold his own (with a little 
 deduction) during a perift of depression and pressure; or, to have a monetary,, 
 system which, operating with a ' short, sharp, and decisive ' action, knocks down 
 
34 CORRESPONDENCE ON THE CUERENCY. 
 
 and clears out all those who cannot stani the rude shock, and leaves most of 
 the remainder the mere wrecks of what they were, to begin again, as in 1847 
 and 1857." 
 
 That question may safely be left to the mercantile community themselves. 
 There may be those who may believe what your lordship so laboriously endea- 
 vours to prove, as to "the superficial and transient character of these panics; 
 but the traces of those evil days are too deeply engraven on the hearts and 
 hearths of the masses. 
 
 Your lordship asks, " how it is, if the provisions of this Act are inadequate for 
 the trade of 1861, that the trade of 1844 has expanded itself into the trade of 
 1861?" And my answer is (as I have shown very clearly in my last letter), 
 that this expansion is due, not to the Act, but to the large influx of gold, to the 
 railway facilities, to free trade, and to the enormously increased banking opera- 
 tions. The first has added to the circulation, and the last has had the same 
 effect as an immense addition to it would have had. 
 
 You ask also, " Why, if the Bank is unable to command a sufficient supply of 
 gold, the intense demand for more does not produce its legitimate effect, an in- 
 creased supply, on the only sound principle, that of demand and supply?" Aud 
 my answer is, as I have shown in this letter, that the provisions of the Bank 
 Act are in direct contravention of the natural law of demand and supply, and 
 prevent it. 
 
 Yom- lordship contends " that the depreciation was greater, and the recovery 
 more difficult, in 1825^ before the Act, than in 1847 and 1857, after the Act;" 
 and you quote the highest and lowest prices of the Government securities, at 
 those periods respectively, to decide that question. They do not decide it. The 
 periods are totally dissimilar; the former period was only ten years after an 
 exhausting war, which had been followed by a series of equally exhausting 
 monetary crises; that of 1825 being the worst of the series. The latter periods 
 were in th& midst of those great accessions to the wealth and resom-ces of the 
 country to which I have already alluded — ^the gold discoveries, railways, free 
 trade, &c. The surplus Capital of the country was enormously greater, and a 
 greater amount would seek investment in Government securities. 
 
 The quotations given are strikingly corroborative of the views I have already 
 presented of the rffeotS' of these fluctuations in the transfer of the accumulations 
 of the' indxistrious classes. The quantity of money for investment in such secu- 
 rities will naturally cause them to range higher generally; wUl prevent them 
 falling so low during panic; will cause them to rise more rapidly after; and 
 subsequently to attain a higher range of prices. 
 
 III. I have said that " sound principles do not need explanations of then* 
 failure, because they do not fail." I venture to add that Acts of Parliament 
 which do not fail, do not require suspension. Your lordship will not admit that 
 the Act of 1844 has failed. It was not a failm-e, you contend, but only a " tem- 
 porary relaxation " of " one of its important provisions;" there was no "failure 
 of principle " nor fallacy detected in the reasoning. It was only a " temporary 
 difficulty," and that was " purely technical," and the " occurrence was purely 
 abnormal." A very pretty story; Little Miss Panic, one of the daughters of Old 
 Ignorance, was a very naughty girl, who had no fixed laws, and, therefore, could 
 not be governed by any fixed principles. And she being a weak-minded and 
 silly thing, and being influenced by others as ill-inforn^ and ignorant as herself, 
 wouldn't go to bed and go to sleep, because, she said, there was a " Mr. Bank 
 Act" standing in the passage and frightening her with a list of "ruins,? and 
 
UOKKESrUKUKWCK 0« THE CDRRENCT, ~35 
 
 " bankruptcies," and " suspensions," and " temporary difficulties," and other 
 " technicals" and " abnormals," and all sorts of horrible " ghosts." Thereupon 
 they sent for the minister to come and lay the ghosts; but he being a sensible 
 man, and knowing that " Bank Act " was the knave at the bottom of it all; 
 thought the best way of getting rid of the ghosts would be to hang " Mr, Bank 
 Act " himself. And thereupon they hanged him, that is to say " suspended 
 him," until his vital principle was extinguished (just as Mr. Calcraft suspends 
 certain victims who have got into " temporary difficulties " of an " abnormal" 
 character, until their vital principle becomes extinct), and as soon as that was 
 done, the silly child went to bed quietly enough. When the minister was after- 
 wards called over the coals at the inquest on " Mr. Bank Act " it was distinctly 
 proved that " Bank Act " really did stand in the passage with his " bankruptcy," 
 and "ruin," and "technicals," and "abnormals," &c.; and that hanging him 
 was the best and shortest way of getting him out, and, therefore, the jury gave a 
 verdict of justifiable homicide, and let the minister off. 
 
 My lord, this is a jocular but a sorry account to be given of a matter of such 
 vital importance as " An Act of Parliament for regulating the monetary affairs 
 of thirty millions of people in the year 1861." 
 
 This question of the failure of the Act is scarcely susceptible of argument, it is 
 so clear, so certain, so indubitable. What is the Act? By section 2 of the 
 Bank Act, the issue of bank notes against securities is limited to /owrtore millions, 
 and all notes issued beyond that amount are to be issued against gold only. This 
 provision in that section, and the section dividing the Bank into two depart- 
 ments, are, I believe, all that the Act contains relating to your system, pr doc- 
 trine, or principles. 
 
 That system, as I have already shown, is nothing but a simple bald provision 
 that the Bank issues against'securities should not exceed the arbitraiy amount of 
 fourteen millions. Why it should ever have been elevated to the dignity of a 
 system, or what pretensions your school can have to talk of their doctrine or 
 principles, I cannot conceive; but if there be any doctrine or a,ny principle in- 
 volved in this provision, it is most assuredly that the bank note issues against 
 securities should not exceed the arbitrary amount at which they are there fixed — 
 fourteen millions. 
 
 Now, what is the alleged failure which you so strenuously deny? It is that 
 on the 25th of October, 1847, and the 12th of November, 1857, the Giovemraent 
 actually suspended, repealed for the time, the whole of that provision, which was 
 the whole provision made by that Act having any relation to your so-called 
 system. The Act said it should not be lawful to issue more than the fourteen 
 millions, and the Government Letter said it should be lawful, the Act notwith- 
 standing; and, at the latter period, the Bank did actually issue two million more 
 than the fourteen millions. Is it possible that any failure could be , more com- 
 plete and undeniable? — I have the honour to remain, your lordship's obedient 
 servant, H. Brooke^. 
 
 The Eight Honourable Lord Overstone. 
 
 7. 
 
 12th October,. 1861. 
 Sir, — My reply to your letter of the 7th inst., which only reaches me on the 
 11th, must be brief, and, so far as I am concerned, it must terminate the cor- 
 respondence between us. I have hitherto considered that I was addressing the 
 secretary of a committee organised for the purpose of discussing and exposing 
 
36 CORRESPONDENCE ON THE CURRENCY. 
 
 the imputed defects of the Bank Act of 1844, and which committee I believe to 
 consist of men of intelligence and importance. You now tell me that you alone 
 are responsible for the purport of your letters. Moreover, the tone of your last 
 letter seems to me hardly consistent with the dispassionate calmness which is 
 essential to scientific discussion. You speak of an insulting passage in my letter. 
 I trust that nothing has proceeded from my pen which can justly bear that cha- 
 racter. I should, indeed be sorry were such the case. I intended to intimate 
 that those who describe the Bank Act as a monstrous abortion, in fact, denounce 
 that which they do not understand. Surely this conveys no insult. 
 
 In closing this correspondence I will advert to a few statements in your letter, 
 - but without entering into any searching discussion of them. 
 
 1. "Fall of prices," it is asserted, "brings ruin to the bulk of the people, but 
 profit to the rich. The. loss of the one is the gain of the other." To me it 
 appears that fall of prices, that is, cheapness of commodities, must be advanta- 
 geous to the consuming class, that is, the bulk of the people. ; although it no 
 
 ' doubt is very inconvenient and disastrous to those who, by their imprudence, 
 . do much to produce the fall of prices, those who over-produce, over-trade, over- 
 speculate. 
 
 2. As regards the " millions of wealth which were passing away from the 
 holders of Government securities," be it observed that the lowest price to which 
 Consols fell in 1857 was 86-|- ; whereas in 1825, when there was no Bank Act, 
 Consols fell to 75. 
 
 3. " All this prosperity, your lordship, either in mockery or infatuation, attri- 
 butes to the Act of 1844." My statement was, "that national prosperity, 
 increase of trade, accumulation of wealth, a wide diffusion of social comfort, and 
 a general spirit of cheerful contentment, may exist under the provisions of the 
 Act of 1844 ;" a very different statement from the supposed assertion that they 
 are the consequence and effect of that Act. To present no insuperable obstacle 
 to national prosperity, and to be the direct producing cause of that prosperity, 
 
 ■ are very far from identical propositions. Other causes no doubt have produced 
 the admitted accumulation of wealth, but the provisions of the Act have not been 
 •found inconsistent with that process of accumulation. 
 
 4. " I deny emphatically that there is any natural or inevitable necessity for 
 : these periodical monetary panics. They are the result, generally, if not inva- 
 riably, of vicious systems of currency, and in our case, since 1844, have 
 indubitably been the results of the Act of that year," &c. In all inquiries, the 
 question is, not what persons who may be more or less competent to form an 
 opinion think, believe, or affirm, but what are the grounds or reasons which they 
 have for so believing or affirming. 
 
 5. " When the people were ignorant and quiescent, the Parliament supine, and 
 the press pre-occupied and indifferent, a newly converted minister launched this 
 mischievous product of the science of the millionaires, and it was imposed upon 
 the country without opposition and almost without discussion." The Act has 
 since been subjected to opposition and discussion in abundance in 1848 and 1858, 
 the Parliament not being then supine, nor the press indifferent, it stiU, however, 
 continues the law of the land. 
 
 . 6. " The Act has done nothing which its authors promised that it should do." 
 It has preserved the convertibility of the bank note; the purpose for which it 
 was passed, and that which alone its authors promised that it should do. 
 
 7. " Would not an endeavour to regulate the price of gold have been a more 
 natural, obvious, and effectual way to obtain a steady and equable currency ? " 
 
COEKESPONDENCE ON THE CUREENCY. 37' 
 
 By what standard vould it be proeosed to regulate the price of gold' ? Wenow 
 refer all Other things to the standard of gold, believing that to be more steady 
 and equable than any other standard which could be selected. Every civilised 
 nation in the world concurs in this opinion ; selecting either gold or silver as the 
 most steady and equable standai-d which can be obtained. What other standard 
 is, or can be suggested, by which to regulate the price of the precious metals and 
 of all other things ? 
 
 Into the more enlarged field of discussion, which a full reply to yonr letter 
 would open, I decline to enter, for the reason already stated, that your letters, as 
 I now leai'n, are written in your unofficial capacity, and not with the authority of 
 the committee of which you are the secretary. 
 
 To the discourteous terms so profusely scattered through your last letter,^ I 
 submit with cheerful patience. No great truth valuable to mankind, no great 
 measure permanently beneficial to a community, has ever been established, I fear, 
 without passing through the ordeal of much misconception, and much unfounded 
 abuse. ■ ' ' 
 
 The history of mankind is full of painful illustrations ; and if the friends and 
 supporters of the Act of 1844 are subjected to what they know to be unmerited 
 obloquy, they will find their consolation in the remembrance that they, in their 
 turn, are sharing the fate which has almost invai'iably befallen those who render 
 good service to mankind. " No real friend of man should be disheartened at 
 the slowness with which his suggestions are understood and received by the 
 world, nor at the obloquy through which they have to pass on their road to 
 adoption." Thus has it been in every age and ia every country. The great 
 discoveries of Newton might have been lost to the world through the influence of 
 this principle. " I was so persecuted with discussions arising from the publica- 
 tion of my theory of light, that I blamed iny own imprudence for parting with so 
 substantial a blessing as my quiet to run after a shadow." 
 
 Mr. Huskisson, on account of his measures, was denounced as having the head 
 of a fool, and the heart of a demon. Sir Robert Peel was assailed in terms little 
 less scrupulous. To Mr. Huskisson, however, we are indebted, in a great degree, 
 for the restoration of an honest standard of value in 1819 ; and to Sir Robert 
 Peel we are indebted for the subsequent measure by which alone, in my judg- 
 ment, that honest stamdard can be permanently secured to the country. The 
 memory of these great statesmen is now held in great respect by the country, 
 which has learned to understand and appreciate their services. — I have the 
 honour to be, &c., &c., Oveestone, 
 
 H. Brookes, Esq., Secretary, &c. 
 
 8. 
 
 24, Birchin-lane, E.G., October 29th, 1861. 
 
 My Loed,— In pursuance of my promise I now proceed briefly to notice . your 
 lordship's letter of the 12th instant, which your lordship informs me must, so far 
 as your lordship is concerned, terminate the correspondence between us. So far 
 as I am concerned I am content. I did not invite this correspondence. Your 
 lordship's first note not only imputed to this committee the publication of " wild 
 and extravagant statements " for the purpose of influencing public opinion, but 
 advanced the principles your lordship had always advocated, and on which the 
 Bank Act was founded, boasted of their successful operation and results, and 
 seemed to challenge a free discussion of the whole. 
 
 With the strong opinions I entertain of the injurious operation of those 
 
38 COKRESPONDENCE ON THE CCRRENCT. 
 
 principles upon the interests of the productive, as contradistinguished from the 
 non-productive classes, I could not do less than accept that challenge, although I 
 foresaw the risk I should run of doing less than justice to the former class, or of 
 being somewhat less than courteous to your lordship, as head of the latter, and 
 the author and defender of the Bank Act. If I have scarcely succeeded in steer- 
 ing a middle course, it is the fault of yom- lordship's position (which is not without 
 its compensations) and the misfortune of mine, which is compensated also by the 
 consciousness of right. 
 
 The subject of my last was rather an historical review of recent events than a 
 scientific discussion, and if it was marked by less of moderation, perhaps it was 
 provoked, if not justified, by the extreme pertinacity with which your lordship 
 persists in underrating the immense and notorious amount of suffering, poverty, 
 and deprivation, involved in the recent panics. 
 
 The cold unsympathising strain in which your lordship seeks to ignore facts of 
 public notoriety, and the scoflSng sneering terms in which you seek to undervalue 
 such small matters as the " ruin," and " poverty," and " bankruptcy," which 
 affect, more or less, so many millions of people when compared with the " wealth" 
 and " prosperity" of fundholders, bankers, and capitalists, are at least in very 
 bad taste. 
 
 The persistency with which your lordship quotes the " wealth and prosperity'' 
 of one class as proofs against the existence of poverty in the other and larger 
 class, is equally bad in policy. If your lordship's object is to establish a contrast 
 between the panics anterior and subsequent to 1844, in favom- of the latter, it 
 would be better to wait till the present generation is gone; to attempt it earlier 
 will only lead to disappointment and to suspicions unfavourable to your lordship's 
 appreciation of such events. 
 
 Your lordship says, " I have lived through several of these panics," and your 
 lordship might have added, " and am not much the worse for them either." Your 
 lordship may, no doubt, be congratulated as an instance of the triumphant success 
 with which such perilous ordeals may be encountered in a strong ship, well 
 timbered, well manned, and well provided. 
 
 The old adage says that no tribulation is too great to be borne, " when you ai'e 
 used to it — like eels to the process of skinning ;" but your lordship may pardon 
 those who reserve their commiseration, for the poor eels who lose their skins, 
 instead of bestowing it upon the lucky fellows who slip through the skinning 
 appai-atus without a scratch. I had a very dear friend who could not live 
 through your panic of 1847; his great and good heart could not survive the 
 abrupt descent from affluence to destitution, and so he died, leaving a widow and 
 famUy, long " in fortune's high lap fed " to struggle thi-ough life in hopeless penury. 
 I had another friend who did live through it, and still lives on, but without a 
 vestige of what he was, and without a trace of " what he might have been." 
 
 With regard to the reason assigned for terminating this correspondence, if 
 your lordship is perfectly satisfied with it, so am I. Yom- lordship must have 
 been aware, from its published documents, that this committee was formed for the 
 purpose of stimulating and promoting inquiry only. They were practical business 
 men — not mere theorists — they had no plans or schemes of their own to propound, 
 and were far from the profession of " doctrines " or " scientific principles " to 
 found another " New Currency School." 
 
 Painful experience had convinced them, in common with many others, even 
 amongst the friends of the Bank Act itself, that there was something wrong in 
 our monetary system, and they wished to see it rectified; but conscious of the 
 
CORRESPONDENCE ON THE CURRENCY. 39 
 
 extent and importance of the subject, and its innumerable coii '^jlications, and of 
 the grave responsibility of rashly intermeddling, they had Wisely determined 
 carefully to inquire first, and to adopt specific action or profession after. 
 
 It was no doubt most kindly, and liberally, and well intended, on the part of 
 your lordship to seize upon the very earliest opportunity of aiding their investi- 
 gations by engaging them in an elaborate discussion of the whole doctrines and 
 principles of monetary science; but considering the embryotic state of the com- 
 mittee, and the extent to which your lordship was identified with the system they 
 had to investigate, they might reasonably doubt if your lordship could have 
 intended to address such an invitation to them. Even if they could have imagined 
 that, they would, doubtless, have deemed that it would be far more adventurous 
 than wise on their part to sufier themselves thus prematurely to be di-awn into 
 such a correspondence, with a champion so redoubted, and with only so humble 
 a representative as myself, on their part, and they would assuredly have 
 declined it. 
 
 It would not have been at all necessary in that case to have assumed that your 
 lordship had any ulterior design in seeking to engage them in such a discussion; 
 nor is' that in the slightest degree now insinuated. No doubt there are many 
 complicated and diificult problems in monetary science in which your lordship is 
 known to be a consummate master, and in some one of which their adventurous 
 steps might have stumbled. But giving your lordship the utmost credit, as I am 
 sure they would have desu-ed to do, for the most entire simplicity and singlteness 
 of purpose, and anticipating only the most liberal and magnanimous consideration 
 and forbearance during its progress, it might still have been deemed neither 
 necessary nor expedient to incur the risk. 
 
 Your lordship's challenge appeared to be addressed to me, and for myself I 
 was free to accept it ; but it would -have been folly, and great presumption on 
 my part, to have undertaken to represent, in such a discussion, the sentiments 
 and opinions of a number of other gentlemen (whether present or absent) on 
 every question of principle or detail, or practice, which your lordship might think 
 proper to introduce for discussion. It was clear, therefore, that I alone could^ 
 and ought to be responsible. 
 
 In my unofficial capacity your lordship declines to continue it fmther, and 
 therein I think your lordship has determined wisely and well. If " the better 
 part of valom- be discretion," your lordship has acted more discreetly in the ter- 
 mination of this correspondence than in its commencement. 
 
 Your lordship will pardon me if I console myself, in some measure, with the 
 belief that the unanswerable nature of my previous letters may have had some 
 weight in that determination ; and if I indulge the hope that my last letter has 
 materially tended to confirm it. 
 
 I have, therefore, only to notice the remaining topics of your lordship's last 
 communication, and then, in my turn, to terminate this correspondence, so far as 
 I am concerned. 
 
 1. Your lordship's first note is " ' Fall of prices,' it is asserted, 'brings rain to 
 the bulk of the people, but profit to the rich.' " There is literally no such passage, 
 no such proposition, in my letter. If there be anything like it, the context will 
 show that the meaning was not that which is here put upon it. But in answer to 
 your lordship's comment, I state, what is well known, that extreme but tempo- 
 rary variations in the value of money may produce an enormous fall in the 
 market value of commodities, suificient to be ruinous to the manufacturer and the 
 people who depend upon him, without materially affecting prices to the consumer. 
 
40 CORRESPONDENCE ON THE CURRENCY. 
 
 That is the " pull of the capitalist," who buys in a falling market arid holds to 
 sell in a rising one. 
 
 2. The statement in my letter is " the millions of wealth then passing away 
 from the holders of Government and other securities, and from the desperate and 
 straitened, if not ruined, holders of mercantile goods." I h^ve already ex- 
 plained why consols would not fall so low in 1857 as in 1825 ; why they would 
 more rapidly rise after the panic, and subsequently attain to a higher range of 
 prices. The fact leads to no inference in favour of the Bank Act, but decidedly 
 against it. 
 
 3. " All this prosperity, your lordship, either in mockery or infatuation, attri- 
 butes to the Act of 1844." That is my statement. This is your lordship's ; 
 " This progress, and these gains, let me beg you to observe, have been effected 
 under the provisions and restrictions of this very Act of 1844." Then follows 
 a long catalogue of the specific benefits which have accrued to the country 
 "during the existence of tl^e Act," which is wound up by the exulting passage 
 which your lordship now quotes, and which, as I read it, is a sort of triumphant 
 insinuation of a conclusion which, conceiving that you had proved it, you disdained': 
 to state in express terms. 
 
 4. "I deny emphatically that there is any natural or inevitable necessity for 
 these monetary panics." Your lordship very properly remarks that the " question 
 is not what persons believe or aflSrm, but what are the grounds for believing or 
 affirming." If this passage had stood alone I should consider myself very 
 properly rebuked ; but inasmuch as I had first demonstrated that the monetary 
 panics of 1847 and 1857 had been the result of the Act of 1844, it was quite 
 natural and perfectly correct that I should wind up by an emphatic denial of 
 your lordship's previous assertion (without proof), that these panics arise from 
 " natural and inevitable causes." 
 
 5. " The Act," your lordship says, " has since been subjected to opposition 
 and discussion' in abundance, but it stiU continues the law of the land." There is 
 a very natural and proper repugnance to repeal laws of any kind, but especially 
 laws relating to trade and commerce, and, above all, those relating to the currency. 
 It may require a great deal more discussion yet, and if it does it will have it. It 
 requii-ed half a century of discussion, and a number of concm-rent European 
 revolutions, to get the Eeform Bill ; it required many years' agitation and a 
 threatening rebellion in Ireland to get Catholic emancipation ; many years of 
 discussion and an Irish famine to get a repeal of the Corn Laws ; and they were 
 all opposed by your " newly converted minister ;" but they were all carried by 
 him, or with his concurrence, and had he lived that " able statesman " would 
 assuredly have repealed the Bank. Act long ere this. 
 
 6. Your lordship repeats that " the Act has preserved the bank note," and I 
 repeat that it has not, because it was itself strangled in the attempt. Your lord- 
 ship can only contend that it did so up to the time it was hanged, and would 
 have continued to do so if it had not been hanged. The difference is not worth 
 fiu-ther disputation ; but it is not correct to say that that was all its authors pro- 
 mised. Sir Robert Peel, to whom yom- lordship concedes the paternity of the 
 measure, certainly promised less fluctuation in money and in prices and less 
 speculation, pressure, and panics. 
 
 7. " By what standard would it be proposed to regulate the price of gold ? " 
 I answer, by the standard of gold itself. Admitting that we and other civilised 
 nations have selected gold as a measm-e of value, because it is more steady and 
 equable than any other ; yet it is undeniable that it is not cAsolutely unvarying. 
 
CORRESPONDENCE ON THE CURRENCT. 41 
 
 We have endeavoured to render it absolutely so by fixing its price in this country, 
 but that does not destroy its marketable value as a commodity elsewhere. Can 
 there be any difficulty or any rational objection to ,our taking gold at 
 £3 17s. lO-^d., our present standard — basing our bank note and all our cm'rency 
 upon that standard — and suffering gold, as a commodity, to oscillate according to 
 its market value ? Gold, at the Mint price, would thus become the unvarying 
 measure of the whole of our currency, and the whole of our currency would be 
 the perpetual measure of the varying oscillations in the price of gold as a 
 commodity. 
 
 Now, your lordship mentions with approval the selection of gold, hecause of its 
 being the least variable in value; from which it might be inferred that a standard 
 of the least varying character would be in harmony with your lordship's prin- 
 ciples. But is that so? It ought to be, but is not. Your lordship is wedded 
 to the fatal principle that, although we select the least varying commodity as a 
 standard, and endeavour to render it absolutely unvarying, we ought nevertheless 
 to persist in the egregious absurdity of regulating our currency, not by our own 
 standard, but by the ever-varying currencies of other countries. ■ This principle 
 keeps oui- currency, notwithstanding our 'standard, and all other property and 
 commodities, in a constant state of oscillation. The difference in practice would 
 be this : — 
 
 1. Our own currency would always be of absolutely peimanent value. 
 
 2. The prices of commodities would be regulated by the proportion between 
 the quantity of commodities and the quantity of the currency. 
 
 3. " The natural laws which govern the distribution of the precious metals " 
 would simply require that, for transmission abroad, we should buy the commodity, 
 gold, with our fixed currency, at the market price of that commodity. 
 
 4. The difference between the market and the Mint price of gold would be a 
 certain guide for the regulation of our currency by those of other countries. 
 
 I approach the concluding paragraphs of this letter with a mixed feeling of 
 regret, and a something else which I cannot describe. Your lordship laments 
 the " profusion of discourteous terms " with such " cheerful patience," such 
 "pathetic resignation," and such magnanimous fortitude, that I cannot help 
 feeling sorry if I have really been discourteous. 
 
 I have intended to be scrupulously just, but umspai'ingly severe; if I have been 
 more than that, pray forgive me. 
 
 Your lordship is reputed to be a hard and vharsh controversialist, and your 
 school have long been celebrated for the reckless freedom with which they have 
 branded their opponents — men of the highest eminence and the purest motives — 
 with disparaging nicknames and opprobrious epithets, " papennongers," " parti- 
 sans of the little shilling," &c., &c., and in controversies of this- description, "a 
 bad name," as in the case of canines, " goes a long way towards hanging.'' 
 
 The passage quoted fi-om " a living writer " certainly imports that the party 
 addressed is the impersonation of " ignorance, mistaking himself for knowledge, 
 and denouncing what he does not understand." Perhaps, however, I was in 
 error in supposing this was addi'essed to me. As your lordship was then address- 
 ing me in my official capacity, perhaps I ought to have considered that compliment 
 addi'essed to the committee, and to have divided the honour with them. 
 
 At all events, if no offence was intended to be given, none shall be considered 
 as received. 
 
 But how about the " educated and reasoning man " and the " ignorant and 
 superstitious savage? " I fear your lordship really intended a comparison there 
 
42 CORRESPONDENCE ON THE CURRENCY. 
 
 which was not very complimentary. It was a good thrust; but such thrnsts> 
 where the blade is bright and sharp, and skilfully wielded, and " cuts clean,'' 
 leave no rankling wound or angry sore. They are mere flesh wounds, which 
 serve to show the gladiatorial skill of the champion and invite a return. 
 
 But what can I say to the mock heroics in which your lordship indulges? To 
 the ludicrous gravity with which your lordship descants upon the cold reception 
 the world has so often given to ." great truths valuable to mankind," " the un- 
 merited obloquy " with which most of the great discoveries in physical science 
 were received, and the discussion and persecutions which rewarded their great 
 discoverers? 
 
 All this yom* lordship says "is consoling" to the suffering martyrs, "the 
 authors and supporters of the Bank Act." Really, this is too bad — it is so 
 highly provocative of a great deal that would be perfectly "just," but "merci- 
 I'essly sarcastic." I have already shown, and I think pretty conclusively, that 
 there is neither science nor philosophy in the so-called doctrines of the new 
 " Cm-rency School," and, that if there be any, that nothing of the kind is em- 
 bodied in the Bank Act — that the only approach to the adoption of a principle 
 in that Act, quoad your doctrines, is the limitation of the Bank issues on 
 securities, and that, even that is not new, but old, and was introduced by its 
 legislative author on another and different hypothesis, — that the practical effect 
 of this is to tie up the hands of the Bank, and preclude the possibility of her 
 helping commerce in its utmost need, which necessarily converts the smallest 
 pressure into the du'est struggle, precipitates a panic, and involves the people in 
 ruinous loss. 
 
 And for this great scheme, — this " grand discovery," which, in truth, is no 
 discovery at all, — your lordship claims the honours of martyrdom; for "this 
 great measure," so " beneficial to the community," your lordship asks the grati- 
 tude of the present generation, and bespeaks the veneration of posterity! 
 Harvey was persecuted, but immortalised for demonstrating " the circulation of 
 the blood," and your lordship glories in persecution,^ and wotdd be immortalised 
 for a scheme to limit " the circulation of money." Newton was persecuted, but 
 immortalised for his " Theory of Light," and your lordship claims canonisation 
 for a " Theory of Obnubilation " to cover a system of legalised confiscation! 
 
 Mr. Huskisson endeavoured, according to the light that was in him, to do an 
 honest thing, but for want of more knowledge than was, perhaps, at that time 
 attainable, converted the doing of that honest thing into one of the most 
 " gigantic robberies," that was ever inflicted upon a people, in any age, or 
 county in the world. Your lordship, with a knowledge derived from five-and- 
 twenty years' experience, which Huskisson had not, insisted upon doing the 
 thing which he, with his knowledge, would not do, that is fix the issues, and tie 
 up the hands of the Bank ; because he knew that would render it impossible for 
 them to avert a panic. Posterity forgives Huskisson his errors of judgment for 
 want of experience, and respects his memory; but posterity will not forgive your 
 lordship's, because it has not the same excuse, and because it is persisted in, 
 though subsequent experience has equally condemned it. Sir Robert Peel 
 sinned asHuskisson sinned, in 1819. He began by opposing the principles of 
 Horner and the " Bullion Report of 1810," and ended by adopting them. That 
 report, the composition of Huskisson, Horner, and Thornton, specially condemns 
 ANT POSITIVE LIMITATION being placed upon the issues of the Bank, and for this 
 reason, which the Bullion Committee adopted as a principle, " that an enlarged 
 ACCOMODATION is the true remedy for that occasional failure of confidence in the ' 
 
COKEESPONDENCE ON THE OHRnENCT. 43 
 
 country to which our system of paper credit is unavoidably exposed." It was 
 proved that the panic of 1793 was relieved by such enlarged accommodation, 
 and that the panic of 1797 was intensely aggravated for the want of it. In the 
 panic of 1825 the country was brought to the very brink of ruin, by a severe 
 contraction of the issues, and was only saved by the Bank enlarging them. It 
 was a saving principle, and Sir Robert Peel knew it, and for a long time, though 
 urged, refused to violate it. But Sir Robert Peel was, as his whole political 
 career demonstrates, highly susceptible of change. 
 
 If a good heart, and a noble, disinterested, and most laborious devotion to his 
 countiy could constitute greatness, Sir Robert might have been a great statesman; 
 but the page he fills in British history will never dazzle by the brilliancy of his 
 intellect, or astonish by the profundity of his judgment, or extort admiration by 
 the consistency of his career. Its most conspicuous feature will always be his 
 remarkable inconsistence/ with himself on all the great measures of his time, and 
 on the currency among the rest. 
 
 Sir Robert had the same knowledge and experience as your lordship up to 
 1844, and subsequently to the period of his death. Yet I believe posterity will 
 forgive Sir Robert and respect his memory, but will never forgive your lordship. 
 Need I state " the reason why? " 
 
 Your lordship calls the standard " an honest standard," and honesty is one of 
 the pretensions which the new school has always arrogated to itself, and by con- 
 sequence denied to all opposed to it. Yet if there be any truth or meaning in 
 plain words, that standard as constituted by your lordship is habitually most 
 dishonest, for it is the instrument by which are pei"petrated all those " transfers 
 of property," which, I fully concur with Mr. Justice Byles in designating, ac- 
 cording to their true nature, " gigantic robberies," " and often much worse." — I 
 remain, my lord, your lordship's most obedient servant, H. Brookes. 
 
 The Right Honourable Lord Overstone. 
 
 9. 
 
 Reply to Section IV. of Lord Overstone's letter of 7th October; — 
 
 2.5, Bii-chin-lane, E. C, 7th Nov., 1861, 
 My Lord, — In my first reply to your lordship I alluded to a state of things 
 which I epitomised in four short propositions, and which, to my mind, exhibited 
 a tendency of an unfavourable character to the future of this country. I have 
 already said it was a thought thrown out for your lordship's reflection rather 
 than criticism. The subject is really so great, and so important, and opens so 
 very large a field for moral and philosophical disquisition, that it requires a pen 
 far more competent than mine to do it justice. I would gladly, therefore, have 
 abstained from entering upon it farther in an incidental discussion like the 
 present, which precludes the possibility of demonstrating all the details on which 
 it rests, and of duly examining all the circumstances which may intervene, with 
 tendencies either to accelerate, retard, or modify the ultimate results. But the 
 mocking tone and manner in which your lordship has received, and from time to 
 time adverted to it, and the deliberate and formal answer attempted in your 
 letter of the 7th ult. (see section IV.), appear to me to leave me no alternative. 
 In the first letter already referred to, I ventured to state that " It is not the 
 vast accumulation, but the distribution and circulation of wealth which renders a 
 country truly prosperous;" and the four propositions alleged vast accumulations 
 and great inequalities in the distribution of the wealth of this country. Your 
 lordship failed to see that this was an allegation of an existing state of things, 
 
44 CORRESPONDENCE ON THE CURHENCY. 
 
 the tendency of which, if not counteracted by intermediate agency, might be to 
 develop certain results a century hence. Your lordship has, therefore, treated it 
 as " a handbreadth view " of existing " degeneracy " and " impending ruin," and 
 as a great and important " practical question;" and this is a view which certainly 
 better accords with the sort of answer your lordship makes to it in your letter of 
 the 7th ult. 
 
 But the " handbreadth view " is your lordship's view, not mine. It is your 
 lordship who cannot look beyond the immediate and the present; who can see 
 nothing beyond the gorgeous mansion in town, and the magnificent domain in the 
 country, with the " improved villas " by the roadside, and the " workmen Of the 
 hour," who strike for higher wages. My view extends from the present to the 
 dim and distant futnre, but yom- lordship's is confined to the present, and to the 
 " bright side " only of that. 
 
 My propositions were — 
 
 1. That the wealth of the country is increasing. 
 
 2. That the numbers of the wealthy and independent are diminishing. 
 
 3. That the number of the poor and dependent are increasing. 
 
 4. That the poverty of the poorest is becoming more intense. 
 
 Your lordship, I understand, disputes not only these four- propositions, but in- 
 cidentally, the ' antecedent proposition, " that the prosperity of the country 
 depends, not upon the vast accumulation, but upon the distribution and circula-i 
 tion of wealth." 
 
 In regard to the four propositions, your lordship contends " that, if theirs* be 
 true, the three following must, almost of necessity, be false ; and if the three last 
 be true, t)x6 first is impossible." This is a very summary way of dealing with 
 them, but unfortunately it is utterly fallacious. Your lordship's counter propo- 
 sition is inconsistent in itself, and is inconsistent also with the facts and deduc- 
 tions which follow, and are intended to prove it. If my first proposition must in 
 the event stated, be impossible, the three other propositions must in the event 
 stated be absolutely false, and the. qualification " almost," might have been 
 omitted. • But let xis examine it fui-ther. 
 
 1. If the fii-st be true, the three others cannot be true also; that is, to say, if it 
 be true " that the wealth of the country is increasing," it cannot be ti-ue " that 
 the number of the wealthy is diminishing." Your lordship must afiu-m, liiere- 
 fore, that wealth cannot increase and become more concentrated; that large 
 landowners cannot buy up the properties of several proprietors, and settle and 
 entail them all upon one; that a wealthy . banker, merchant, or manufacturer, 
 cannot engross the business of several smaller houses, realise large accumulations, 
 and invest the whole in land, houses, canals, railways, &c. That immense 
 capitals cannot be invested in gigantic factories and warehouses, in shipping, in 
 manufactures or merchandise, and that the powerful competition of these concen- 
 trated capitals cannot extinguish a number of smaller capitalists, &c. And the 
 proof lies upon your lordship, and yoiu- lordship cannot, of course, prove any 
 such thing. 
 
 2. If wealth jnay thus become concentrated at all, it follows that it mat 
 become so, to the extent of diminishing the proportionate number of the wealthy. 
 
 3. Whether the proportionate number of the wealthy has been thus diminished 
 or not is another question, and is a mere question of fact; but assuming that 
 what might have been has been, then it follows that the number of the less 
 wealthy must have increased, even if the population remained stationary, and the 
 more so if tlie population has been increasing likewise. 
 
COREESPONDENCE ON THE CURRENCY. 45 
 
 4. And if the number of the less wealthy, or poor and dependant, has thus 
 been increased, it will follow almost inevitably that the poverty of the poorest 
 must have become more intense. 
 
 The, first, therefore, is undeniably possible and true; the second may be true, 
 and if it be so, the third must be true, and the fourth becomes almost inevitable. . 
 And it follows, also, that the truth of the three last is not at all inconsistent with 
 the possibility of the first, " that the wealth of the country is increasing." So 
 much for your lordship's logic. 
 
 Let us now see how your lordship deals with the subject on " scientific prin- 
 ciples." Your lordship admits "that the concentration, in fewer hands, of a 
 given amount of wealth might possibly involve a diminution of the general well- 
 being of the community;" but you deny "that this can be the case with an 
 increasing amount of wealth." 
 
 I have always understood it to be one of the primary and elementary principles 
 in political economy that it would and must he so. In. a little elementary book 
 on social economy, by Mi-. Ellis, intended for boys at school, and which I com- 
 mend to your , lordsMp's study, the principle is taken for granted. " In all 
 countries," he says, " which have attained to a high degree of civilisation, capital, 
 and hence profit, will be distributed among the whole population, and not heaped, 
 upon a few, whilst the mass ai-e destitute." But Malthus, if I remember rightly, 
 lays it down as a great principle, " that the excessive wealth of a swaZZ number,,, 
 is not so efiicient in creating a real demand for labour as the more moderate 
 wealth of the greater number." A dozen authorities might be cited to the same 
 effect, if I could deem it needful to refer to them; but I cannot imagine your, 
 lordship will controvert this principle. .. 
 
 What your lordship meant to say, and to argue was this; — tha,t in a country, 
 where wealth is increasing, it is more Mkely that the wealth would remain in 
 distribution amongst the hands that produced it; and that I fully grant — that I 
 freely concede to your lordship; and I admit that in our case there would be na 
 such tendency to extreme concentration and vast accumulation, but for the vicious- 
 iQonetary system and vicious legislation against which I am contending. That 
 is my argument. 
 
 It is the operation of yom- lordship's system which has the effect of transferring 
 the increasing wealth as it accumulates from the innumerable hands of the pro- 
 ducers, and to concentrate it in " tlie fewer hands " of the capitalists, so that the 
 increasing quantity is thus periodically converted into a. fixed quantity. 
 
 " If the wealth of the country is increasing," you say, " the fund for the main- 
 tenance of labour is increasing, and whether that fund be in the hands of a few 
 rich, or be more widely diffiised, the demand for labour and the remuneration of 
 labour cannot fall off ."■ 
 
 The fact may be as stated, but the deduction is entirely erroneous. 
 
 The capital of the country constitutes its means of living; and its increase by 
 reproduction, nay, its preservation from exhaustion^ depend upon the multiplicity 
 of its exchanges. It would be absm'd to conteiid that the number of exchanges 
 " in the hands of the few rich " would be equal to, the number of the excha,ngesi 
 in the hands of the laborious many. If capital in the hands of a few rich woul4 
 create an equally effective demand for labour, so might the whole capital of the 
 country in the hands of one only; but that would be an extent of absurdity for 
 which your lordship would scarcely contend. 
 
 Capital, when thus concentrated, generally ceases to be floating capital, and 
 assumes the chai-acter of fixed capital. " If floating capital be suddenly turned 
 
46 COKEESPONDENCE ON THE CUBKENCY, 
 
 into fixed capital," Bays Macleod, "the fund applicable to the promotion of 
 labour will be greatly diminished, and it must infallibly cause great distress 
 among the persons who were dependent upon it for their support," 
 
 Manufactm'ers and traders stripped of their capital are deprived of the means 
 of employing or paying labour, buying material, or producing or exchanging pro- 
 ducts. True, the capitalist may lend his money in the discount of mercantile 
 bills, and the trader may borrow, and pay for the loan of it out of his profits; 
 and he thus becomes a trader upon credit or credit-capital, and dependent upon 
 the contingencies of credit. 
 
 The game of the capitalist is pretty safe. It is " heads I win, tails you lose." 
 As long as trade goes on smoothly the trader must of course live, and must have 
 bis " improved " shop and his " improved villa," and the capitalist gets his share 
 of the produce of the others' toil, and skill, and risk. But when danger looms 
 in the distance, men trading upon their own capital know their own strength, 
 and have courage to meet it, and husband their own resources accordingly; but 
 nothing is so sensitive as credit, and, the moment danger threatens, credit-capital 
 retires, and credit collapses, and panic ensues. And then, says your inend 
 Colonel Torrens, even then " there is one class which continues to flourish amid 
 the general distress. This class consists of those whose property is realised in 
 money. That universal fall in money prices is the same thing as a rise in the 
 value of money, and necessarily gives to the moneyed capitalist a greater command 
 over the necessaries and conveniences of life. But this is not all. On every 
 occasion of glut or stagnation, the moneyed capitalist will not only get a greater 
 quantity of commodities for the same given sum in cash, but will obtain a higher 
 rate of interest on the money he advances,, in the way of loan, or invests in the 
 purchase of real property." 
 
 Nor is this all. The ruined trader must become a workman, or a petty or 
 speculative trader without capital. In the one case his competition with the 
 workman lowers wages: and, in the other, his competition with the honest trader, 
 who has a capital, lowers profits and tends to ruin him, or at least to render him 
 also the humble servant of the moneyed capitalist. 
 
 It is thus that the concentration of capital diminishes the demand for labour, 
 and lowers its remuneration by reducing the number of the employers of labour, 
 increasing the number of labourers, and the competition amongst them, and con- 
 sequently lowering wages. 
 
 The moneyed capitalist feeds all, fleeces all, and is mast«r of all. So much 
 for your lordship's science. 
 
 Having thus shown the utter fallacy of the logic and the science your lordship 
 has brought to bear upon this subject, I will now proceed to examine the facts. 
 Your lordship has especially noticed several classes, but there is one class wholly 
 omitted; and the omission is certainly rather significant in such one argument, 
 viz : — 
 
 The WEALTHy Few. — Is it true that the rich are becoming richer? Let ns 
 see. Some fifty or sixty yeai-s ago the landed gentry and small land owners of 
 this country numbered upwards of two hundred and fifty thousand. Where are 
 they now, and where ai-e their estates? Where ai-e the noble-hearted old English 
 gentlemen, and the stout yeomen of England, once theii- country's mainstay and 
 pride? By the authorised analysis of the census returns for 1851, your lordship 
 will find that the whole class of landed estate holders does not now number more 
 than thirty-five thousand. The small estates have been swallowed up by the 
 cormorant estates of the wealthy peer or commoner in their vicinity. Many of 
 
CORRESPONDENCE ON THE CURRENT;?. 47 
 
 the old country gentlemen have been reduced to tenant farmers, or perhaps lower 
 still; and the descendants of the yeomen are tenants at rack rent, or perhaps 
 labourers upon the soil they once owned. And these mammoth estates are 
 divided into mammotlufarms, and the old race of moderate and easy-going farmers 
 has given place to the capitalist farmer. I am not complaining of all those 
 changes, for some of them have their compensations; I am merely stating the 
 facts: but in some parts, Scotland, for instance (though neither England nor 
 Ireland have been exempt), vast tracts of country, whole counties, miles in 
 extent, have thus fallen into the insatiable hands of a few individuals, and what 
 have been the results? Why the mountains and valleys of Scotland, which for- 
 merly produced a race of stalwart peasantry to till our fields and replenish our 
 armies, have been denuded of their human populations to make way for the infe- 
 rior animals, for game. Thousands and tens of thousands of acres, which 
 formerly produced immense supplies of cattle and sheep, to feed the teeming 
 populations of the towns, are now reduced to di-eary wastes, in order to fit them 
 for the lordly recreation of deer-stalking. When our warlike statesmen wanted 
 more soldiers for the Crimea, they called upon Scotland for her accustomed sup- 
 plies, but they called in vain; the race that should have responded was become 
 almost extinct. Her hardy sons had been driven forth from the cottages where 
 their sires and grandsires had dwelt for centuries, to exUe, and penury, and 
 want. Many of the old people who could not bow to the barbarous expulsion, 
 had their cottages pulled down, and even burnt down over their heads. Some 
 took refuge in the lowland towns, and gradually deteriorated and died off; others 
 sought homes in our far-off colonies, and found them, or at least found a grave 
 there — " and the land of their birth knew them no more." 
 
 This concentration of wealth in a few hands is a passion " which grows by 
 what it feeds on." It must go on, and go on unceasingly. The great families 
 must be kept great, and therefore the female branches must reconcile themselves 
 to hated lives of miscalled " single blessedness," and their male relatives to 
 bachelor homes and " pretty horsebreakers." 
 
 But besides an aristocracy of birth and teiTitory, we have an aiistocracy of 
 trade and commerce, and in like manner the great mercantile houses, wholesale 
 and retail, are swallowing up numbers of the smaller ones. The great capitalist 
 in trade and manufactures has his mammoth establishment, his monster factory, 
 and his truck system, and his child labom-, to put him upon a level with the 
 lordly clearer of land. " Property must have its rights," says the landowner. 
 " And so must capital," echoes the trader. " The land must be cleared," shouts 
 the landlord, and it is cleared. "Goods must be cheap," vociferates the trader; 
 and, in the words of Mr. Justice Byles, " they are cheap, for they are made of 
 human flesh;" aye, and of human hearts and of human feelings, too, and in how 
 many thousands of cases, of human souls ? No matter — Land is king, and 
 prince, and peer; and Cotton is lord and master of all — and would be more, and 
 will be more. 
 
 Your lordship notices a recent agricultural meeting, where a noble duke pre- 
 sided and made a statement, with nothing in it calling for dissent; but your 
 lordship records the remarkable fact that, " not one of the 500 persons present 
 expressed any dissent." Is this meant as a reproach to the 500, or a compliment 
 to the noble duke? or can it be that your lordship is "poking fun" at the agri- 
 culturists? Is it usual, at agricultural meetings, to "express dissent?" Is it 
 not, on the contrary, quite orthodox to swallow everything that may be said after 
 the dinner, with the same unctuous relish as they swallow the dinner itself? I 
 
48 COEKESPONDENCE ON THE CURRENCY. 
 
 never heai-d but of two instances of anybody bold enough to " dissent" from what 
 was said at such a meeting; and I should imagine they are the only two instances 
 on record. One was a clergyman, who dared to say something which indicated 
 that a labourer ought to be treated more like a man than ii a prize pig;" and the 
 company felt their dignity so outraged, that they did not respect even his sacred 
 calling, but hooted him down. The other was the recent case of Mr. Wegnelin, 
 the honourable member for Wolverhampton, who was assailed by every species, 
 of vituperative eloquence, and hideous yelling and noise, to prevent his uttering 
 a few very rational and common sense remarks. Mr. Weguelin has since ex- 
 plained, admitting that, inasmuch as his remarks were purely of a common sense 
 character, they were wholly unfitted for such an assembly, and therefore that it 
 was quite natural they should have refused to hear them. 
 
 Of the Middle Classes I know not what to say, for I scarcely know whom to 
 comprehend under that wide designation. I admit their numbers, and I admit 
 their wealth. I have " looked at many of the houses and villas," and, to say the 
 truth, I don't much like them. Most of them have been " stuck up "' by contract, 
 and I don't think the " order" much " improved," and the " signs of comfort and 
 affluence they exhibit," are often very deceptive signs, that have no substantial 
 character. I have never " looked at the town of Birkenhead," but I have heard 
 of such a place, and believe in its existence; but I do not see why it should have 
 been " admitted into our representative system on account of the wealth of its 
 inhabitants," instead of on account of the inhabitants themselves. I thought 
 from my poor readings of the Constitution, that members of parliament, where 
 they do not represent themselves or some noble lord, were the representatives of 
 the people, and not of their wealth. I have " looked at the railways," too, but 
 really the accidents have been so frightful lately, that it makes one almost afi'aid 
 to look at them. I confess I do not know " who are the proprietors of the four 
 hundred millions of fixed capital invested in them," but I have a strong suspicion 
 that the greater portion of it, " is really owned by a limited number of overgrown 
 rich," and not, as your lordship supposes, " by an unlimited number of the indus- 
 trious and enterprising." But for the panics of 1847 and 1857, it might have 
 been far otherwise. I have " eyes to see," my lord, and yet I do not see anything 
 in all this that materially afifects the question. A few garish villas, a newly- 
 created town, and a system of railways, do not outweigh, in my mind, the facts 
 I have already quoted, and have yet to quote, tending to prove " that the rich 
 are becoming richer, and the poor poorer;" and that the wealth of this country 
 is unduly concentrated " in a few hands," by an unwise system of currency. 
 
 I acknowledge that the middle classes are u great and comprehensive power in 
 this realm, comprising in their ranks all the indomitable corn-age, enterprise, 
 intelligence, fortitude, and all that is great and noble and characteristic in the 
 country and the race; but at this moment their condition appears but as a mere 
 ephemeral phase to my view. A succession of bad hai-vests, especially if followed 
 or preceded by a European war, would bring the whole fabric toppling down, 
 and the Act of 1844 with it, and probably a suspension of cash payments. 
 
 It is upon the energy and enterprise, the capital and industry, and the con- 
 tinued success of this large class, that the " wealth and prosperity" of this 
 country, and the well-being of the innumerable industrious classes below them 
 depend; and I see this great and all-important class to a great, an unsafe, a 
 dangerous extent, resting in fancied secm-ity upon the treacherous quicksand of a 
 false and fraudulent system of cm-rency; dependent upon the monied capitalist 
 for CHEAP money when credit and confidence are good, and they could the better 
 
UUKKKSfUJMUISMl.:^! UJS IHil OURRENCY. 49 
 
 do without it; and dependent upon the same source for dear money when credit 
 and confidence are shaken, when every nerve of the commercial body is quivering 
 with aguish apprehension, when their all, and the all of all those who depend 
 upon them is at stake, when they must have money, at whatever cost, or sink; 
 and then it is that they have it not, or have it only at a fearful cost, which bank- 
 rupts or beggars a large proportion of them, and plunders all. 
 
 It is this uncertain " hand-to-mouth" state, of so large a proportion of this 
 great body, which constitutes the worst " sign of the times," for their equivocal 
 position involves that of the whole of the working classes, and that uncertainty 
 results from the operation of your lordship's pernicious currency system. 
 
 The Skilled Workman. — Come we now to the skilled workman. I have 
 already expressed ray doubts about the rise of wages, and the fall of provisions 
 and clothing which your lordship states to be " a notorious fact," Yom* lordship 
 has not dissipated those doubts by expressing it as a " tendency to rise " and a 
 " tendency to fall." I am not sufficiently acquainted with the wages question 
 to dispute the allegation, but I know that all kinds of vegetables have not fallen, 
 but have materially risen in the price. That animal food has not fallen, but 
 has risen, I should think, 50 per cent., and that bacon, the poor man's principal 
 animal food, has risen not less than 60 or 80 per cent. But, says your loi-dship, 
 " seventy masons have struck work • though receiving 4s. 6d. and 5s. a-day 
 wages ! " And your lordship puts it to me interrogatively, whether that one 
 circumstance " does not afford a striking, illustration of the fact, that wealth, 
 however concentrated, must permeate through the mass of the labouring classes 
 in the form of 'good wages?" My lord, it neither proves orUInstrates anything 
 of the kind. If that is the mode in which your lordship jumps at conclusions, 
 it is no wonder that you find yourself frequently up to the chin in muddy ones 
 with bad bottoms, and sometimes over head and ears in conclusions which have ' 
 no bottom at all. Do me the favour to read that statement again, and suppose 
 that your lordship is somebody else (me, for instance), and that I am Lord 
 Overstone, and that I put before you such a tiny morsel of fact, and asked you 
 to draw such an enormous inferenv^e from it; would you not say -Mr. Brookes 
 was p-esuming very much upon youi- ignorance^ or making an attempt on your 
 ci-edulity? 
 
 In the first place " masons " are skilled workmen, and not "labourers," and they 
 form but a very small section of the working classes. The adequacy of their 
 wages, whether 4s. 6d. or 5s., depends upon a variety of elements not one of 
 which is stated by youi- lordship. If the fact proves anything about "wages," 
 it proves that they are had and not good wages. If it proves anything about 
 " wealth, when concentrated," it proves that it does not permeate through even 
 that small section; and it proves nothing whatever as to its permeating through 
 the mass of the labouring classes. To my mind, the fact of seventy masons 
 striking goes to show that the masons generally are of opinion that those wages 
 are not an adequate price for their labour. Of that question I recognize them 
 as the proper judges, and not your lordship nor the employer. If the employer 
 can buy labour as good elsewhere he should do so. If he cannot do that, his 
 proper com-se is to pay the men the extra wages they demand, and "charge it 
 in the bill." I believe that those conclusions are in harmony with the soundest 
 principles of political economy, and that your lordship's notions on the subject 
 are very much in need of improvement. 
 
 I have no sympathy with " strikes." I regard them not only as unmixed 
 evils, but as signs and indications of a greater evil ; of that lamentable want' of 
 
50 COERESPONDENCE ON THE CCRRENCY. 
 
 sympathy bet-ween the upper and lower Orders of society in this county which 
 Mr. Justice Talfourd, the gifted and the good, whose life had been one continued 
 manifestation of the highest philanthi-opy, was so pathetically lamenting from the 
 judgment seat, when he died with the words upon his lips. My lord, the 
 working-classes of this country have been the manufacturers of its enormous 
 wealth, it greatness and its prosperity — they are in the main lovers of law and 
 order, and they ought not to be in a position so powerless and defenceless, as to 
 be compelled to have recourse to strikes. Capital, whether fixed or floating, can 
 take care of itself; the labour — capital of the working man — must have a 
 daily market or the man starves. For that reason he has a right to expect that 
 an equitable tribunal should be provided to obviate all necessity for " strikes." 
 The owners of the realised capital he has created are bound to provide such a 
 tribunal, and failing that, it ought to be provided by the legislature. WDl your 
 lordship aid in that good work ! Mr. Blanchaa-d Jerrold will be very glad of 
 your help, if you will give it, and he ought to have it. 
 
 The Poor Man. — And lastly, your lordship says — ■" Let us look to the condition 
 of the poor man." I wish yom- lordship would look to it; it is a condition that 
 wants looking to very badly. When I hastily read that first line, I as heartily 
 congratulated the *'poor man" upon having another friend to look to him; but a 
 few more lines speedily undeceived me. Your lordship makes a marvellous an- 
 nouncement under this heading, and then cries, " enough, — ^it would be easy to 
 accumulate other proofs, but after this, it is unnecessary; enough has been ad- 
 duced." What is this astounding fact, this overwhelming proof? Why this, 
 and nothing but this. That Parliament last session passed an Act to establish 
 Post-office Savings Banks, and the Government opened more than 300 of these 
 offices within a fortnight, and the Morning Post announces that " they are aheady 
 doing a large business! " I cannot see the slightest conceivable bearing this can 
 have upon the question. Pai'liament passed the Act, and Government opened 
 the offices. The poor man had nothing to do with eidier, and in all probability 
 not one in one thousand of that class have ever heard of such places up to this 
 moment. But the Morning Post, the poor man's paper, says that already " they 
 are doing a large business." What is meant by a " large business " in this new 
 line? Does it eonvey any idea to the mind of the gi-oss amount deposited? of 
 the number of persons making the deposits? or of the class to which those 
 persons belong? or of the proportion which the numbers depositing bear to the 
 total number of that class? No, not the least; and it does not show even that 
 any one of the deposits which constitute the " large business," was made by one 
 of that class. It is more than probable that the great bulk of that " large 
 business" were the deposits of little tradesmen, or then* wives, or children; of 
 the children of professional men, of bankers', merchants', and lawyers' clerks, 
 and shopmen, and persons of that class; and I should doubt if the "poor man'' 
 class constitute one per cent., either in number or amount. This is really worse 
 than the " striking " story of the seventy masons, and it is even more lame and 
 impotent in its conclusions. 
 
 My lord, if you want " to look to the condition of the poor man," you must 
 go about it in a very difierent fashion. It not his savings, but his earnings, and 
 spendings, and losings, that want your wise and economical cai-e; and you will 
 learn more about these in the " courts " in which he lives, than in " Court 
 Journals," or the courtly morning papei-s which you read. Go and look at him 
 in his factory and his workshop; breathe with him the pent-up atmosphere in 
 which he labours and strives the live long day. Follow him from the workshop 
 
CORJRESPONDENCE ON THE CUREENCT, 5l, 
 
 to His miserable abode in the dingy court or alley, -wHere the limit of his wages 
 compels him to live; look at the poverty-stricken and woe-begone appearance of 
 his wife and children, and inhale with them the pestiferous air they are compelled 
 to inhale. If your lordship should find, as he finds, that such labours and such 
 atmospheres " take the spirit out of a man," and make him thirst to pour more 
 spirits in, go with him to his alehouse, or his dram shop, and taste the beverages 
 which your friends, the wealthy brewers and spirit merchants, concoct for his 
 refreshment — ^pui'e and neat as they supply it, if you can get it. Then taste the 
 beverage as prepared by the publican, who, as your fi-iends well know, must 
 dilute and adulterate in order that he may live, because of the price at which it 
 is supplied; but don't drink much, for it may not be very agreeable to the 
 palate or very comfortable to the stomach. And if your lordship should meet 
 the " publican's druggist " there, canvassing for orders, endeavour to ascertain 
 what efiect his deleterious compounds may possibly have upon the brain and 
 nervous system, and how far they may contribute to those maddening efiects of 
 drink, which are so often developed in wife beatings and other brutalities of that 
 description, which must occasionally come before your lordship as a magistrate. 
 Keturn with him to his home — I won't say after your debauch, because I take it, 
 your lordship would be very certain to indulge with gi-eat moderation — but see 
 what he has for supper, and inquire what his family have had during thet day, 
 and for the past week, and how much it has cost; if your lordship should be 
 quick at figures it would not be a very difficult sum. Compare their diet with, 
 the dietary table of the nearest workhouse, or, better still, with the neighbouring 
 prison, and you will probably find that the pauper, badly as he fares, is better off 
 than the poor man who labours; and that the felonious scouiidrel who thieves 
 and plunders, fares, in his prison-house, better than either — gets a much more 
 nourishing diet, snugger quarters, less work, and kinder treatment. When you 
 have cast up the keep of the family — adding rent, and coals, and candles, and 
 shoes and stockings, if they wear such things, and other weai-ing apparel, and 
 his "bit of drink money," and his tobacco if he smokes, as most likely he does; 
 and when you have deducted all these fi-om his wages, see how much he has left 
 for the education of his childi'en, for a Sunday's dinner, or a Sunday's recreation, 
 and a bit of " decenter toggery " to go to church in, if he should be disposed to 
 go there. Your lordship will feel, no doubt, a generous and irrepressible impulsa 
 to contribute something to eke out their scanty supplies. But I would say, don't 
 do it; that's not the thing that's wanted; it is not charity, but work, regular 
 work, honest wages, better culture, more humane treatment, and moral elevation, 
 which their condition requires — and more sympathy would do it all. 
 
 If your lordship should not be too much overcome, "make a night of it;" 
 take a stroll by some of the Loudon workhouses; Purvey the poor wretches lying 
 on the bare stones outside, and take a peep at the more numerous swarms inside.. 
 There are other " walks," and " slums," and " districts," in which, with ap- 
 propriate guides, you may see a few specimens of some twenty or thirty thou- 
 sand helpless, careworn, workworn i>eedlewomen, and other " unprotected fe- 
 males," and of a hundi-ed other forms and varieties of human want and misery. 
 With a little trouble your lordship may pick up information enough to form an 
 estimate of how many thousands and tens of thousands of human beings are 
 every day suffering all the pangs of hunger, or the agony inspired by the im- 
 minent approach of it, in this metropolis — the centre of a Christian country, 
 teeming with " wealth," and reeling under a plethora of " prosperity! " 
 
 Go, then,. my lord, to Manchester and the manufacturing districts, and see the. 
 
52 OOERESPONDENCE ON THE CURRENCY 
 
 cTiminutive and attenuated forms of myriads of beings, desccndents of the 
 Anglo-Saxon race, who, bred to the factory, and almost born in it, have^ passed 
 their whole lives from babyhood upwards within its precincts, and bear in their 
 persons, manners, languuge, and habits, the stamp of its deteriorating influence. 
 They have never known the joys of childhood, or the glowing sunshine of youth; 
 the spring time of life is to them nothing but a barren and dreary retrospect. 
 They are mostly beings who " 'spects they grow'd " without knowing why or 
 wherefore, or how; and without caring to inquire, until they burst upon the 
 meridian of life in the steamy and swamplike atmosphere of the factory, and 
 tlien it was all too late for them to appreciate or improve the knowledge. These 
 countless swarms, with the aid of m_achinei-y and capital, have been, and are, the 
 fabricators of an enormous proportion of all the wealth and prosperity of which 
 your loi'dship boasts; and what is their present condition? and what their 
 future prospect? If a reverse should come — if the trade should fall off, even for 
 a few years, even a year, so that employment and wages fail, what must become 
 of them? They are neither fit for, nor capable of, any other occupation; and 
 what, in that contingency, 'would be their " right, title, or interest, at law or in 
 equity, of, in, or to, the capital or labour fund," for the creation of which they 
 were bred and reared, and to the increase of which their whole lives have been 
 devoted? That is a problem in political economy not yet solved. Will your 
 lordship endeavour to solve it? I have stated the case, will your lordship elimi- 
 nate the " scientific principle," and develope the " natural law ? " 
 
 Go, then, to Liverpool, and see some of the wretched hordes congregated toge- 
 ther in the noisome cellars and lodging-houses there. Call on your way back on 
 the colliers and ironworkers in South Staffordshire, and see the brutal and de- 
 graded populations of Tipton, Dudley, Bilston, &c., and mark well their temper 
 too — you need not fear it, though it is bad enough, if it had numbers to back it. 
 Call at Coventry, too, and see the starving multitudes there, and say if poverty 
 could well be more intense. 
 
 Your lordship speaks of the improvements in labourer's cottages. In carriage 
 drives in close vicinity to the mansions of the great, no doubt, some picturesque 
 erections are to be seen, put there to beguile indifferent and easy inquirers who, 
 content to look on the " bright side" only, are but too willing to be imposed 
 upon. But if youi' lordship would see some of the plague spots of England, the 
 festering pustules which disfigure and pollute the agricultural districts, drive to 
 the villages and the outlying farms, and then get out and stroll through them. 
 Examine the murky, smoky, tumble-down, crumble-down compounds of mnd 
 and clay, and wood and thatch, sodden with wet and damp, reeking with filth 
 and stench. See how utterly defenceless against either wind or water. See the 
 ■\vi-etched accommodation the dog-holes afford for parents and children, young and 
 old, and say what you can expect to grow out of such places? 
 
 " Look to the condition " of the labourers in Hi^mpshire and Dorsetshire, and 
 say what must be the intensity of their poverty, with wages of 9s. and 10s. per 
 week, to pay rent, firing, candles, food, clothing, &c., for a man who has to labour, 
 and the maintenance of a wife and family. They are said never to taste animal 
 food the year round, except on Sundays, and then it is only a bit of bacon, and 
 it is wonderful how they can afford even that. 
 
 Such, my lord, are the bountiful and humane provisions, and such the Christialivi 
 and philanthropic care manifested by the " wealthy and prosperous few " for the 
 well-being of the things, the animals, the beings who labour and toil for thomj 
 the main instruments in the creation of all that ^' wealth and prosperity " in Ae. 
 
COERESPONDENCE ON THE CURRENCY. 53 
 
 cnjo3Tncnt of which they live, and for which, whilst ?h the enjoyment of it, they 
 ■exhibit this deep, this damning ingratitude! Even now, whilst I write, a short 
 newspaper paragraph tells us of two deaths from cold and want" in one night 
 (Saturday last), one in plebeian Southwark, and the other in aristocratic 
 Marylebone ! 
 
 When you return home, my lord, and whilst the impression of these scenes is 
 still fresh and vivid on the memory, call your groom and go with him to look at 
 your horses. Your lordship remembers PMrec^'« cartoon? No! if your lordship 
 read Punch you would be a wiser though perhaps a sadder man. " Punch is 
 rude and vulgar?" Yes, and so is common humanity when side by side with 
 selfishness and pride. "Well, look to the stables, see the well whitewashed walls, 
 the well washed floor; how carefully the manure has been carried away, how 
 nicely the crisp fresh straw looks, and how sweetly the fodder and corn smell. 
 Of course, your groom uses sand or sawdust, or what is better, McDougall's 
 disinfecting powder, to keep down all unpleasant odours; and see how pure the 
 water looks in the well-kept pail, for the horse is a dainty animal, in its drink 
 especially, and would not take Thames water out of a dirty vessel. Look to the 
 horses, and see how beautifully their coats have been cleaned and brushed and 
 polished off; and then- feet how carefully they have been washed, spunged, and 
 rubbed dry; and their manes how nicely combed. " Fine animals, and valuable 
 too?" No doubt they are; and they are well housed, well fed, well cared for in 
 sickness and in health, well trained, easily worked, and their tempers and dis- 
 positions most carefully managed. It is really a pleasure to look upon such a 
 scene. There was nothing like this to be seen in the human dwellings we have 
 just been visiting, and yet there were some " fine animals " there also, but sadly 
 out of condition; the old ones lean and overworked, and the young ones beggarly 
 and underfed; but still fine animals, if they were but worth better treatment. 
 And then they have souls too. "Soles to their shoes?" No, most of them are 
 ba,refoot, — but souls to be accounted for. 
 
 Call now the cowman, and the chubby and rosy milkmaid, and let us look at 
 the cows and the cow-house. Everything we see here also is- nice and clean and 
 comfortable, the animals in good condition, their houses in good order, all far 
 better to look upon than any of those poor human habitations. 
 
 Go we now to the piggeries. The pig is a nasty untidy animal, but even he, 
 if he cannot be trained to habits of cleanliness and order, can be kept cleanly 
 if it be worth while to take the trouble with him, as we see here. He has a 
 good house to live in, a good clean bed of straw to lie down upon, plenty to eat 
 and di-ink, if not of the choicest, choice to him, for his gluttonous palate is not 
 over fastidious; and he has a good trough to eat it from. As far as a pig can 
 be so, he is happy, and if you will but scratch his back for him into the bargain, 
 he will be supremely happy, and will show you that gratitude is one of the attri- 
 butes of even hoggish nature. Fortunate grunters! thrice happy wallowers in 
 mire ! even they are better off, and fare more sumptuously every day than those 
 same miserable human beings who claim a proud superiority over him. I have 
 heard of a wealthy and retired banker who amused his leisure in architectural 
 and other improvements, and whose piggeries, of an " improved order," were 
 provided with troughs of polished marble ! for the delicate lips of the swine to 
 feed fi"om. 
 
 Such is the present condition of the " poor man," including a very large propor- 
 tion of the working classes, in wealthy, prosperous, and happy England. And 
 such as it is now, it has been for years past. It is not a temporary, accidental 
 
54 COBRESPONDENCE ON THE CUREENCY. 
 
 or adventitious condition, but the chronic, hereditary state ot the class; they were 
 born to it, bred up in it, and, as regards the mass, are doomed to die in it. ^ It 
 is a picture of horror, but it is no fancy picture, no product of a lively imagina^ 
 tion, but a terrible reality. Read what Dr. Channing, a native of a far-off clime, 
 wrote on the same subject years ago; and as it was then so it is now, only 
 worse : — 
 
 " To a man who looks' with sympathy and brotherly regard on the mass of the 
 people — who is chiefly interested in the ' lower classes ' — England must present 
 much that is repulsive. The condition of the lower orders, at the present moment, 
 is a moui-nful comment on English institutions and civilisation. The multitude 
 are depressed to a degree of ignorance, want, and misery, which must touch any 
 heart not made of stone. In the civilised world there are few sadder spectacles 
 than the contrasts presented in Great Britain of unbounded wealth and luxury 
 with the starvation of thousands and tens of thousands, crowded into cellars 
 and dens without ventilation or light, compared with which the wigwam of the 
 Indian is a palace. Misery, famine, brutal degradation, in the neighbourhood 
 and presence of stately mansions, which ring with gaiety and dazzle with pomp 
 and unbounded profusion, shock us as no other wretchedness does ; and this is 
 not an accidental, but an almost necessary, effect of the spirit of aristocracy and 
 that of trade, acting intensely together. 
 
 " It is a striking fact that the private chai-ity of England, though almost in- 
 credible, makes little impression on this mass of misery; thus teaching the rich 
 and titled ' to be just before they ai'e generous,' and not to look to private muni- 
 ficence as a remedy for the evils of selfish institutions." 
 
 Your lordship seems to have a penchant for perverting the best sayings of 
 others to the worst of purposes. Benjamin Franklin considered " his natural 
 disposition to look at the bright side of things as good as an annuity of £10,000 
 a-year." If Franklin liked to look upon " the bright side of things " he did not 
 shut his eyes to the dark side, but loved to make it brighter that it might be 
 the fairer to look upon. No doubt a man may save £10,000 a-year by closing 
 his eyes to the sight, and his ears to the cry, of the humanity he outrages; but 
 the annuity would be for life only, and at the moment when the annuity ceases? 
 What then? 
 
 Your lordship says that " distress is, under the laws of Providence, an inse- 
 parable condition of national progress," This is the docti-ine of your lordship's 
 class. I ventm-e to tell your lordship, in plain terms, that it is rank blasphemy: 
 the impudence of pious presumption, prostituting the sacred name of Providence, 
 to cover its own grovelling ignorance and excuse its own inhuman selfishness. 
 The true cause of national distress is not to be found in the beneficent laws of 
 Providence, but in the sordid devices of man ; in laws, concocted and devised in 
 ignorant and wicked disregard of the natural laws which Providence ordains. 
 Such are the laws of which your lordship has hitherto so proudly boasted, but of 
 which, I trust, your lordship will henceforth boast no more. In the pregnant 
 sentences of Mr. Justice Byles, some of whose words I think I have ah-eady 
 quoted, the true cause is clearly shown to be the transfer and destruction of 
 property and the suspension of industry. " Men talk glibly," he says, " of 
 variations in the currency. Few reflect on the awful extent to which such 
 changes affect the prosperity of all ranks. The labourer, the pauper, and the 
 beggar, are as much interested in the currency question as the manufacturer, 
 the shopkeeper, the great proprietor of land or funds, and even more." And, 
 why? Because " alterations in the amount and value of the circulating medium 
 
COERESPONDENCE ON THE CURRENCY. 55 
 
 are at best transfers of property — gigantic robberies — they are often much 
 worse: — they involve wanton destruction of immense property and the stoppage 
 of industry. The standard of value should be as fixed and immutable as human 
 art can make it. The Act of 1844 makes it as variable as the wind." 
 
 Your lordship says " it is the duty of those who share the prosperity to alleviate 
 the distress." My lord, they have a higher, a nobler duty to perform, and one 
 which I earnestly commend to your lordship, the duty and obligation to prevent 
 it. It is not charity the people want, but justice. Deny them not the one and 
 they will need but little of the other. Benevolence cannot do all that justice has 
 left undone. Charity can never adequately help a people who are not per- 
 mitted to help themselves. 
 
 Your lordship endeavours to draw further corroborative evidence, in favour of 
 your conclusions, from the increased consumption of food during the last twenty 
 years. It may be very cruel, but I cannot permit your lordship to remain under 
 the delusion that any such inference is warranted by the facts. The population 
 has enormously increased during that same period, but admitting that the in- 
 creased consumption of articles of food has increased in greater proportion, it by 
 no means follows, nor does your lordship show, that the increased consumption 
 has been by the working or labouring classes. Indeed, it could not be so, except 
 in one of two cases — either wages must have risen, or prices must have fallen. 
 All that your lordship ventures to allege is, that wages have exhibited a tendency 
 to rise. The removal of duties has increased competition- and materially reduced 
 the prices of some articles — bread, tea, coffee, &c., and greater quantities of those 
 could be obtained and consumed out of the same amount of wages. Butcher's 
 meat, bacon, and vegetables, I have shown, have greatly risen in price, and the 
 consumption of those articles has probably been considerably less in proportion, 
 and that would cause a further increase in the consumption of the former articles. 
 The bulk of the increase, however, has no doubt arisen from greater profusion 
 amongst the upper and middle classes; but there are no cei-tain means of demon- 
 strating the fact. 
 
 But if I venture to admit all that your lordship contends for under this head, 
 it would not sustain your lordship's argument, nor invalidate mine. The work- 
 ing classes have an innate perception of a natural and indefeasible right to 
 progress, with the general progression of the country, and to have better wages, 
 and better houses, clothing, diet, and education. And their innate perception 
 is right, though it may have led them into wrong, and may have seduced them 
 into extravagance and waste, which has aggravated the intensity of their poverty. 
 If the present generation were to stand still, and content themselves with being 
 no worse than the last, they would be retrograding; all above them are advanc- 
 ing, or appearing to advance, and therefore they would be poorer — worse off, 
 the disparity would be greater, the deterioration would be more marked. And 
 the evil is one with an inherent tendency to propagate and perpetuate itself. 
 The appearance of that tendency, therefore, is sufficient to justify the inference, 
 and to warrant the demand for its correction. 
 
 This letter will close our correspondence. It was evidently commenced by 
 your lordship with a view to publication, and I hope your lordship will feel 
 gratified to learn that I intend to carry out what appears to have been your 
 lordship's original design. In takmg my leave of your lordship it would be 
 ungrateful not to express my acknowledgements for the opportunity this corres- 
 pondence has afforded me of exposing the shallow pretensions of the "New 
 Currency School " and their so called " scientific principles," — of showing to 
 
56 COERESPONDENCE ON THE CURRENCY. 
 
 the public how easily a Parliament may be imposed upon by a very little 
 knowledge and a great deal of obfuscation, — and Of exhibiting to the world 
 another instance of "the little wisdom by which nations and people are — 
 misgoverned." — I have the honour to remain, your lordship's most obedient 
 servant, • • H. Brookes. 
 
 The Right Hon. Lord Overstone. 
 
 10. 
 
 Carlton Gardens, 15th November, 18G1. 
 
 Sir, — Your communication of the 7th inst. has reached me. 
 
 When I first received the printed circular of the Anti-Bank Act Committee, I 
 saw appended to it the names of persons whom I knew'to be men of intelligence; 
 and with whom I felt confident that a correspondence, however wide the difference 
 qf opinion, might be conducted with satisfaction. My reply, therefore, to the 
 letter in which that circular was enclosed, and my subsequent letters, were 
 addressed to you as the Secretary of the Committee, in the hope that a cai-eful 
 and temperate discussion of some branches of the question, might prove useful by 
 bringing together ths prominent arguments for and against the Bank Act iu 
 a condensed and readable form. The correspondence, however, was at once 
 closed on my part when I learned that your letters wore not written with the 
 cognisance and under the control of the Committee. Moreover, they seemed to 
 me to be characterised by a tone not consistent with that spirit, in which alone iSpj 
 philosophical discussion can be conducted to a profitable result. 
 
 the determination, expressed in my letter of the 12th October, not to continue 
 the correspondence with you in your private capacity, precludes me from making 
 any comment upon the statements containe"d in your subsequent letters; nor, 
 indeed, have I any wish to do so. The iutelllgence and good sense of those to 
 whom the correspondence may be submitted, I am confident, will correctly 
 appreciate the long series of misconceptions and erroneous reasoning, which per- 
 vade your letters. To follow them up step by step, to dissect, and to lay open 
 the fallacies upon which they rest, would indeed be an interminable task; and I 
 think few persons will doubt the propriety of my determination not to enter 
 upon it. 
 
 My letters, you will observe, were addressed to you in your oflicial character 
 as Secretaiy of the Committee; and whatever control over those letters may have 
 passed from me, has become vested in the Committee, aaid not in yourself person;- 
 ally. If the Committee think proper to take upon themselves to publish my 
 letters, I make not the slightest objection to their doing so; but I am disposed 
 to believe that they will find much iu the tone and in the matter of the sub- 
 sequent letters, which bear your signature, which will induce them to hesitate 
 seriously before they give tlieir sanction to the propriety of making them public. 
 
 This correspondence is now finally terminated; these few lines, of course, 
 being considered as forming part of it. — ^Your obedient servant, 
 
 H. Brookes, Esq., Secretary, &c, Overstone. 
 
 11. 
 
 25 Birciiin-lane, E.G., Dec. 3rd, 18C1. 
 
 My Lord, — I have to acknowledge the receipt of "a few more last words" 
 
 in your lordship's letter of the 15th ult. Your lordship seems determined to 
 
 differ with mo to the last, and with a singular fatality to be always in the wrong. 
 
 Your lordship commenced this correspondence with the avowed design of " bring- 
 
CORRESPONDENCE ON THE CtRRENCY. 57 
 
 ing together all the prominent arguments for and against the Bank Act, in a 
 condensed and readable form, for public discussion;" but no sooner is it 
 printed and ready for publication, than your lordship shrinks from it. I am 
 amazed at the degree of moral courage exhibited in the avowal of this moral 
 cowardice. Finding the simplest arguments against the Bank Act far more 
 cogent than the most prominent arguments in its favour, you would suppress the 
 publication you have courted, and evade that " free discussion " to which, ere 
 while, -you so bravely professed to look for the development and vindication of 
 the truth. At the prospect of that ordeal, the courage seems to dribble from 
 your lordship's pen, as that of Bob Acres oozed out at the palms of his hands 
 and his finger ends, when coming in cold contact with the loaded pistols. Your 
 lordship has, no doubt, a comforting Sir Lucius O'Trigger at your elbow to 
 remind you of the "snug lying in Westminster Abbey," or the pleasant alterna- 
 tive of being " pickled and preserved for the country; " but you probably 
 prefer a good standing in " Westminster Hall " to either. 
 
 Your lordship is evidently in an agony of apprehension lest the logic of a few 
 plain facts and deductions should prove too much in opening the eyes of the 
 public for all your lordship's science; but not having the gi-ace to confess your 
 own apprehensions, you endeavour to excite and play upon those of others. To 
 save yourself you would crawl between the legs, and coil round the stalwart 
 " understandings," of a committee, taking the off-chance, perhaps, that either in 
 receiving or avoiding a kick you may at least prove a stumbling-block to them. 
 To say the least of it, my lord, this is very ignoble. The timid haie, after a long 
 run, in which she has exhausted all her art in doubling and turning, will some- 
 times rush for protection into the arms of her pursuers; but "the grey old fox 
 generally dies game at last." Fancy poor Eeynai'd, hai*d pressed, appealing 
 from the hunters in pursuit of him to the farmers, whose hen roosts he has been 
 in the habit of thinning, crying " Save me, save me ! for the dogs are upon us 
 and OUR poultry." No, Reynard would not so disgrace himself or scandalise his 
 race and lineage; he would never dream of begging his craven life from the fell 
 hounds in chase of him, or the huntsman who follows upon their track. Your 
 lordship is a greater philosopher than Reynard, and would stoop to be saved by 
 the one, in order to cheat the other of his legitimate trophy, the brush. 
 
 To accomplish this inglorious purpose, your lordship contends that these 
 letters, having been addressed to me in my oificial capacity, as Secretary to the 
 Bank Act and Cun-ency Committee, that Committee alone are entitled to publish 
 them, and that I am not. This pleading is entirely bad, because it is entirely 
 unfounded in fact. 
 
 Your lordship's first note, it will scarcely be denied, must be taken as the 
 " key note " to the whole. It was that note which opened the discussion, and 
 that note with my first reply, definitively settled the relations of both parties in 
 the controversy; and your -lordship's second letter would accept and confirm 
 those relations beySlid future cavil or dispute. If that first note was not clearly 
 and indubitably addressed to, or intended for the Committee; and if my first 
 reply was not as clearly and indubitably wi-itten for and on their behalf; or, 
 being otherwise, if your lordship took no exception to it on that account, then 
 there cannot be the shadow of a doubt that the fact is not as your lordship states, 
 and that the plea now set up is a mere afterthought, and utterly unsustainable. 
 
 Now what are the facts? Why, in the fii-st place, that first note is certainly 
 NOT addressed to me as Secretary, and does not even contain the merely descrip- 
 tive addition of " Secretary." 2ndly. It does not, in the body and tenor of it. 
 
58 <;OKUESP0NDENCE ON THE CURRENCY. 
 
 recognise me in that or any other capacity. Srdly. It does not express, nor' 
 either directly or indirectly intimate, any desire or intention that it should be 
 laid before the Committee, as it undoubtedly would have done if that'Tiad then 
 been intended. 4thly. So far from this, it does not recognise even the existence 
 of the Committee itself; but, on the contrary, it carefully, studiously, and with 
 evident design, avoids any such recognition; and the circular is not recognised 
 as the circular of the Committee, but is commented upon as " a printed paper, 
 with certain names appended thereto." • 
 
 This being the character of your first note, there was no gi-ound or pretext 
 for the Committee to claim or recognise it, as addressed to them, even if they 
 had desired it; and they did not claim it ; and there was no obligation, of duty 
 or otherwise, upon me to submit it formally to them; and it was not so sub- 
 mitted ; or to ask for their instructions, as to the reply I should make to it; 
 and I did not ask, and I did not receive any such instructions. The letter 
 was addressed to me, personally and individually, in every part of it, and my 
 reply testifies in every part of it that it is my personal and individual reply. 
 There is not a line, or a phrase, or a word in it, that could have led or misled 
 your lordship to entertain any other impression. Your lordship could not fail to 
 have seen all this, and if anything else had been at that time in your lordship's 
 contemplation, that was the time, and that the opportunity to avow it. Did 
 your lordship, in your next letter, make any such avowal? or any remark 
 whatever to that effect? Not a word. On the contrary, every fact, argument, 
 and opinion therein are taken and treated by your lordship as mine and mine 
 only, and not as those of the Committee. What, then, becomes of the rash, un- 
 qualified assertion, that these letters were addressed to me as Secretary? 
 
 It is true that when we come to the third, which was substantially the last, 
 of your lordship's letters, a phrase creeps out about " the matters in dispute 
 between me and youi- Committee." That letter is dated on the same day (7th 
 October) as my reply to your previous one (which reply was then written and 
 dated, but in the hands of the copyist) ; and without waiting to reply to a phrase 
 of such very equivocal significance, until I replied to the letter which contained 
 it, I at once added the final paragraph to my letter of that date, repudiating any 
 such reference to the Committee. 
 
 In perusing that reply, and before arriving at that paragraph, I can fancy your 
 lordship would see many good reasons for desiring to cut short a correspondence 
 so little likely to sustain the reputation of the Bank Act or its authors, and that 
 paragraph afforded an excellent pretext, and was immediately made available 
 for the purpose. 
 
 Your lordship has stated again and again, and again and again repeated, as if 
 the asseveration would acquire additional weight by frequent repetition, or at 
 least, stood greatly in need of it, that the avowal in that paragraph was the 
 true reason, and not a pretext only. I am quite content to leave that statement, 
 with the facts and dates to which I have now adverted, to the reader's decision, 
 and I make your lordship a present of his judgment upon it. I will leave him 
 also to call upon your lordship, to explain why it was, if the letters were 
 originally intended for the Committee, that all indication of that intention is so 
 carefully, and with such manifest design, excluded from them? And your lord-, 
 ship will find it a very awkward explanation to give. 
 
 The motive, the object of now seeking to transfer the correspondence to the 
 Committee, is transparent enough; indeedit is avowed. If the Committee will 
 but accept the transfer, your lordship " is disposed to believe that there are some 
 
UUKlUisrUNDENCK ON THE CURRENCY. 59 
 
 matters in my letters which should induce them to hesitate seriously before 
 they give their sanction to the propriety of making them public." " The wish," 
 my lord, " was father to that thought." Your lordship, no doubt, is very much 
 disposed to hope it; and, with a tendency as strong as Franklin's, always to look 
 at " the bright side of things," equally disposed to believe it. Your lordship 
 does not condescend to state what those matters are; that, of course, would not 
 do; your lordship sees the advantage of advancing under cover of a dense cloud 
 of smoke, and of eflfecting a retreat under the same protecting obscuration. 
 Those who are wont to frighten children in the dark, generally rely upon the 
 indefinite and indescribable; they may talk of hobgoblins, but need not expend 
 much ingenuity in descriptive particulars. As in the case of "little Miss 
 Panic " and the late " Mr. Bank Act," with his " bankruptcies and ruins, and 
 abnormals," &c., a very small amount of danger, with a great deal of mystifica- 
 tion, will excite the requisite amount of apprehension. And your lordship does 
 not hesitate to avow a belief that the gentlemen of this Committee may be in- 
 duced to exhibit the same shrinking timidity, the same moral cowardice, the 
 same aversion to " fi-ee discussion," and the same anxiety to shirk the ventilation 
 of unpalatable truths as your lordship now manifests! But either your lordship 
 mistakes the men, or I do. If I mistake them not, they stand upon pretty good 
 terms with honesty, and have little need to fear or avoid her in any path. Ac- 
 customed to shoulder theii* way through life, with " Free Discussion " on one aim, 
 and " Enlightened Experience " on the other; with heads erect and faces upturned 
 to the blazing sun of truth, they need not shrink from an open encounter with 
 either truth or error; and they will not. And for any injustice affecting them 
 or their class, they wUl be content to trust to their tried friends on either arm, 
 rather than stoop to the unmanly expedient of suppressing a publication on your 
 lordship's most disinterested and considerate suggestion. "Jour lordship thought 
 proper, for some reason, to commence the controversy with me, and it is not 
 reasonable to expect that they should at the last moment take it out of my hands. 
 Following the memorable example of the late Sir Robert Peel, they will probably 
 " hesitate a long time, and consider the subject very seriously and with much 
 anxious deliberation, before they finally make up their minds — not to entertain 
 it at all." 
 
 Your lordship again remarks, as your lordship has several times remarked 
 before, upon " the tone " of my letters as not being " consistent with the spirit in 
 which alone philosophical discussions can be conducted;" and these remarks are 
 intended, no doubt, to be very disparaging. They are very unjust, and somewhat 
 ungenerous, and, it may be, are quite as ill-advised. My letters have all been 
 written in reply to your lordship's, and their tone has been adapted to the subject- 
 matters you have presented to me. If your lordship has given me but the 
 smallest modicum of science, intermixed with a vast amount of sophistry and 
 fallacy, and glowing descriptions of obfuscating delusions, and deceptive pictures 
 of states of things wiich do not in reality exist, but all of which were eminently 
 calculated to deceive and impose upon the unwary, what was I to do with the 
 seductive medley? I might, no doubt, have accepted your lordship's facts, 
 adopted your lordship's reasonings, and so have arrived at exactly the same con- 
 clusions. It was rougher, ruder work to take those scientific principles to pieces, 
 and scatter the fragments at your lordship's feet ; but there was an imperative 
 obligation upon me to do it. And that being done — the science being thus dis- 
 posed of — all that remained was the fallacy, delusion, and literary imposture ; 
 and those became the proper subjects of unmitigated censure and well deseiTed 
 
 G 
 
CO CORRESPONDENCE ON THE CCRRENCr. 
 
 deuunciatiou. I am not the first who has exposed the egregious pretensions to 
 science of the new Currency School, or has denounced its philosophy in language 
 measured only by an honest conviction of its deserts. They have been subjects 
 of ridicule and derision, and have been denounced by men of the highest repute 
 in science and political economy, from the earliest period of their promulgation 
 down to the present time. 
 
 The all-pervading influence and importance of this great subject, renders it far 
 .too complicated for the puny grasp of the charlatan and the empiric. Whatever 
 of science or philosophy it involves — and there is no science and no philosophy 
 .'of greater moment to the whole human race — have their essential and inevitable 
 bearings upon the trade and commerce, the wages and prices of the countiy, and 
 the distribution as well as the accumulation of its wealth, and those your lord- 
 ship has neither the knowledge nor the capacity to grapple with. The testimony 
 against Lord Overstone, on this head, is the testimony of Lord Overstone him- 
 self, in the character of Mr. Jones Loyd, before a Committee of the House of 
 Commons. Your lordship having mastered the " theory of the exchanges," 
 and acquired proficiency in the " art and mystery of money dealing," has mis- 
 taken those attainments for " the philosophy of national wealth and progress, 
 and prosperity." 
 
 Another " living wi-iter," whom your lordship will permit me to quote without 
 naming, says, " The views of Lord Overstone, whatever may be his pretensions, 
 are those of a mere banker — a trader and dealer in money— ^and are bounded by 
 the counter and the till. There is nothing of the statesman or man of science 
 about them. He has watched the foreign exchanges aud marked the rise and 
 fall of discounts, the flux and reflux of gold, and noted their more immediate 
 causes and results. He had profundity enough to see how these might be turned 
 to profitable account J)y the capitalist, but had not depth or breadth of view suffi- 
 cient to enable him to see how they might and ought to have beean improved to 
 the advantage of the country at lai-ge. With a frankness which shows that he is 
 utterly unconscious of his own incompetency, he confesses that the idea of apply- 
 ing the results deducible fi'om such investigations ' to the regulation of the inter- 
 nal trade of the country seems to him to be nonsense!' He constructs a 
 scheme for regulating the exchanges, which has proved enormously profitable to 
 a class and ruinous to his countiy, without ' ever having reflected upon the effect 
 which those regulations might have upon the wages of the industrious classes, or 
 the stocks of our home traders ; convinced,' as he innocently cohfesses, ' that his 
 intellect was unequal to the task, and would only he led irito confusion hy the 
 attempt .' ' We accept the confession, conscientiously believing it to be true; 
 and believing that, we ask Lord Overstone's admh-ers, whether anything could, 
 by any possibility, be more utterly derogatory to his lordship's pretensions, more 
 subversive of his authority, or more condemnatory of his system." Such were 
 my own opinions exactly, once, and they continue to be so still. 
 
 Your lordship alludes to a long series of misconceptions and fallacies in my 
 letters, but do not prove or even specify a single instance. This is not hand- 
 some treatment. Your lordship's misconceptions aud fallacies have been rather 
 numerous, and I have not passed over any, but have done ample justice and 
 execution upon all, and your lordship might have returned the courtesy. So far 
 as I am concenied, I can forgive this slight, but it will, doubtless, occur to many 
 of the persons of " intelligence and good sense " who read these letters, that your 
 lordship might have specified one or two, if only by way of sample of the rest; 
 and I fear they may infer that if your loi-dship could have done it, your lordship 
 
COnEESPONDENCE ON THE CURRENCY. 61 
 
 would not have failed to do it. Not having attempted that, it might have been 
 as well to have abstained from the idle boast, that " you could an' if you would" 
 have done it. 
 
 Your lordship did not feel at all precluded from adopting that course in your 
 letter of the 12th October, although the same fact might have been pleaded in 
 preclusion then as is pleaded in preclusion now ; but it is too preposterous ever 
 to have been pleaded at all. Your lordship has, in fact, had a gi-and opportu- 
 nity for the purpose you have in view, and have wilfully and perversely thrown 
 it away. In your lordship's letters are finely developed all your scientific prin- 
 ciples, and the manner in which they have been dovetailed into the Act of 1844; 
 the beauties and advantages of that glorious and ever-to-be-glorified statute, and 
 the inestimable benefits it has conferred upon the community, are set forth in the 
 choicest phraseology, culled from yoiu- lordship's best written speeches given in 
 evidence before Parliamentary committees: and all its "suspensions," and 
 " temporary difiiculties," and " abnormal conflicts " — maliciously miscalled its 
 failm-es — are most laboriously, lucidly, and satisfactorily explained. And against 
 this formidable array of science and leai|ning and philosophy and masterly expo- 
 sitions, there was nothing opposed but a troop of Mr. Conception's little daughters, 
 and a horde of Mr. Reason's erring sons, and a batch of old Truth's illegitimate 
 offipring — all persons of very little consideration, brought together by a person 
 of no consideration whatever, only to make a disturbance, and all, therefore, very 
 easy to put down. Why, what more could your lordship have desired. Here 
 was a magnificent triumph such as was never presented before, and is never 
 likely to offer again. Your lordship should have leaped for joy, and have danced, 
 and clapped your lordship's hands for very gladness. And the publication of 
 such a correspondence, instead of being discouraged and suppressed, should have 
 been hailed with rapture, and your lordship should have volunteered a contribu- 
 tion of large amount to promote its gi-atuitous distribution throughout the length 
 and breadth of the land, in order that all who had " eyes to see might see " and 
 might read and be converted, and might then fall down before the golden calf 
 which Nebuchadnezzar the king had set up, and worship it for ever and ever- 
 more. There was but one drawback to all this tempting prospect — the difficulty 
 of dealing with the "misconceptions," " erroneous reasonings," and "fallacies;" 
 but that, your loi-dship says, could very easily have been managed; and if your 
 lordship says so, we are all bound to believe it — of course. 
 
 On several occasions your lordship has been good enough, if not to lecture me, 
 to give me sage counsel. Always grateful to those who condescend to instruct 
 me, I am not unmindful of my obligations to your lordship. In return for those 
 good ofiices I would suggest to your lordship, never again to enter upon a con- 
 troversy on the Currency with anyone who has the means of replying. As a 
 " writer on the Times," whenever the Bank Act requires upholding, or public 
 opinion requires to be obfuscated, your lordship approaches the unanswerable, 
 for the good and sufficient reason that no one is permitted to answer. There 
 your lordship may " run riot " in questionable science, false philosophy, and 
 unsound doctrine, and may disparage and abuse all other writers or speakers 
 who may entertain views at variance with " Sir Oracle," and that is a sort of 
 " free discussion " admii-ably adapted to your lordship's principles and to the 
 merits and- demerits of the Bank Act of 1844. — I have the honour to remain, 
 your lordship's most obedient servant, H. Brookes. 
 
APPENDIX, (a). 
 
 The following ie the CSrcular, or " printed paper." referred to by Lord Overstone in 
 the preceding Correspondence: — 
 
 THE BANK ACT AND THE CURRENCY. 
 
 Committee Rooms, 25, Birchin Lane, London. — E.G. 
 July 3rd, 1861. 
 
 The Cureenct Question is one which very few have studied, and still fewer 
 understand; most people eschew it as dry and uninteresting, and the Press will 
 not write upon it because the people will not read, and the people will not read 
 because they believe that the nature, the quantity, and the circulation of money, 
 and the rates of interest and discount, are questions fit only for Bankers and 
 Money Dealers. The latter are in truth almost the only parties who understand 
 those questions, and they understand them chiefly, as aifecting their respective 
 trades, interests, and profits. It is not their business to consider them as govern- 
 ing, not only the larger transactions of the banker, the merchant, and the manu- 
 facturer, but as vitally affecting the daily operations of the small trader and 
 the petty shopkeeper, the employment of the working man and the rate of his 
 wages, and the price of every article of food or clothing they purchase for them- 
 selves or their families. 
 
 "When viewed in this light, the Currency becomes one of the most momentons 
 topics to which the Public mind can be directed, and it behoves every man to 
 see that it be rightly founded upon a safe basis, and justly regulated upon sound 
 principles. It is believed by many — including several of the most eminent and 
 practical men of the age — that our present monetary system is unsound: — ^that 
 the extraordinary fluctuations which in recent years have inflicted such enormous 
 losses upon the country, were mainly caused, or were greatly aggravated, by the 
 exigencies of the Bank of England, under the powers conferred, and the obli- 
 gations imposed, upon it by the Act of 1844 : — that the issue of Fourteen 
 millions of Bank Notes, all payable in Gold on demand, against a Government 
 Debt, which is practically not convertible into Gold, is not a sound or natural 
 foundation for the National Currency: — that the artificial schemes and con- 
 trivances by which it is sought to render these Bank Notes apparently convertible, 
 whilst they also are really inconvertible (there being no Gold to meet them), — have 
 again and again inflicted losses upon the community to the extent of hundreds of 
 millions; have utterly ruined numbers of traders, and subjected millions of the 
 people to miseries and privations of the utmost extremity." It was estimated, in 
 evidence before a Committee of the House of Commons, that the panic of 1847 
 caused a depreciation in the property of the country of at least three hundred 
 MILLIONS, and that of 1857 was not less than that amount; and the chronic 
 state of pressure and fluctuation which has existed since, has probably involved 
 the sacrifice of profits and property to an incalculably greater amount. Bankers 
 and capitalists — a small and non-productive class — profit to a large extent by 
 these disasters, absorbing a considerable portion of the capital which had been 
 created by the ruined trader, and which, when confidence returns, again becomes 
 the source of evil, in the shape of cheap money, low rates and over-trading. 
 The undersignec[ believe that these subjects require more general investigation 
 
APPENDIX. 63 
 
 and discnssion, and they desire to stimulate and promote it. They believe that 
 the Bank Act of 1844 is founded upon unsound principles — -upon narrow and 
 empirical views: that even if its principles were sound, and its provisions 
 adequate for the trade of 1844, those provisions are utterly inadequate for the 
 trade of 1861, — that the quantity of Gold which the Bank is enabled to command 
 is quite insufiicient for the increased trade and increased currency, which are 
 based upon it, — and that the inability of the Bank to retain its Gold under 
 the existing law, must continue to expose us to frequently recurring panics. 
 Considering the ruin and misery occasioned by these panics, they would earnestly 
 recommend the enquiry whether any, and what measures can be adopted by 
 way of prevention or preparation for the " coming events " which even now 
 " cast their ominous shadows before." 
 
 Without pledging themselves, or in the least degree desiring to commit others, 
 to all the views and objects advocated in the accompanying pamphlets,* they 
 consider them well adapted to give a popular and intelligible view of the evils 
 of the present system, and to raise for discussion, all possible remedies, or means 
 of temporary alleviation; they therefore invite a careful perusal of them, and 
 would m-ge you to promote the discussion of these topics amongst your friends 
 and acquaintance, and in your local papers. They solicit also the commimica- 
 tion to the Seceetart, of any suggestions that may occur to you in further 
 elucidation of the subject, with copies of any Newspaper containing articles or 
 correspondence thereon ; and that your name may be added to the Committee. 
 
 SAMUEL MOELBY, Wood Street. 
 GEORGE B. GBEAXOEEX, Aldermanbnry. 
 JOHN BAGGALLAT, Love Lane. 
 CHARLES J. LEAF, Old Change. 
 JOHN WREFORD, Aldermanbury. 
 J. R. JEFFERT, Regent's Street, & LiTerpooI. 
 JOHN MARGETSON, Cheapside. 
 JOSEPH WELCH, Cheapside. 
 CHARLES W. BUTTON, Newgate Street. 
 ROBERT SLATER, Fore Street. 
 EDMUND PHILLIPS, London Street. 
 H. BROOKES, Secretary. 
 
 [* Copies of the Pamphlets may be had on application, by letter, to the Secretary.] 
 
 APPENDIX, (b). 
 
 [Extract from a Letter of Hamer Stansfeld, Esq., in the " Money Market Review," 
 of December 21st, 1861.] 
 
 It is not the first time that Lord Overstone has shrunk from an examination 
 of his cuwency principles. He did so before the Committee of 1840, as is shown 
 by the following extract of a letter from Mr. Hume to myself, dated 23rd 
 January, 1854: — "As a member of that Coinmittee on the Bank of England, of 
 which Sir C. Wood was chairman, I had the opportunity of observing that Sir 
 
64 APPENDIX. 
 
 R. Peel, Sii- C. Wood, Mr. Warburton, and almost every member (the member 
 for Bii-mingham alone excepted), were under tbe influence of Mr. Jones Loyd's 
 opinions, viz., ^ that he could regulate the amount of paper currency;' and 
 further, that deposits in the Bank of England were not part of the currency. 
 These were the two fallacies of Mr. Jones Loyd, and the perusal of the evidence 
 will show how he broke down in his examination — nor would he even have re- 
 turned to finish his examination, if I had not consented to limit my questions, 
 and these, with the answers of Mr. Loyd, are before the public." 
 
 In the correspondence with Mr. Brookes, Lord Overstone adduces, in support 
 of the Act of 1844, that it had been twice submitted to the ordeal of Parliament- 
 ary Committees, and still remained the law of the land. But why? Because, 
 in the Committee of 1848, its repeal was sacrificed to a party compromise, as 
 shown in the following extract from another letter of Mr. Hume's : — " My 
 exertions in the Committee of 1848 would have repealed the Act of Peel of 1844, 
 as inconsistent with the principles of free trade, and my resolution in that Com- 
 mittee to that pm'pose was lost by the casting vote of -Sir Robert Peel. He was 
 so much in favour of those Bills (1844 and 1845), though supported only by the 
 chair of the Bank, that he obtained in exchange for his support of Lord J. Russell's 
 Cabinet, their votes to leave those Bills as they were. Lord J. Russell, who had 
 not attended the sittings the Committee, or taken any part in the discussion, 
 attended, and gave his vote to Sir Robert' Peel, by which no change was 
 recommended." 
 
 And why did the Committee of 1858 permit it to remain the law of the land ? 
 Because it was a packed Committee, consisting of twenty-five members — eleven 
 of whom were either interested in its support or had previously sanctioned it — 
 to wit, two were Bank Directors, sitting in judgment on theii- own monopoly; 
 two were members selected expressly to watch over the interests of the joint- 
 stock and private banks of issue, also partaking of the monopoly; three members 
 were bankers. The chaii-man, the Hon. E. Cardwell, was a Peelite, and apai-ty 
 to the introduction of the Act, and still a strenuous and ardent supporter of it; 
 and three of the members were similarly situated, or had voted in favour of the 
 Act on its trial before the Committee of 1848. With such a Committee, what 
 chance was there of repealing, the Act? Was not the inquiry a mockery, a 
 delusion, and a snare? 
 
 Again, Lord Overstone, forgetting his memorable answer to Question 5,208, 
 " That the principle upon which the Act was passed was that of protecting the 
 public non solum a calamitate, sed etiam calamitatis met&," says now, that the 
 sole object of the Act of 1844 was to ensure the convertibility of the notes. His 
 words are " to obviate this one calamity is the object and purpose for which the 
 Act of 1844 was passed." Was this the truth, the whole truth, and nothing 
 but the truth ? We will call Sir Robert Peel as a witness to the contrary. In 
 his speech on December 3, 1847, he thus expressed himself: — " I say, then, that 
 the Bill of 1844 had a triple object. Its first object was that in which I admit 
 it has proved a failure, namely, to prevent a panic and a confusion such as that 
 which has been obviated by the intervention of the Government (in suspending 
 the Act). But there were two other objects of as great importance; the one 
 being to maintain and guarantee the convertibility of a paper currency into gold, 
 and the other to preven' the aggravation of those difficulties which arise at all 
 times from undue speculation, encouraged by an abuse of credit. In these two 
 objects my belief is that the Bill has completely succeeded." It appears, then, 
 that there were three objects, and not one only. Its first object, that of prevent- 
 
APPENDIX. 65 
 
 ing panics, and protecting the public non solum a calqmitate, sed etiam cala- 
 mitatis metu, is admitted by Sir Robert Peel to have failed, and the failure of 
 the two latter is pronounced by the Committee of the House of Lords on the 
 Bank Acts, in their celebrated report of 1848. 
 
 Let us briefly consider the fundamental principle of the Act of 1844, which 
 has been such a cui-se to the country — viz., that a mixed currency should fluctuate 
 exactly as a metallic currency would. The observation of Mr. James Wilson, 
 " That the principles on which the Act is founded are not only not true, but in 
 every instance nearly the reverse of the truth," may justly be applied to its 
 foundation principle. With great deference to the opinions of the high authori- 
 ties who have sanctioned it, we would submit that the very opposite principle is 
 the more correct — namely, that a mixed currency should not fluctuate as a metal- 
 lic currency does. A metallic currency is undoubtedly the safest, possessing 
 intrinsic value; but its liability to fluctuation in quantity arising from the state 
 of the exchanges, and consequent drains, diminishes its claim to be considered 
 the best type of a currency. Its liability to fluctuation is an evil to be coun- 
 teracted and not adopted. 
 
 The avowed intention of the Act is to make money dear and everything 
 else cheap, when the exchanges are against us, and gold leaving the country, in 
 order to bring-it back and ensure the convertiljility of the note. The ingenuity 
 of man could not have devised a better scheme for legally defrauding all other 
 classes for the benefit of the monied class. But it will be asked, How can we 
 maintain, under a mixed currency, the safety of a metallic currency, and yet 
 avoid its fluctuationss Simply by keeping a larger reserve of bullion as recom- 
 mended by Mr. Tooke; such a reserve as would adjust the exchanges without 
 diminishing the supply of our domestic currency. The largest drain ever known, 
 necessai-y to turn the exchanges in our favour, and bring the gold back, was in 
 the panic of 1847, when gold to the amount of £9,000,000 was exported. If, 
 then, a reserve of gold in the form of bullion of £10,000,000 were kept, it 
 would be ample to prevent any disturbance of om- domestic currency and any 
 alteration in the rate of discount. Consequent on the efflux of gold. This 
 £10,000,000 may be raised without any additional tax, by ti-ansferring to a 
 National Bank of Issue the sole power of issuing bank-notes, now monopolised 
 by the Bank of England and certain privileged bankers. Were a National 
 Bank of Issue established, on the principle of allowing any one, with the exception 
 of the Government, to have legal tender bank-notes payable in gold on demand, 
 on depositing two-thirds of the amount in Government securities, and one-third 
 in gold, a sum of at least £30,000,000 might be obtained. With this sum the 
 debt to the Bank of England could be discharged, which is necessary to be done 
 before the Act can be repealed, a reserve fund of £10,000,000 of gold obtained 
 to regulate the exchanges, and taxes in some degree diminished. 
 
 . Previous to the Act of 1844 anybody could issue notes without giving the 
 least security whatever. We advocate the granting the same freedom of issue, 
 but requiring the amplest security to be deposited for their convertibility into gold 
 at its market price. — I am, sir, your obedient servant, Hamer Stansfeld. 
 
 Highfield, Windermere, Dec. 14, 1861. 
 
 D. i\ Oakey, Printer, 21. Cannon Row, Westminster, S.W, 
 
Just published, fourth edition, price One Shilling. 
 
 Free Trade in Gold not incompatable with our 
 
 Standard of Value, and the True Remedy for Kninous Fluctuations 
 in Prices and in the Bank rate of Discount. By Henkt Beookes, 
 late Editor of the " Bankers' Circular." 
 
 London: Effingham Wilson, Boyal Exchange. 
 
 Just published, fifth edition, price One Shilling. 
 
 Eeasons for an Alteration in tlie Legal Tender, and 
 a Reform in the Currency. By Robert Slatek. 
 
 London: Effingham Wilson, Royal Exchange. 
 
FOURTH EDITION. 
 
 THE BANK ACT OF 1844. 
 
 FREE TRADE IN GOLD 
 
 NOT INOOMPATIBLE WITH OUE 
 
 STANDARD OF VALUE, 
 
 AlTD THE TErE EEMEDT TOE ETJINOTJS ELTJCTUATIONS IN 
 PEICES AND IN THE 
 
 BANK RATE OF DISCOUNT. 
 
 BT 
 
 HENRY BROOKES, 
 
 (Late Editor op the " Bankebs' CiscuLiE.") 
 
 LONDON : 
 EFFINGHAM "WILSON, EOTAL EXCHANGE. 
 
 1861. 
 
G. HILL, MAOHIHE PEINTEE, WESTMINSTEE EOAD. 
 
PREFACE. 
 
 Two or three sections of the following pages were written a few 
 months ago, when the Bank rate was at 8 fer cent. Circumstances 
 interrupted their completion until April, by which time the rate had 
 fallen to 5 ^er cent, A month ago there were serious apprehensions 
 of a glut of clieap money — the high rates of last year having so con- 
 tracted all mercantile operations, that there was no commensurate 
 demand for the superabundant supplies ready to flood the money 
 market the moment that full confidence should return. "Within a 
 fortnight, however, there was another change, and by Thursday last 
 it was fully expected the Bank rate would be raised to 6 ^er cent. 
 By next Thursday that rise may have become inevitable — or, it may 
 fall to 4 per cent. "Who can tell ? But how is it possible that 
 business can be conducted, and mercantile engagements be provided 
 for, amidst such changes ? If the legal restrictions for the main- 
 tenance of our standard of vulue be the cause, or one of the causes 
 of these evils, it is time they should be abrogated or modified, but 
 none of the innumerable propositions in relation to them, have 
 hitherto shown how those restrictions can be safely dispensed with. 
 The " G-old note," described at page 33, as the "representative of the 
 standard," is I believe a new idea, smd if adopted will, I venture 
 to affirm, render the standard absolutely perfect, and nevertheless 
 permit the free importation and sale of Gold at market price. If 
 it accomplish that it will assuredly be the means of saving millions 
 of capital now annually wasted. Pull, free, and independent dis- 
 cussion in the press and in local committees, if they do not 
 estabUsh the soundness of these propositions, may elicit something 
 better. It behoves every merchant and manufacturer, and every 
 trader and shopkeeper, therefore, to aid in disseminating them, 
 and in promoting that discussion. The capitalists will oppose aU 
 change, and nothing but a vigorous expression of mercantile 
 and public opinion can enable Parliament to efiect it. That 
 opinion has yet to be formed and organized, and a few months more 
 may find us struggling m the throes and pangs of anothee panic. 
 
 May 13th, 1861. 
 
OPINIONS OF THE PRESS. 
 
 This is unquestionably a very large and most important subject — to tbe mercantile 
 community it is or ougbt to be the question of the day, and Mr. Brookes' pamphlet is 
 Tery opportune * * Mr. Brookes attacks with great boldness, if not temerity, some 
 of the leading doctrines on which the Bank Act is founded * * he traces these flnctna- 
 tions to their origin in the law, which, by establishing tbe Mint price for gold, pre- 
 cludes the possibility of our obtaining or retaining the quantity our commerce requires 
 at a market price. This he considers the root of the evil. Mr. Brookes agrees with 
 Lord Overstone that " the manager of the currency ought to have no connection with 
 trade or commerce," asd shews, with considerablfi care and minuteness, the probable 
 operation of the changes he proposes, in keeping up the stock of gold and in regulating 
 the rates of discount and the prices of commodities. * * Altogether the pamphlet 
 is worthy of attentive perusal either by Bullionists or Anti-BuUionists, and is calculated 
 to revive the full discussion of what are so universally known as our Currency Laws.— 
 The Bankers' Magazine. 
 
 We may honestly recommend a perusal of this Pamphlet. Mr. Brookes has evidently 
 studied his subject deeply, aud writes with the earnestness of conviction. * * It is the 
 most thoughtful exposition of currency views that has issued from the Press for many 
 years. — Money Market Sevieie. 
 
 The Pamphlet is written with great clearness, and states that which is evidently the 
 result of a lengthened enquiry into this great subject. Indeed, the many points referred 
 to, aud the effective manner in which the old arguments are refuted, evince beyond 
 dispute the ability of the writer to grapple with the question. — The News and Banker^ 
 Journal. 
 
 The Bank Act of 1844 — A Plea for a Tree Trade in Gold, eloquently and ably argned 
 by Mr. H. Beookes, the late Editorand Proprietor of the Bankeks' ClECULiB. — 
 The Observer. 
 
 Mr. Brookes, the newest authority on the subject, maintains that " Bullion Notes " 
 may be issued by the Mint, not on the security of the States debt, bnt on the security 
 of the States Bullion, a safer currency, doubtless, than Bank of England Notes repre- 
 senting gold spent in the Peninsular Wars, and at Waterloo. — The Greenock Herald. 
 
 Mr. Henry Brookes, formerly of the " Bankers' Circular," acts as Secretary to the 
 Committee, and has published an exceedingly well-written Pamphlet. * * We close our 
 article with the following admirable passage. — The Northern Whig, Belfast. 
 
I.— THE BANK ACT OP 1844, AND ITS TEUITS. 
 
 Our monetary laws put it in the power of a few shrewd capitalists so to contrast the 
 swpplp of gold as to enrich themselves, emtarass the bank, and nearly ruin the nation. 
 
 — IiOKI) ASHBUETON. 
 
 The Committee 0/ 1848 examined Seventeen witnesses, and only Five of them 
 
 approved of the Act of 1844. viz. The Governor of the Banh at the time the- 
 
 Act passed. Lord Overstone, and the Governor and Deputy Governor of the 
 
 Bank, in 1 848.— Mr. Cayley, M.P. 
 
 If the Act of 1844 continues unrepealed, there can he no difficulty in forseeing thai 
 
 its provisions must he suspended, as they were in 1847, in every period of great 
 
 cnmmercial difficulty, as soon as the crisis has really and completely set in. — 
 
 Mr. J. SiuAKT Mill. 
 
 " The Act of 1 844 is one of the most wanton, ill-advised, pedantic, and rash pieces 
 
 of legislation," and " a total, unmitigated, uncompensated, and, in its consequences, a 
 
 lamentable failure. — Mr. TookEj History of Prices. 
 
 1. — For nearly a hundred years past we have been suffering 
 one continued series of monetary panics, each one involving 
 the loss of capital, the fruits of our labour, to the extent of 
 hundreds of millions ; and each of which, as we have after- 
 wards seen, might have been avoided or at least greatly miti- 
 gated but for the ignorance or infatuation of our financial 
 dictators. We need not go back to those fearful panics which 
 marked the close of the last century, and resulted in the sus- 
 pension of cash payments, or to those of the earlier portion of 
 the present century, which led to the now famou^ Bank Act of 
 1844. We are now in a chronic state of alternate confidence 
 and panic, or of pressure, which induces perpetual apprehen- 
 sion of panic. 
 
 2. — That Act was designed to check the spirit of speculation, 
 which has nevertheless been as rampant as ever ; and to prevent 
 fluctuations in the money market, which have nevertheless 
 been far more frequent and far more extreme than before. 
 Instead of producing the results promised, it has produced 
 results diametrically opposite ; it was professedly founded upon 
 
the Bullion Report of 1810, as embodied in the Act of 1819, 
 which it was intended to supplement, but its leading provisions 
 are in direct contravention of the most conspicuous, because 
 the most exceptional of the principles of that Report. The 
 Report explicitly declares that in certain periods of panic an 
 extension instead of a contraction of the issues is the true 
 remedy, yet the specific object of the Act of 1854, V7as to 
 provide that in all periods of jiauic when the currency is already 
 unduly contracted, the Bank shall be compelled to contract it 
 still more. 
 
 3. — It has been tested twice in its brief career, and has 
 signally failed on each occasion, and every one foresees that if 
 it lives to be tested again, it will again fail ; and the next time 
 more signally than before. Yet the authors and advocates of 
 this frail system still boast that it " works well." " It has 
 secured the (apparent) convertibility of the Bant-note, and 
 it has compelled a paper circulation, to expand and contract 
 precisely in the same manner as a metallic currency would 
 have done." These are the boasted results of those ingenious, 
 elaborate, and scientific contrivances, but not a word is said of 
 the fearful cost to the country, at which even those poor results 
 and questionable advantages have been purchased. 
 
 4. — What is the spectacle we have for months past been 
 exhibiting to surrounding nations ? We are perhaps the 
 wealthiest as well as the proudest people in the world — we 
 have inexhaustible natural resources, and irrepressible in- 
 dustry and enterprise — we have therefore available produce 
 and capital to pay hundreds of millions of pounds if we owed 
 them. And yet it so happens — and it always so happens — that 
 when we have three or four millions to pay to the foreigner for 
 goods, or when the foreigner buys and carries away a few 
 millions of our gold, the whole trade and manufacturing in- 
 dustry of the country are thrown into the most lamentable 
 
disorder, and the bank raises its rate of discount to five, six, 
 or eight per cent, in order to prevent the further efflux of gold. 
 Doubling the bank rate of discount doubles the value of 
 money, and as ^£100 Will then produce as much interest as 
 ^200 did before, the effect of thus doubling the value of money- 
 is in many cases to halve the value of the stocks of mercantile 
 goods on hand. The holder of such stocks must have money 
 to meet his bills ; but ordinary buyers cannot buy at a profit 
 with money at that price — the holder is therefore compelled to 
 force them into the market, where they are bought by the 
 capitalist at three-fourths or two-thirds, or perhaps half their 
 real value. In this way the property and commodities of this 
 country are depreciated in value to the extent of hundreds of 
 millions of pounds — hundreds of thousands of workpeople are 
 deprived of employment, or employed at reduced wages — and 
 numbers of our traders are utterly ruined, or compelled to see 
 the. earnings of many years absorbed by the bankers and 
 capitalists of this country, or the capitalists and traders of other 
 and rival communities. 
 
 6. — And why ? Because France has been taking three or four 
 millions of our gold, and America three or four millions more — 
 together some six or seven millions — no more. And all this 
 disturbance arises from the loss of that paltry sum ; and that 
 notwithstanding the extraordinary fact that for several years 
 past we have been importing gold to the amount of twenty 
 millions per annum, and to a total amount of not less than one 
 hundred and fifty or sixty millions. How is this ? And why 
 should it be so, and continue to be so, year after year, without 
 any effectual attempt being made either by parliament or the 
 mercantile community to remedy it ? What has become of all 
 that gold, and why is it that having had all that gold we should 
 be so disastrously affected by such insignificant demands 
 for it? 
 
8 
 
 6. — The meaning of a drain of gold to France or to America 
 or elsewhere, is, either that we have contracted debts with those 
 countries and want to send the gold there to pay those debts, 
 or that those countries being in want of gold come to our 
 country to buy it. As in the one case we have had their goods 
 and owe them the money, and in the other receive a profit on 
 the gold they buy, any man endowed with common sense only, 
 and not over-learned in economic finance or philosophical 
 banking, would imagine that there ought to be no difficulty in the 
 matter. If this efflux of gold be really necessary to pay our 
 debts, how is it that with all our wealth, we have not the ready 
 means of paying what we owe ? Why should the parting with 
 six or seven millions of gold produce such disastrous efiects, 
 when we have the means of paying sixty or seventy millions, 
 or ten times the amount if ten times the amount were needed ? 
 These are the simple questions commercial men should call 
 upon their Financial authorities to answer. 
 
 7." — ^But, unfortunately, our commercial men, profoundly igno- 
 rant of a subject which nevertheless so deeply afiects themselves 
 and all their operations, and the interests of all those who are 
 dependent upon them, are still content to pin their faith upon 
 the dogmas and doctrines of Lord Overstone and the banking 
 interest, and they tell us that these things must be — that there 
 is no help for it. Like the quack phlebotomist, they go on 
 bleeding and telling us that we must be worse before we can 
 begin to mend — they bid us look to France and to America, 
 and to every imaginable point of the geographical and political 
 compass, and we shall see " what we shall see " — and peradven- 
 ture it may be sufficient to account for all that is and all that 
 ought to be apprehended, and such arguments (?) with a few 
 sententious phrases about the " mysterious policy of the French," 
 and " the strange practices of the Bank of France," they con- 
 sider sufficient to justify even the last most unjustifiable rise in 
 
the Bank rate of discount ; but is it possible that such dreamy 
 speculations can be considered sufficient and satisfactory by 
 others ? 
 
 8. — " There are two parties interested in this question," said 
 Mr. Cayley, M. P., in the debate in 1857, " the bankers and the 
 public, and if we look to the large dividends paid by the Joint 
 Stock Banks, we must see that the system has been a very 
 profitable one to all bankers." It is in fact the Bank and the 
 banking and capital interest against all other parties and inte- 
 rests in the realm. The loss sustained by the mercantile and work- 
 ing classes from the depreciated values of stocks, &c., during the 
 year 1857, has been estimated at three hundred millions, whilst 
 the Bank of England is said to have realized nearly half a million, 
 and Lord Overstone not lessthan two hundred and fifty thousand 
 pounds of profit by it. This of course is mere rumour, but it is 
 a fact that the bank dividend, for the first time in thirty-five 
 year^ rose in that year to 10 per cent, on its fourteen millions 
 of capital, and that the leading joint-stock banks paid even 
 much larger dividends upon their capitals, so disproportionately 
 small. 
 
 9. — Lord Overstone, the original promulgator of this system, 
 has written much in its defence and has been ably sup- 
 ported by others, and especially by Mr. Combe, whose pamphlet 
 is by far the most lucid and logical exposition of the subject 
 ever published ; but what does it all amount to but that in the 
 worst possible case the worst possible policy was the only policy 
 practicable ? Given certain evils to be remedied, for which cer- 
 tain measures only, which in themselves are greater evils, 
 appear to be practicable, and you may get the perfection of an 
 artistic remedy complete in its design and application, with an 
 accumulation of disaster such as are abundantly developed by 
 the operation of the Act of 1844. The mischief lay below the 
 surface, and that they did not penetrate. The views of Lord 
 
10 
 
 Overstone, whatever may be' his pretensions, are those of a mere 
 banker, a trader and dealer in money, and are bounded by the 
 counter and the till. There is nothing of the statesman or man 
 of science about them. He has -watched the Foreign exchanges 
 and marked the rise and fall of discounts, the flux and reflux 
 of gold, and noted their more immediate causes and results. 
 He had profundity enough to see how these might be turned to 
 profitable account by the capitalist, but had not depth or 
 breadth of view sufficient to enable him to see how they might 
 and ought to have been improved to the advantage of the 
 country at large. With a frankness which shows that he is 
 utterly unconscious of his own incompetency, he confesses that 
 the idea of applying the results deducible from such investiga- 
 tions " to the regulation of the internal trade of the country seems 
 to him. to be nonsense .'" He constructs a scheme for regulating 
 the exchanges which has proved enormously profitable to a 
 class and ruinous to his country, without " ever having reflected 
 upon the effect which those regulations might have upon the 
 wages of the industrious classes, or the stocks of our home 
 traders ; convinced^'' as he innocentlj' confesses, " that his in- 
 tellect was unequal to the task, and would only be led into 
 confusion by the attempt ! " We accept the confession, con- 
 scientiously believing it to be true ; and believing that, we ask 
 Lord Overstone's admirers, whether anything could, by any 
 possibility, be more utterly derogatory to his Lordship's pre- 
 tensions, more subversive of his authority, or more condemnatory 
 of his sjstem. 
 
 10. — Few men knew more of nature's laws than Mr. Combe, 
 or could teach them better ; yet he appeals to the natural laws 
 which govern the currency, as if he knew not that our currency is 
 not based upon natural laws, but upon parliamentary law, and that 
 therefore it is that all its operations are abnormal and require so 
 much " regulation." The exchange of commodities under 
 
11 
 
 the natural law of demand and supply requires a currency of 
 adequate proportion to their value quantity being an essen- 
 tial element in the estimation of that proportion. In accord- 
 ance with nature's laws we stimulate the increase of commodities, 
 and in violation of nature's law we restrain the proportionate 
 increase of the medium (gold) by which alone we permit them 
 to be exchanged. By law we make our gold cheaper than our 
 commodities, and therefore the gold is taken for exportation 
 instead of goods, and that we are then told is " perfectly natu- 
 ral," and so it is, but it was most unnatural to make it so. Tt 
 is absurd to talk of " the natural law of equilibrium by which 
 the precious metals are distributed throughout the world,'' whilst 
 we are maintaining a parliamentary law in flagrant violation of 
 it. That is the fundamental error which lies at the bottom of 
 the system, and which rendered its success a moral impossi- 
 bility from the beginning. That is the error which Mr. Combe 
 failed to see, or seeing, failed to appreciate, or was unable to 
 grapple with, and therefore passed over without attempting to 
 recognize or remove it. 
 
 11. — Success or failure, we grant, may not always be the test 
 of merit either in the man or in the moral and political designs of 
 mankind ; but in this case the system has had every advantage 
 and every aid which its authors and advocates, who have been its 
 nurses and its guardians also, could confer upon it, or bring to 
 its maintenance and support. It has had no malign influence 
 to thwart it— no obstacle to impede, and nothing even to dis- 
 courage it, but everything to promote and assist it. And yet it 
 has failed — not from the vigorous assaults of avowed opponents, 
 or the insidious workings of treacherous friends, but from its 
 own inherent unsoundness. And not once or twice only, 
 — it has been failing from its cradle, and will continue to 
 be failing to its grave. Nothing could be more complete, 
 more signal, or more damnatory than this utter and irre- 
 
12 
 
 trievable break-down, to which all the world are witnesses, 
 and yet it has not abashed its friends, nor taught them 
 wisdom, ncr modesty, nor even forbearance. They still 
 stand by their bantling, and lift up their heads in defiant 
 disregard of universal condemnation challenging the same 
 meed of praise as if it had achieved a series of triumphant suc- 
 cesses, and filled the world with the fame of its deserts. But 
 is it possible that the authors should escape the condemnation, 
 so utter and complete, which has fallen upon their system, its 
 principles, and its fruits ? To defer again to the opinions and 
 principles of thosie who have so egregiously erred already 
 would be worse than folly — worse than infatuation ; considering 
 the number, the magnitude, and the vitality of the interests in- 
 volved, it would be the greatest of all moral and political blun- 
 ders — a crime. 
 
13 
 
 II— EEGULATING THE CUEEENCY AND THE 
 BANK EATE OE DISCOUNT. 
 
 Against ike actual exhaustion of its treasure ly a drain through the foreign exchanges 
 the Bank has the power of protecting herself; but to do this she must produce wpon 
 the money market a pressure ruinous for its suddenness and severity ; she must save 
 herself by the destruction of all around her. — Loed Overstone. 
 
 I telieve that greater evils have been occasioned to the trade and manufactures of 
 this country BT fluctuations in the currency ; greater evils, pecuniary, social, and 
 moral than by the direct failure of all the Banks of issue since they were first estab- 
 lished in this country. — Mb. Cobden, M.P. 
 
 Three separate advances in the rate of Discount in the space of one week amounting 
 <o 50 per cent, on the previous rate 1 1 The loss to England in that memorable week 
 between the 1th ^ \ith November, 1860, by the advance in the rate of Discount, 
 and the depreciation in the value of property ariaine solely from a dernund for Gold for 
 France, is far more than would be sufficient to keep the whole French Army, large as 
 it is, for an entire year. * * * The vnthdrawal of Bullion has unquestionably arisen 
 as a trading operation between the Bank of France and the Bullion dealers and 
 Capitalists here. The operation is purely Trading and not Banking. — Me, Sobebt 
 Slateb. 
 
 12. — It is a fundamental principle of the Act of 1834 and 
 its advocates, that when the Exchange turns against us and a 
 demand for gold ensues, we should meet that demand by 
 raising the rate of discount against our own traders as well as 
 the foreigner in order — 
 
 1. — To deprive our manufacturers of the means of buying 
 
 materials, employing labour, and producing more goods. 
 
 2. — To compel them to forced sales, and thereby accelerate 
 
 the depreciation in value of their stocks on hand in 
 
 favour of the foreigner — in order 
 
 3.-^To tempt the foreigner to buy our cheap goods, and 
 
 bring the gold back in payment for them. 
 
 And this is called the art or science of regulating the bank 
 
 issues and the currency, according to the foreign exchanges. 
 
 The ruinous losses of our traders, therefore, are a part of their 
 
 system, an essential element in their remedial treatment. Its 
 
 excellence consists, in their eyes, in the celerity with which it 
 
14 
 
 topples down a hundred great houses and a thousand second- 
 raters, reduces tens of thousands to a state of bankruptcy, and 
 goods worth hundreds of millions, the produce of years of 
 labour and capital, to three-fourths or half their value. Stand- 
 ing aloof themselves, they cry, with exulting satisfaction, " Down 
 "with your goods, gentlemen, down with them — lower yet — lower 
 "yet — they must come down, the foreigner has got our gold 
 " and a goodly stock of our goods also, and he wont buy more 
 "till j'ou make them ' dirt cheap,' and then he wont be able to 
 " resist the temptation — so, up with the bank rate of discount and 
 " down with your prices, and get into the bankruptcy court 
 " to be rid of your debts." The more rapidly and the 
 more effectually the system produces these so-called desirable 
 results, the stronger are the proofs in the estimation of these 
 gentlemen, that it " works well," and is admirably adapted for 
 its object — the preservation of our trade and commerce from 
 fluctuation and panics and ruin. 
 
 13, — But the whole of this is based upon the assumption 
 that we cannot obtain gold enough to enable us to pay our debts 
 — that we have no other means (than the bank rate of discount) 
 of retaining what we have— and no other means of getting it 
 back again after it has left our shores. 
 
 14. — If all these were absolute and undeniable facts, instead 
 of being, as they are, mere assumptions, then the system of 
 Lord Oveestone would have a foundation in the inevitable 
 necessities of the case which, whether we liked it or not, we 
 should be obliged to bow to, and this system might then be 
 the best of which the circumstances would admit. But if it be 
 the fact that there is gold enough to be had to enable us to pay 
 our debts ; that we have other means, than exorbitant rates of 
 discount, of preventing its departure ; and other means of getting 
 it back, or of supplying its place ; then a system founded upon 
 a series of assumptions to the contrary of those facts, and one so 
 
15 
 
 fraught with perpetually recurring ruin and disaster, ought not 
 to be tolerated a moment longer. 
 
 15. — The TRUE PRINCIPLE we submit should be, that when the 
 Exchanges turn against us, and a demand for gold ensues, we 
 should meet that demand by raising the price of gold itself. 
 The tendency of this would be — 
 
 1. — to reduce the quantity taken away and tempt other 
 gold to come to supply its place, and so increase or at 
 least maintain our stock of gold, 
 2. — To maintain the value of our other commodities in 
 comparison with gold, and by lessening the difference 
 between them lessen the drain. 
 3. — To retard the depreciation of our goods, until by the 
 increase in our stock of gold (from the rise in our gold 
 market) and the reduction of the foreign demand for gold, 
 the equilibrium shall be restored. 
 But here the question will occur, how can we raise the price of 
 gold without destroying our standard of value f and that is a 
 question we shall presently consider. 
 
 16. — But there is another grave fallacy about the Act of 
 1844 as regards the circulation. It is claimed as one of 
 the most advantageous and meritorious results that under 
 the operation of that Act, our mixed currency of gold and 
 paper has contracted .in periods of disaster precisely as it 
 would have contracted had it been purely metallic. We are 
 unable to perceive either the advantage or the merit of this. 
 
 17. — It is well known that a gold currency from its intrinsic 
 value and its limited supply will always have an inherent tend- 
 ency to contract, and to derange all monetary affairs by its 
 contraction, but that is an evil to be avoided, and not a good to 
 be imitated. 
 
 18. — It is also well known, that a paper currency not founded 
 upon gold, but based upon credit only, will always have the in- 
 
16 
 
 lierent tendency to excessive expansion when credit is good, 
 and to a sudden and total collapse whenever credit fails, and 
 that also is an evil. 
 
 19. — It wight therefore have been predicated that a mixed 
 currency such as ours, composed of paper convertible into, but 
 not bounded by the limits of gold, would in periods of pros- 
 perity, exhibit the inherent tendency of paper to excessive ex- 
 pansion, and in periods of adversity the, inherent tendency 
 of gold to contract, accelerated by the super-addition of 
 the inherent tendency of paper to collapse ; and that 
 the tendency of the latter to collapse would be accelerated 
 and intensified by the tendency of gold to contract. These 
 results we believe are in strict accordance with our expe- 
 rience. Are they the results intended, and are they so de- 
 sirable ? Are they not on the contrary in every point of view 
 most injurious and undesirable .? And if so, where is the merit 
 of the ingenious contrivances by which they are brought about ? 
 
 20 It could not have been very diflScult in the use of these 
 
 media to have counteracted the inherent tendency of gold to 
 contract by the tendency of paper to expand and vice versa, 
 and so, by a judicious combination of the two, to have pro- 
 duced a generally harmonious action and result. We have 
 not succeeded in this, because the design of our legislation 
 has been to accomplish directly contrary objects. Instead 
 of adopting means to counteract the inherent tendency of 
 gold to contract, we have aggravated thai evil by legal enact- 
 ments — prohibiting the acquisition of gold, except at a price at 
 which, when most required, it cannot be obtained And as if 
 the folly of this were not enough, we add to the evil by a sys- 
 tem which stimulates the expansive power of paper when it 
 most requires to be restrained, but when we want the aid of 
 that expansive power against the natural and the artificially 
 created contraction of gold, condemns it to be governed by the 
 
17 
 
 law of gold, and to contract with it. And this has been 
 deemed the perfection of financial wisdom! When such 
 have been the boasted designs and contrivances ought we 
 to wonder at the disastrous results ? 
 
 21. — We have a currency not purely metallic, but more than 
 one half composed of paper. In periods of prosperity when 
 credit is good, the rate of discount is low, and the circulation 
 becomes unduly inflated with paper, money is abundant and 
 prices rise, and as prices rise at home in our favour, prices soon 
 rise all over the world against us. As prosperity increases, 
 prices rise higher and higher, and our purchases at paper 
 prices become larger and larger, until the tide turns against us, 
 and then we must pay those paper prices in gold. When gold 
 begins to flow out, having no provision for replenishing 
 our stock, the rate of discount is raised to check it. Gold begins 
 to contract, and then we compel our paper to contract with it — 
 the bank rate still rises, prices fall, goods become unsaleable, the 
 market tightens, pressure ensues, and then panic and all its 
 train of ruin and disaster. 
 
 22. — Various plans have been proposed for the remedy of 
 these evils. Mr. Slatbk (of the firm of Morrison, Dillon, & Co.,) 
 in an excellent Pamphlet recently published, proposes a Free 
 Trade in Gold, and the issue of " Bullion Notes," which shall 
 rise and fall in value with the market price of gold. But with 
 the Sovereign and the Bank Nole changing in value. Silver must 
 rise and fall relatively to both, and we should have no currency 
 by which prices of commodities could be tested. This would 
 be the certain efiect, though evidently not the efiect intended. 
 Mr. Pollard, the late manager of the Joint Stock Bank, 
 proposes that the bank note should be a promise to pay at a/w- 
 ture date, so as to prevent its being used for the purpose of ob- 
 taining gold from the bank in periods of pressure. This modifi- 
 cation might have that useful effect, but as every note would vary 
 
18 
 
 in its value every day from its date to its day of payment, the cal- 
 culation of the interest or discount on every transfer, especially 
 in transactions involving a number of notes of various dates and 
 amounts, would assuredly be deemed a great inconvenience 
 and it would not reach and could not remedy the real cause of 
 all these evils — the present legal restrictions on the acquisition 
 of gold. Mr. Edmund Philips, in numerous publications 
 insists that the government debt should be paid off, and the 
 
 gold be held by the bank to meet th e notes issued against it 
 
 a measure perfectly sound and needful under the existing state 
 of things, and so far desirable, as it would soon prove the im- 
 practicability of retaining that gold, and must therefore, by 
 revealing the real source of the evil, render the ti'ue remedy the 
 more apparent. Mr.McPfliN, of Glasgow, proposes a National 
 Bank with innumerable branches, under the control of the 
 House of Commons, and the issue of notes upon terms and 
 securities which might produce the desired results if such banks 
 were either practicable or desirable, which in our opinion they 
 are not. Mr. Hamek Stansfield also proposes a National 
 Bank equally impracticable, and the issue of paper money— 
 especially one-pound notes— equally imdesirable. Mr. Jona- 
 than Duncan concludes a very elaborate and able exposi of 
 the fallacies of modern financiers by proposing a remedy more 
 fallacious than any of them, viz. an entire paper currency con- 
 sisting of an annual issue of imperial paper money to the 
 amount of the annual taxation of the country, and of other 
 paper money for commercial purposes, all based upon theories, 
 which, though plausible and seductive in writing, would cer- 
 tainly prove utterly impracticable in the working. Mr. Charles 
 Tennant, in his able pamphlet on the Bank Act of 1844, would 
 abolish the division effected by that Act between the issue and 
 banking departments, would require the government to repay to 
 the bank its fourteen millions of capital, and that the bank 
 
19 
 
 should continue to be the -national bank of issue, but that 
 ALL its notes should be issued against coin and bullion only. 
 Even this change would be infinitely better than the present 
 system, but the bank could not long retain its gold under laws 
 which make gold the subject of perpetual demand, and yet per- 
 sistently deny us the means of obtaining adequate supplies. 
 
20 
 III.— "WE WANT MOEE GOLD. 
 
 There are two reasons why the Act of 1844 should be looked into— the enormous 
 increase in the trade of the country since 1844, and the rise in the price of all kinds 
 of raw material, which has necessitated the employment of so much more capital than 
 before for carrying on trade. — Mb. Fkank Crosslet, M.P. 
 
 The quantity of money must in every country naturally increase as the value of the an- 
 nual produce increases. The value of the consumable goods annually circulated within 
 the society being greater, will require a greater amount of money to circulate them. 
 A part of the increased produce, therefore, will be naturally employed in pdechasing 
 ■WHKEBVEE IT T3 TO BE HAD the additional quantity of gold and silver necessary for 
 circulating the rest. — Adam Smith. 
 
 23. — The currency of a great commercial country is a subject 
 of the very gravest importance. Upon that question depends, 
 not only its material prosperity, but its physical, moral, aye, 
 and its religious welfare also. A very large proportion of the 
 crime and immorality which often make one doubt the 
 reality of our progress in civilization, are directly trace- 
 able to the poverty and privations of the people, and these, 
 lo the fluctuations in employment and the gambling uncer- 
 tainties of trade. There are no people in any country in 
 the world who labour more unceasingly or more productively 
 than the English. The immense producing powers of the 
 masses have made their country the richest country in the world, 
 and have created incomes for certain of its classes, which 
 rival the revenues of the kings and princes of other countries. 
 But what have been the gains, the profits of the labouring, the 
 wealth-producing classes themselves ? Assuredly, nothing in 
 proportion to those of the wealth-enjoying classes. They may 
 be a little better fed, and a little better clothed, and educated, 
 but if these disastrous fluctuations could be prevented, there is 
 no reason why that little should not become a great deal more. 
 As the intelligence of the people increases, they are beginning 
 to see and to reason upon the enormous disparity between the 
 gains of labour and the gains of capital. It may be quite true 
 
21 
 
 tliat they see imperfectly, and reason badly upon the Object, 
 and that their illogical conclusions have led them into erroneous 
 courses of action ; but it is equally apparent that our capitalists 
 and legislators do not see a whit more clearly, and have not any 
 more rational views of the mutual interests of capital and 
 labour, and the modifications in existing laws and institutions 
 which are essential for the future prosperity and safety of both. 
 
 24. — It is easy to say that these fluctuations depend upon 
 laws which no government and no system can control, and it 
 may be diflBcult to devise a system which shall be fully adequate 
 to the realization of such a- result, but it is by no means im- 
 possible. The same principles which govern the gigantic 
 operations of I. and R. Morley, or William Leaf & Sons, and 
 other similar and dissimilar establishments, may be easily 
 extended and adapted to the exigencies of the country at large. 
 It is, or ought to be, a primary obligation in national as in 
 individual commerce to be always ready with sufficient means 
 for discharging the debts due to our customers without being 
 compelled periodically to resort to the scandalous and ruinous 
 practice of " selling off at prime cost," or " clearing out at 
 a tremendous sacrifice," in order to raise those means. 
 
 25. — What should we think of such houses as those alluded 
 to if their buyers and sellers operated so wildly, that every three 
 or four years the firms were compelled to force a large propor- 
 tion of their stocks upon the market, at a loss of one third or 
 one half their value, in order to raise money to pay their bills 
 as they fall due ? Should we not tell them that it was their 
 duty as prudent traders to have kept a larger proportion of 
 their capital, in the shape of cash, at their bankers, ready to 
 meet those Bills ? If they told us that the mischief had arisen 
 from the large increase in their business, for which their cash 
 balance, which had always heretofore proved sufficient, had, in 
 consequence of that increase, now proved inadequate : should 
 
22 
 
 we nol reply, that concurrently with the increase in their 
 business and capital, their cash balance should also have been 
 commensurately increased, and that the whole of their additional 
 capital should not have been locked up in additional stoclis ? 
 If they told us that it arose from ignorance or oversight on 
 the part of their buyers, who had gone on increasing the 
 number and amount of their transactions without reference to 
 the cash at their bankers, should we not tell them that it was 
 their duty, as the principals, to have looked to that, and to 
 have put their buyers upon such a system in regard to their 
 capital, or their capital upon such- a system in regard to their 
 buyer's operations, as would have kept them in constant harmony 
 with each other ? 
 
 26. — Undoubtedly we should, and if these things are true 
 as to great mercantile firms, they are equally true in regard to 
 a great commercial country. Our trade and commerce have 
 been enormously increasing, and are many times greater now 
 than they were in 1844, and yet we are struggling to conduct 
 them with the same, or nearly the same cnrrency, and the same 
 system — in other words, with the same balance at our bankers 
 as we formerly had for a business of not nearly the same 
 extent. Some little addition to our Metallic circulation and 
 our country bank issues, and the wonderful facilities aflForded 
 by the clearing house, for economising currency, have enabled 
 us thus far to manage, though with great difficulty, so long as 
 all runs smoothly ; but the moment anything occurs, at home or 
 abroad, to disturb the even tenor of our way, then the whole 
 moaetary and commercial affairs of the country are thrown 
 into disorder, and we are compelled to sell our goods at 
 enormous sacrific3s in order to realize ready money. 
 
 27. — Fluctuations in trade and in monetary affairs are un- 
 avoidable, and must occur occasionally from bad harvests, or 
 some other of the thousand vicissitudes, to which all mundane 
 
23 
 
 affairs are liable. It should be the policy of an enlig^ened 
 community to prevent them, if they be preventible ; or to be 
 prepared for them, and to modify and diminish their intensity 
 whensoever they become inevitable. Our present system of 
 finance has a tendency to produce them when they would not 
 otherwise occur, and to aggravate and render them more 
 intolerable and disastrous when they do. 
 
 28. — When the exchanges turn against us and a drain of gold 
 commences, it is evidence that we have overstocked those 
 countries with our goods, and that they want no more — that 
 gold is the commodity they want — not cottons, linens, or wool- 
 lens, but gold. If we could supply them with that commodity 
 at a profit to ourselves proportioned to their demand, for a little 
 while, until they became stocked or overstocked with that com- 
 modity also, then the drain would cease, and when it ceased 
 the exchange would either remain in equilibrio, or the flow 
 would commence back to this country. That it would come back 
 is sure and certain, and always will be so long as our produ- 
 cing powers remain to us, and we can supply goods saleable in 
 their markets at a profit to the foreigner. He takes our gold 
 in preference to our goods only so long as he finds the gold 
 more profitable to him than our goods would be ; and the 
 moment we can shew him, either by raising the price of the 
 gold, or lowering the price of our goods, that his advantage 
 lies in taking the goods, he will take them in preference to 
 gold. 
 
 29. — With the further extensions of free trade in general, now 
 in progress, and our increased importations of corn and pro- 
 «visions in particular, adverse exchanges will, without doubt, 
 become far more frequent, and drains of gold to a much larger 
 extent may be confidently expected. Shall we wait till they 
 come upon us again and again, bringing ruin in their train each 
 time, or shall we, like prudent men, make ready and be pre- 
 
pared for them in time ? To meet those drains we require to 
 have a larger stock of gold on hand — at present we have not 
 gold enough in the country to supply our wants, to provide for 
 our ordinary necessities — we require more, but we have not the 
 means for obtaining more, or of retaining it if we could obtain 
 more. Next year, or it may be this present year, we shall hare 
 to pay gold for most or all of our imports from America. And, 
 we must have it. Let the cry, therefore, become more loud 
 more deep, more frequent, more persistent for gold — more gold. 
 We have no time to lose. 
 
 30. — And there will be no difficulty, no expense, no loss in 
 obtaining and holding larger stocks — there is plenty always 
 coming to our hands, and every ounce of it that we sink in our 
 vaults will have its paper representatives, doing its duty in the 
 hands or tills of our traders. The only answer to this demand 
 will still be our standard of value stands in the way of it. 
 
25 
 
 IV.— HOW THE GOLD GOES TO EEAJSTCE, AND "WHY ? 
 
 Wien the exchanges are wifavourahle to a certain extent it heeow.es profitable to 
 export gold. Persons therefore who have had no commercial dealings necessitating 
 OjDaymeB^, TABBIOATE BILLS roR THE EXPRESS PURPOSE OP SELLING TBEM. Bank 
 liotes are not wanted, it is gold that is demanded and taken for export, and it steals 
 out of the country noiselessly and unobserved. — MacLeod's ' Theory and Fractice 
 of Banking." 
 
 Demand on the continent might he counteracted hy demand here, and gold would 
 cease to he a preferahle article for transmission abroad, from the moment at which, 
 like other articles, it could be sold for its real value at home. — Mb. Canning. 
 
 31. — The policy of the French Emperor, and the practices of 
 the bank of France, are neither mysterious nor strange to those 
 who can see and read passing events. The policy of the 
 Emperor is a masterly policy for the advancement of French 
 commerce and French interests at our expense, and the conduct 
 of the bank of France has been admirably adapted for carrying 
 it out. Both the policy and the practice, no doubt, stand out in 
 bold and remarkable contrast to the supreme indifference of our 
 government, the stolid ignorance of our politicians, and the 
 sordid self-seeking of our capitalist and banking interests. 
 
 32. It is the policy of the French Emperor to stimulate the 
 trading and commercial enterprise of his people to the utmost. 
 He knows that trade and commerce are the creators of national 
 capital and wealth, and he knows, by the testimony of history, 
 as well as by his own experience, that the power of a country 
 depends upon its pecuniary resources. He knows, moreover, 
 that a people devoted to commerce, whose minds are en- 
 grossed by the pursuit of gain, are the less disposed to inter- 
 meddle in affairs of state, and are all the more easily governed. 
 If he wants an instance of this, he has only to look across the 
 channel, and see how this great commercial country is governed 
 by a handful of second, and third, and fourth-rate men, but 
 few of whom have any competent knowledge of or genuine 
 
26 
 
 sympathy with trade, as our currency laws abundantly prove. 
 The Emperor wanted the means — the sinews of war — to enable 
 him to govern France and dominate in Europe, and commerce 
 would supply those means. He wanted to accomplish all this 
 without the meddlesome aid or troublesome interference of his 
 people, and the diversion of their minds to the pursuits of 
 trade would tend to secure to him unrestricted freedom of action. 
 And the bank of France was a mere instrument in his hands. 
 
 33. — Over and over again it has been asked in England how 
 the Bank of France could aflFord to pay our bank rate of dis- 
 count, in order to obtain our gold, and yet discount the bills of 
 her customers at the same, or even a lower rate of discount. 
 When our merchants and manufacturers were paying 6 per cent, 
 discount to the bank of England, the bank of France was dis- 
 counting the bills of French Merchants at 4i per cent. Yes, 
 because the bank of France, for every one million of gold she 
 obtained could issue two millions of notes, and so obtain the 
 discount upon two millions, and inasmuch as 4J per cent, 
 twice told makes 9 per cent., she could well afford to give us 
 6 per cent for our gold, and clear 3 per cent, by the operation. 
 Abundance of gold has been imported from Australia and 
 California, which the Bank of England might have purchased, 
 but our wise laws prevented its giving more than 77s. 9d. per 
 ounce for it. France knew, and the importers knew, that the 
 Bank of England could not offer more, and the Bank of France 
 had only therefore to offer a shade in advance of that price to 
 become its purchaser and possessor. 
 
 34. — And thus, whilst French Commerce has been thriving 
 upon abundance at moderate rates, and successfully competing 
 with us even in our home market, our own commerce has been 
 strangled by a contracted currency and heavy rates of discount, 
 and thus crippled and weighted, has had to sustain that compe- 
 tition as best it could. 
 
27 
 
 35. — For many years prior to 1847, France exported more gold 
 than she imported, but imported more silver than she exported. 
 From that time down to the present the case has been re- 
 versed — ^her exports of silver have exceeded her imports, and 
 her imports of gold have greatly exceeded her exports. 
 
 By the French official returns it appears that the average 
 annual imports of gold in excess of the annual exports for the 
 ten years 1846 to 1856 gave a total of - £ 1,448,811,830 
 
 The excess of imports for the year 1 857, - f. 445,488,900 
 Ditto for the year 1858, . . - - f. 487,097,400 
 Ditto for the year 1859, - - - . f. 539,268,000 
 
 Total f. 2,920,666,130 
 
 Or a total in 13 years of £116,826,645 sterling — nearly double 
 the amount of the whole of our gold coinage, which is esti- 
 mated to amount to sixty or seventy millions only, 
 
 36. — In this way France has obtained and absorbed into her 
 circulation upwards of one hundred and sixteen millions of 
 gold, chiefly our gold, and has besides beconse the priacipal 
 gold distributor of the whole continent of Europe. Wherever the 
 English sovereign was formerly seen, there the French 20 franc 
 •piece is now found in its stead, and we have not only enabled 
 her to obtain all this treasure under the market price, for the 
 benefit of her manufacturers and traders, but at the same time- 
 we have been, wilfully and designedly, crushing down and 
 cheapening our own commodities, and defrauding our manufac- 
 turers of their legitimate profits in every market of the world , 
 By these means, as the French now boastfully demonstrate, 
 the commerce of France has increased within the last eight 
 years no less than eighty per cent. And by these means 
 France has been enabled, year by year, to export goods to us to 
 nearly three times the amount that she imports from us ; and 
 by keeping the exchange against us, to compel us to pay her 
 
28 
 
 in gold (a commodity wliich our laws will not permit us to 
 obtain) instead of in other commodities, of which we possess a 
 superabundance. 
 
 37. — But then it is said what matters ? If France takes our 
 gold she does not get it for nothing, she must pay for it, and 
 leave us a profit upon it in some way. This is true, and it is 
 not true. It is sufficiently true to prevent its being absolutely 
 false, but sufficiently false to render the small modicum of truth 
 it contains utterly illusive. France buys our gold, but she buys 
 it not at a market price, but at her own price. We have no 
 market price because we have no market for gold, only the 
 vaults of the bank, where it is condemned at a fixed price. 
 Gold is the most precious of all our commodities, and we have 
 made it our standard of value ; and in raising it to that dignity 
 we have degraded it below all other commodities, for we have 
 deprived it of the essential property or quality of a commodity 
 — the right to find its own value according to the laws of supply 
 and demand. The slave, whom we despise, the moment he 
 treads on British soil becomes free ; but the gold which many 
 of us worship as a god, the moment it reaches our shores becomes 
 a slave — the slave of a law which condemns it to the ignominy 
 of perpetual degradation at home, and keeps it under a per- 
 manent sentence of transportation to foreign lands. Millions 
 and millions of gold for the possession of which the bank of 
 England was craving, and our merchants and traders perishing, 
 the agents of the Bank of France have bought at the munificent 
 premium of one farthing per oz., or about one fourth of a 
 farthing in the pound sterling, and carried it away. 
 
 38. — It is but mockery to tell us that this is selling gold, or 
 exchanging gold as a commodity, at a profit. Had the Bank 
 of England been permitted to compete for its purchase, the 
 premium might have run up to one-penny, or two-pence, or 
 four-pence per ounce ; and the Bank of France, if its necessities 
 
■sn jfoi:jS3p puB aojaraoioo .mo 
 uini ^^nre^iao [{im :^i 'pajnijiisnoo ;a9sa.id ^v sv paatB^ai aq %i jt 
 pnB 'pinoAV ji paijtupsuoo laasajd %v sy ; aiii^A jo pjBpn'E:>s ano 
 ^ojjsap jBtiJ ijoa ppioM '^ureaisaa ^noq^m 'p^oS jo osBqojnd aqij joj 
 a:}adaioo oj pawjoijad aaaM puuiSag jo JiUBg aqj ji ^ng — 'o^ 
 
 i 11 op 0% aaMod 
 011% JO -^^4 aAudap puis SAfej ppS Jno ia%iB qm n^qs .iq g iiit^ 
 oqs JI aas puB ;ibm 8m |pqs— STq:> op nvo aou'BJj . -anip aoiBS 
 aq; %ie igq (jsuiisSb pjay aqij a5[B; o:^ sn pdinoo paB sn nodn sasso^ 
 asoqi ijoigai jf^ra aqs 'ajoni op jCbui aqs f suSiBdraieo snoJiSBsip 
 puB aAiiom^sap aajq:) jo oja^ jo ^sod aq^ o; iBnba sasso[ sn nodn 
 pipni Svm aqs 'anS ajSais b Sui:jnB|d jo ubim b SuiAora ijno 
 "H'lAi. 'suoiiixm fo spadpumi^o ;aa:>xa aq; oij sn qsuaAodmi puB 
 ssBjjBqraa Xbih aqs 'pfoS no staniraajd ui p^oS jo uotjjim auo Sui 
 -pnadxa jfg -sn qiiM Suidoo jo Xbm r^v^ou'e StmifovM m. ffotjod 
 aaq pujj XBtn J%i jo 5iou; aqj :>oS„ Aiou SuiABq 'aonBj^ 'pnci 
 
 -Sua puB aouBj^ uaaA^aqinooo hibSb jaAa jbm pinoqg -gg 
 
 •Suiiia:(s pnnod aqq ni aonad-jnoj jo aajqij jo '^unoosip 
 JO aiBi 5iuBq aqj ui -^aao jad aAg sn paABs aABq ;qSini nop 
 -BinojiD aqj o? pappB puB pasBqoand os pioS ^q:^ 'Sujijais pnnod 
 aq:j ui ifunad-ano jo raniuiajd b jo 'aonno jad -p^ ;b aasBqojnd 
 aqi paniBinaj pBq puBiSug; jo jjuBg aq» ji puB f %i niBjqo o; 
 aoud jaqSiq ^Bq? waAiS aABq :>snra 'aoud aaqSiq b 0% ^Bnba ajaii 
 
 6^ 
 
30 
 
 V— THE STANDAED OP TALtHE. 
 
 Unless the marJcet price of gold is so fixed and shall continue so near the Mint price 
 as not to afford a profit upon the exportation of that metal, it has heen abundantly 
 proved by past experience that no late can prevent such exportation and the conse- 
 quent demand upon the Bank. — Beport of the Committee of the House of Lords. 
 
 No accumulation of treasure, to whatever extent it may ie carried, can render the 
 Bank competent to satisfy the demands which will inevitably be made for gold if the 
 Bank is under an obligation to issue it at the rate of £3 17s. lOid, per ounce, and 
 if the parties having a right to demand it can continue to derive a profit of five or 
 sixper cent, upon its exportation. — Report of the Committee of the House of Commons. 
 
 Let guineas go for what they are worth in the market, and you will prevent the 
 exportation cf our coin. That by no other means the coin of the country can be 
 retained in circulation, so long as the precious metal of which it is composed is 
 intrinsieally of a value so much higher than the rate at which it is estimated in our 
 currency, is a proposition of which all experience as well as reason establishes the 
 truth. The present state of the law, in the present state cf our currency, operates in 
 fact as a bounty upon the exportation of our coin. — Me. Canning. 
 
 41. — ^We come now to that subject which lies at the root of 
 the whole question — the Gold Standard of value. Doubtless it 
 is that standard, or rather the legal restrictions enacted for its 
 preservation, which are the causes of these monetary panics — 
 these extreme fluctuations in the bank rate of discount, and of 
 all the evils and privations which flow from those sources. If 
 it be a paramount necessity that those restrictive laws must be 
 maintained, then it is certain that however much they may be 
 lessened by palliative measures, the existing evils can never be 
 effectually cured ; and as the tendency of events is to render 
 those evils of more frequent occurrence in future, and of greater 
 intensity than heretofore, the utmost we can do will not prove 
 more than suflBcient — if sufficient — to prevent matters becoming 
 worse. But if it can be shown that the standard of value may 
 be preserved in all its integrity, whilst those restrictive laws may 
 be dispensed with, then it will need no argument to enforce the 
 paramount importance of a change fraught with such beneficial 
 results. 
 
31 
 
 42. — It is admitted that a standard of value is essential. All 
 commodities may have a varying value according to the demand 
 and supply which may exist for them, at any given time or 
 given place which will constitute their market value. So 
 long as one article is exchanged for another hy way of barter, 
 the relative value of each can be estimated by comparison 
 with the other, but when commodities become the subject of 
 sale and purchase, through the medium of money, their ex- 
 changeable value is measured by the money, and a standard of 
 value becomes necessary to test the rise or fall in the value of 
 the money, the medium of exchange itself. 
 
 43. — Any commodity or denomination of money will serve for 
 that purpose, provided it be not in itself an article or commodity 
 liable to variations in value. But to measure the value of things 
 real, we require a standard composed of something real, and of 
 intrinsic value itself. 
 
 44. — There is, however, no substance or commodity known 
 which is absolutely unvarying in its intrinsic value, but of all 
 known substances (at all adapted for the purpose) gold has 
 the most fixed and permanent value at all times and in all 
 countries. For hundreds of years the price of gold all the 
 world over has been somewhere about £3 I7s. lOid., and 
 therefore we have adopted gold at that price as our standard of 
 value. It is not an absolutely unvarying or perfect standard, 
 because, as already observed, there is no such thing in reality ; 
 but there is nothing real which more nearly approaches per- 
 manency of value, and we endeavour to render it still more 
 perfect by the aid of the law. 
 
 45. — By the law we compel the bank of England to purchase 
 all gold in bullion at £3 17s. 9d. per ounce, and to sell all gold 
 that may be demanded of it at ^3 10s. lOid. Nj one there- 
 fore having gold to sell will sell it for less than 77s. 9d., 
 because by taking it to the bank he can always obtain that 
 
32 
 
 price, and no one wanting to purchase gold will give the im- 
 porter more than £3 17. lOJd,, because, by going to the bank, 
 he can always obtain as much as he wants at that price. 
 
 46. — There is consequently no market and no market price 
 for gold in this country. It can only be taken to the bank 
 vaults and be let down at the condemned or legal price. 
 
 47. — Gold is a commodity which other countries want as 
 well as ourselves, but to no country is it of such vital import- 
 ance to hold a large stock of it as to us ; because it governs the 
 price or value of all our money, all our goods, and all our 
 labour ; and therefore all our trade, all our commerce, all our 
 interests, and all our power and prestige depend upon it. But 
 though we really possess the means of commanding any quan- 
 tity of it beyond what we have, yet the law not only steps in to 
 prevent it, but permits any other country to come and take from 
 us what we have — at their own price — even whilst we are com- 
 pelling our own merchants to pay an enormous price for it, and 
 are consigning the whole of our trading and mercantile in- 
 terests to utter perdition for the want of it. 
 
 48. — It is true that the bank may do something to protect 
 its small stores of gold by raising the bank rate of discount, 
 and making money dear, because, inasmuch as the foreigner 
 must pay for the gold he takes from us, or at least a large pro- 
 portion of it in our own money, he must pay the bank rate in 
 order to obtain that money ; yet still he pays no more than our 
 own merchants pay, and the whole of what he pays goes to the 
 bank shareholders, and is not otherwise beneficial to the 
 country. And every million of gold the foreigner thus takes is 
 an enormous gain to him, for it keeps his rate of discount down, 
 and the prices of his commodities up ; whereas, every million 
 of gold we thus lose involves us in enormous loss, for it runs 
 our rate of discount up, and sends the prices of our commo- 
 dities down. 
 
33 
 
 49. — The whole evil lies, not in the standard itself, but in the 
 statutory provisions made for its preservation — in the law 
 
 WHICH COMPELS THE BANK TO PART WITH ITS GOLD TO ALL 
 
 COMERS AT £3 17s. lO^d,, and thereby precludes it from giving 
 more than £S I7s, 9d. to obtain it. That law, we maintain, may 
 be altered without prejudice to the standard, and with ines- 
 timable advantage to the country. 
 
 50.; — To preserve the standard we propose to retain the legal 
 obligation to purchase all gold at £3 17s. 9d. ; and to obtain 
 FREE TRADE IN GOLD feeyond that price, we propose to abolish 
 
 THE LAW WHICH COMPELS US AT ALL TIMES AND WHATEVER MAY 
 BE ITS MARKET VALUE ELSEWHERE, TO PART WITH OUR 
 
 GOLD AT ^3 17s. lOid., ONLY. This will give us a real 
 market for the purchase and sale, or exchange of gold at the 
 market price of the day, ranging from £3 17s. 9d. upwards — ■ 
 and this will enable us whenever times of peessure come, to 
 
 RETAIN the GOLD WE HAVE, AND TO OBTAIN AS MUCH MORE AS OUR 
 
 COMMERCE REQUIRES. As gold rises in foreign markets it will 
 rise here also; and as gold in London rises to a par with gold 
 in Paris or elsewhere, there will be the less inducement to the 
 foreigner to take our gold instead of our goods, because it is 
 cheap ; and the less inducement to the bullion dealer to send it 
 abroad because il is dear. The mere bullion drains from which 
 we now suffer so much will then cease, and our currency will then 
 be as our trade and commerce are now, subject to the natural 
 and ordinary fluctuations of supply and demand only. 
 
 51 — In effecting this, not the slightest change will be made 
 in the standard itself, but inasmuch as that standard, being 
 essentially composed of a saleable commodity, is not, and never 
 can become perfect, we propose to supplement, or aid it by a 
 
 '' GOLD NOTE," Or " BULLION NOTE," WHICH SHALL ALWAYS RE- 
 PRESENT GOLD AT £3 1 7s, 10|d. per ounce, neitjjer more nor less, 
 whatever may be the price of gold in our own or other markets. 
 
 C 
 
34 
 
 52. — This Bullion note representing gold at £S 17s. lO^d. 
 would in fact become the eepeesentatipe of ode standaed 
 OF VALUE ; and inasmuch as it could never rise or fall, or vary 
 in value (as does the gold on which it is based) it would con- 
 stitute the ABSOLUTELY FIXED AND PEEFECT STANDAED, which haS 
 
 hitherto been so much and so long desiderated, and in vain. It 
 would supply an unvaeying paper representative, to those who 
 require a standard having intrinsic value in itself, and which, 
 therefore, must vaey ; and it will supply a basis of intrinsic 
 value, to those who, believing in the " British pound of account,' 
 can find unvarying permanence only in a paper representative, 
 which must always be wanting in the essential element of a 
 standard — ^recognised intrinsic value. It would be of exactly 
 the same value as the present sovereign, the present bank note, 
 and the present twenty shillings in silver, and therefore 
 would produce no alteration whatever in prices. 
 
 53. — It is proposed that the bullion note shall be issued by 
 the mint, (as after mentioned) that the Bank of England notes 
 shall be called in and cancelled, and that the bullion notes 
 shall supersede or replace them in the Circulation. 
 
 54. — At the present time the sovereign, the bank note, and in 
 fact all our currency represent value measured by gold at 
 ^3 17s. lOid., and under the proposed change the Bullion Note 
 and all the currency in the realm will continue to represent the 
 same value precisely, with the single exception of the gold 
 coin : and that coin vsill be an exception, only at those times 
 when the Market price of gold happens to rise materially above. 
 the Mint price, and then and for that time only the gold coin 
 may bear a premium. This would be the only inconvenience 
 (if inconvenience it should involve) which the public would 
 be subjected to, in order to accomplish a change, which, it is 
 not too much 1^ say, may effect the saving of capital and 
 labour now wasted, to the extent of many millions a year, 
 and which will affect beneficially the interests of every man, 
 woman, and child in the realm. 
 
35 
 
 VI.— TEANSFJER OF THE MANAGEMENT OP THE 
 CrERBNCT TO THE MASTER OP THE MINT. 
 
 M we must have free trade in corn, let us have also a free trade in money, and des- 
 troy that fatal connection betieeen the Government and a single chartered Banh : a 
 connection that facilitates the prodigality of the Ministers, and invests an irrespon- 
 sible body with the most delicate and most important functions of the State— the 
 control over the circuiting medium. — SiE James Geaham. 
 
 The connection of the Bank with commerce is the leading cause of its mismanagement 
 of the circulation. The Manager of the Circulation ought to have no connection with 
 trade and commerce. — Loed Oveestone. 
 
 / believe the day has come when all this machinery should be placed in other hands— 
 that the day has arrived when we should have, not bank of England notes, or 
 notes of government circulation, but what may be called Mint notes, or something of 
 that Hnd.—Mr. G. C. Glyn, M.P.— Debate 6th February, 1857. 
 
 55. — To carry out this change, it will be necessary that the 
 Bullion department of the Bank of England, and the issue 
 and payment of notes, with all power and control over the 
 currency, should be transferred to some responsible oflScer 
 of the government, to the Chancellor of the Echequer or the 
 Master of the Mint, and the latter seems to be the more appro- 
 priate. If there be any great objection to removing the whole 
 of this business from the Bank premises, there can be no diffi- 
 culty in the bank surrendering to the government, at a proper 
 rent, that portion of the Bank premises now appropriated to that 
 department, and the whole of their staff now engaged in it. 
 According to the ground plan of the Bank premises recently 
 published by the government, (Parliamentary Paper No. 12, 
 Session 1861) this may be easily effected. The business may 
 thus be continued within the walls of the Bank as now, and 
 with the same staff, &c. ; but under the rule and government 
 of a responsible minister of the crown, instead of the bank 
 directors, and without any additional epense, for the Master- 
 ship of the Mint is at present little more than a sinecure. 
 
 56. — The Mint will be under the same legal obligation to pur- 
 chase all gold of standard quality at the mint price, £S 17s. 9d. ; 
 
 but will also have the optional or discretionary power of purchas- 
 
 c 2 
 
36 
 
 ing any quantity of such gold at the market price, which will 
 always he at par with or above the mint price. And it will issue in 
 payment for such gold, the "bullion notes'" or "gold notes" 
 before described, which will be payable to bearer on demand, 
 and will of course be signed by the Master of the Mint, and be 
 rendered a legal tender by the Act of Parliament. The Mint 
 will rededm all such notes when tendered, paying gold on 
 demand, at the mint price when that is at par with the market 
 price, and gold on demand at the market price whenever that 
 shall be above the mint price. 
 
 57. — The Bank note, after all, is the principal medium in our 
 currency for all commercial transactions ; and we shall thus 
 obtain a perfect Sank or Bullion note, based upon gold, and 
 expanding and contracting exactly with the increase or diminu- 
 tion of its basis — with this difference and this advantage, that the 
 basis itself will be capable of enlargement in proportion to the 
 requirements of trade and our ability to supply the capital — the 
 material of that basis. That ability we need not distrust. 
 Surplus capital is always seeking investment in the most port- 
 able and the most exchangeable forms, as is abundantly proved 
 by the tendency to increase, constantly exhibited by our gold 
 coinage, even under the present repressive and exhaustive 
 system. When gold can be so much more freely obtained, and 
 so much more easily retained, that tendency to increase will no 
 doubt be greatly accelerated. Whatever expansion of currency 
 commerce may then require, commerce will then be able to 
 obtain, and in the safe and solid shape of gold — for gold will 
 be free. 
 
 58. — But may not the currency then become excessive and 
 redundant ? Not so. The requirements of trade will always be 
 absorbing a sufficient amount of money, or forcing (if need be) a 
 sufficient amount of surplus capital into that form, but when- 
 ever the needs of trade are satisfied to repletion, and the currency 
 
37 
 
 becomes redundant as compared with foreign currencies, the 
 excess will raise the price of other commodities; and their 
 dearness will render currency cheap in comparison, and will 
 lead to the exportation of that portion of the currency which 
 is exportable (gold) in preference to those other commodities 
 and so check the redundancy, and restore the equilibrium at home. 
 This is not the much vexed question, as to whether a "bank of 
 issue possesses the power of OTer issue-" The elements of this 
 question are not the same; in the former case the question is, as 
 to the issue of something in relation and in proportion to gold 
 as coin — gold as a commodity being under restrictions. In this 
 case the question is, as to the issue of gold itself as a coin, gold 
 as a commodity being free. The operation will be simple 
 because it will be natural, and the greater the simplicity of the 
 system the less it will require of our management, and the 
 better it will manage itself, 
 
 59. — Whenever the price of gold on the continent or else- 
 where falls helow par, the mint may buy it there, just as the 
 bank may do now. And whenever the market price of gold, 
 either here or on the continent rises above our standard, we may 
 (if circumstances render it advisable) buy all we want at the 
 market price, whatever that may be. 
 
 60. — We should make a certain profit on all we bought below 
 par (abroad), and on all we bought at par, and sold above 
 par, but we might make either a profit or a loss on such as 
 we bought above par, or we might make just as much by the 
 gold we sold above par, as we should lose by that we bought 
 above par. 
 
 61. — The intrmsic vaXMQ of the notes can never fall below 
 their nominal value, because they will always represent so 
 many pounds sterling in gold at the mint price (just as the 
 bank note does now) and they can never rise above their nomi- 
 nal value, because tvhatever may be the market price of gold 
 
88 
 
 they will never represent more of that price than so many 
 pounds in gold, at the mint price. 
 
 62. — The note could never fall below par, because the gold 
 it represents could never fall below par, so long as the mint 
 (whatever might otherwise be the tendency of the market) is 
 compelled to buy all gold at the mint price. 
 
 63. — Fluctuations in the market price of gold would have no 
 effect whatever upon the circulation of the note, because 
 whatever might be the market price of the gold it represents, 
 inasmuch as it will represent, and pass current for only so much 
 of that price as is at par with gold at ^£3 17s. 10|d., it would 
 never be used for the purpose of obtaining more. In other 
 words, if the market price of gold be above par, the £5 note 
 will not purchase five sovereigns at the mint without a premium, 
 and therefore the note would not be withdrawn from circulation 
 for that puipose. 
 
 64. — These fluctuations in the market price of gold must of 
 course always be above, and could never be helow our standard, 
 and therefore the effect of any variation in the market price 
 could only be to raise the value of the whole of our gold coins 
 and bullion with it. As to the bullion and coin in the mint 
 the immediate effect would be that those who wanted gold for 
 exportation would be able to obtain it only by paying a premium 
 equal to the market price. Gold would be applied for then only 
 by those who wanted it, and must have it for exportation. In 
 the full and unrestricted use of the gold notes for our home -trade 
 we should not want gold, and therefore should not have to pay 
 the premium for it. If France or America had pressing need 
 of it, and their necessities were such and so urgent as to raise 
 the price of it, they would be able to obtain it only on paying 
 that price. It would be at their cost and to our advantage. 
 
 65. — But, it will be said, our merchants and traders will re- 
 quire gold, to pay for the corn and provisions which they have 
 
39 
 
 ordered, it may be, in periods of scarcity ; and our loan con- 
 tractors, and the shareholders in Foreign Railways, &c., will 
 all require gold to discharge their contracts. Even so, and 
 they will be obliged to pay the premium. Their obligations 
 will have been contracted with a foreknowledge just as now 
 that the exchange, Tthen the time for payment arrives, may be 
 against them, and they will not have more to pay for their gold 
 than they now have to pay for it, in the shape of enhanced 
 rates of discount, and very probably not nearly so much. And 
 it will be perfectly just that they who contracted obliga- 
 tions which they knew exposed them to this contingency, should 
 alone have to meet the contingency when it arrives, rather than 
 that every manufacturer and trader in the country should par- 
 ticipate in the cost as they now do, and the more especially as 
 their participation would not ease the merchant at all, but in 
 fact would rather have a tendency to the contrary. 
 
 66. — In ordinary times the fluctuations in the market price 
 of gold might be sufficient to effect important results in the sale 
 or purchase of large quantities of gold, without making any 
 difference in the value of the sovereigns in actual circulation so 
 as to affect ordinary transactions. Some parties, however, may 
 be disposed to make much of possible inconveniences to arise 
 from this source, especially those whose minds are deeply 
 imbued with the historical and traditional recollections of fifty 
 years ago. But those were times of war, and war subsidies, and 
 of profuse issues of iNconvertible and one pound notes — 
 times and circumstances not very likely to occur again. And 
 such parties may be reminded, that the difference in the ex- 
 changeable value of paper and gold then arose from the depre- 
 ciation of the paper, not from a legitimate rise in the price of 
 gold. 
 
 67. — Others, again, and those who have long submitted to 
 exorbitant rates of discount, would feel aggrieved if, wanting 
 
40 
 
 one hundred sovereigns, tliey were obliged to pay a premiuiir of 
 even one farthing in the pound to obtain them. As gold is 
 rarely wanted, and could easily be dispensed with in trade, and 
 as the payment of a premium would be only t|^e temporaiy 
 means of avoiding a far heavier infliction, the objection would 
 be ungracious, but if likely to prevail to any extent, it may, 
 perhaps, be remedied. The foreigner takes our gold as a com- 
 modity and not as coin — not as so much money, but as so many 
 ounces of gold. The present value of the sovereign is 19s. 1 lid., 
 which leaves a margtn of about 3d. per ounce. If this small 
 seigniorage were doubled by the mint, it would reduce the 
 actual value of the sovereign to 19s. lOid., and that would allow 
 of a rise of 6d. per ounce in the market price of gold, without 
 affecting the value of the gold in circulation, and would besides 
 afford an additional protection against the exportation of 
 sovereigns. 
 
 58. — At this time that will appear to be a \ery large margin — ' 
 larger than is ever likely to be required — but it is long since we 
 had any experience of a real market for gold — circumstances 
 have much changed since, and we have now no adequate means 
 of judging to what price competition might raise it, in a time of. 
 war or other season of privation, exposing us to long continued 
 adverse exchanges, and protracted drains of gold. It is, there- 
 fore, just possible that the market price might rise so high as 
 to raise the value of the sovereign in circulation. And what 
 would be the effect ? In that case all the effect would really be 
 for good, none for evil. As the market price rose, our pur- 
 chasing price at the Mint would rise with it, and the Mint would 
 of course purchase our own coins at their market value ; so that 
 those who held sovereigns would get as much for them at the 
 Mint as they could get for them by exportation, and the notes 
 issued for the purchase of them would supply their place in the 
 circulation. There would be no inducement, therefore, for the 
 
41 
 
 exporter of gold to buy up sovereigns, as he would gain no 
 advantage by that course, which he could not get by going to 
 the mint. Sovereigns might in some measure disappear from 
 circulation for a time, but it would only be to accummulate in 
 the vaults of the Mint — the place where and at the time when 
 they would be most needed and most useful. 
 
 69. — The English are not much given to hoarding, but it may 
 be said, this possible rise in the value of the sovereign would 
 generate the tendency to hoard gold. No doubt it might, to 
 some extent, but not to any extent that would seriously affect 
 the amount of gold in circulation. And the tendency if 
 generated would have this beneficial result, that whenever the 
 rise did take place, the hoarded gold would be brought forth to 
 realize the profit, and thus be available to meet the drain which 
 had caused the rise. 
 
 70. — Mr. FuLLERTON says, " It is of the very essence of the 
 metallic system that the hoards, in all cases of probable occur- 
 rence, should be equal, in the first place to supply the Bullion 
 demanded for exportation ; and in the next place, to keep up the 
 home circulation to its legitimate complement." And Mr. J. 
 Stuart Mill says, "Every drain for exportation, whatever may 
 be its cause, and whether under a metallic currency it would 
 afiect the circulation or not, is now compulsorily drawn from 
 the circulation alone- The Bank Note circulation and the dis- 
 count or other advances of the bank must be diminished to an 
 amount equal to that of the metal exported, though it be to the 
 full extent of seven or ten millions." But, as Mr. Mill further 
 says, " An exportation of the precious metals often arises from 
 no causes affecting currency or credit, but simply from various 
 circumstances not commercial. In none of these cases, if the 
 currency were metallic, would the gold exported for the pur- 
 poses in question, be necessarily or even probably drawn from 
 the circulation, it would be drawn from the hoards which, under 
 
42 
 
 a metallic currency, always exist to a very large amount ; in 
 uncivilized countries in the hands of all who can afford it ; in 
 civilized coulitries chiefly in the form of Bankers' reserves." 
 
 71. — The present amount of our foreign trade requires that 
 we should have on hand double or treble the amount of gold 
 which the bank now generally holds, in order to be enabled to 
 meet temporary drains without inconvenience, but we have no 
 adequate means of obtaining or keeping such a stock. At 
 present we can buy below our Mint price only in a foreign 
 market, and in otur own market only at our mint price. Under 
 the proposed system we should be able to obtain, and to keep 
 double or treble the stock we now ordinarily hold. No doubt 
 an adequate premium would fetch every 20 franc piece out of 
 the tills of the bank of France ; and a very moderate premium 
 would probably be sufficient to enable us to retain a few more 
 of the many millions which annually reach our shores, and to 
 ensure the stock we want to begin with. That stock would not 
 be so liable to reduction as now, because the moment the price 
 rose elsewhere our price would rise with it, and keep the drain 
 in check. At the same time we should have the power, if the 
 Markets were likely to rise, of buying to any extent either at 
 home or abroad, whilst in the case of a long continued drain, 
 our gold coins in circulation or in hoards would prove an almost 
 inexhaustible resource, steadily flowing through the country and 
 London banks into the Mint, to be exchanged at the market 
 price for gold notes, which would supply their place in the 
 circulation just as well — and especially if at such time the Mint 
 had power to issue gold notes of one pound each. 
 
43 
 
 VII.— THE BAKK PEOPEE AND ITS EUTUEE EATE8 
 OE DISCOUNT. 
 
 The idea of regulating and maintaining the internal trade of the country ly as steady 
 and equable prices as possible seems to me to be nonsense. — Loed Ovekstone, 
 Evidence before House of Commons Committee, 1840. 
 
 The earlier practice of the Bank of England had been to discount at a, rate nearly 
 fixed and uniform, irom 1704 to 1839 this rate never exceeded five, nor was less 
 than four per cent. This necessarily tended to check the fall in the rate when already 
 low, and on the other hand to check the rise in the rate when money was scarce. In 
 both cases the effect was to produce steadiness and diminish fluctuations. — lleport of 
 Committee of House of Lords on " The unexampled fluctuations iu the rates of Biscouat 
 since the Act of 1844." 
 
 But it has not been, the high rate of discount which has exclusively or even mainly 
 been productive of mischief. On the contrary, evil consequenees to the full as great, 
 are traceable to periods of forced depression of the rates of Ssscount. — Ibid. 
 
 72. — The Bank of England will still be the bankers of the 
 government, may still have the management of the public debt, 
 and may still continue to be a bank of deposit and discount, but 
 all its business and operations should in future be limited to the 
 legitimate operations of banking only. It should cease to be a 
 bank of issue. 
 
 73. — It is said to be so limited even now ; that the separation 
 of the issue department is so complete and entire, and that the 
 latter department operates so mechanically by the force of law, 
 that the bank, as a bank, has really nothing to do with it. If 
 that were so, the proposed transfer would merely have the effect 
 of carrying out more completely that which has already, in fact, 
 been accomplished. But it is not so. In at least one respect 
 the action of the issue department has the most direct and em- 
 barrassing operation upon the bank as bankers. When a million 
 of gold is taken from the till of the issue department, the bank 
 must cancel a million of the notes which it holds in reserve for 
 its banking purposes. That reserve constitutes the source whence 
 
44 
 
 the government creditovs and its own depositors are to be paid, 
 and whence its discount customers are to be supplied ; and when 
 that fund is in course of rapid diminution, by operations which 
 have nothing to do with, and do not enter into the calculation of 
 its banking operations, it, of course, becomes vitally affected in 
 its most vulnerable part. Hence the rise in the rate of discount 
 (a banking operation) to parry the demand for gold in the issue 
 department. 
 
 74. — The Master of the Mint will in future meet the demand 
 for gold, by raising the price of gold, and the bank will be 
 entirely relieved from all care or action in the matter. 
 
 75. —The Bank may hand over to the Mint the bullion it 
 holds in the issue department and receive in exchange Bullion 
 notes, which may be substituted for the bank notes it has issued 
 against that gold, and a part of which it still holds in its 
 reserve. From time to time, as gold accumulates in its hands, it 
 will for its own convenience, whilst gold is at par, take such 
 portion as it does not require in its till to the mint in exchange 
 for bullion notes. And whenever gold is above par, it will of 
 course, take such surplus to the mint and realise the premium 
 upon it. 
 
 76. — If a drain of gold be severe or long continued, it will of 
 course still produce a degree of pressure upon the money market; 
 the demand for money will be greater than the supply — its value 
 will rise, and there will consequently be fluctuations in the bank 
 rate of discount. But neither the bank nor the mint will be 
 affected to the same or to anything like the same extent as the 
 bank is affected now. Gold will be required only for expor- 
 tation, and the demand for exportation will exercise no direct 
 action on the bank reserve— the reserve may be diminished to 
 some extent, but there will be no cancelling of notes, the demand 
 upon it will be limited to banking operations only. If gold be 
 bearing a premium there will be a constant stream of gold 
 
45 
 
 through the bank to realize the premium and a profit at the 
 mint. Hoards of Gold will thus be brought into active circula- 
 tion, and the bullion notes received in exchange will go to swell 
 the bank reserve, or do duty in the hands of the public. 
 Demand and supply will govern the bank rate, and as the 
 demand will be fhus moderated, and the supply will always be 
 susceptible of maintenance and increase, the pressure can never 
 be so great, and the fluctuations never so extreme. Where now 
 we have a rise of one or two per cent, a rise of a quarter or 
 half per cent will then be amply sufficient. The rale will 
 never rise so high, and perhaps will never fall so low, as at 
 present, but will probably range from three and a half, to four 
 and a half, or at the utmost five per cent. 
 
 77. — It will never rise so high because, assuming that the mint 
 should hold, say, twenty-five or thirty millions of gold in hand, a 
 moderate drain would not affect the market to any material extent: 
 and if the export of gold continued, the mint would have two 
 means of lessening its pressure which the bank has not, viz. the 
 premium on the gold exported, which would tend to diminish 
 the efflux, and the premium ofTered on the purchase of gold, 
 which would promote an influx, and so counteract the efflux. 
 
 78. — The rate will never fall so low, because a more equable 
 and evenly prosperous state of trade will tend to prevent those 
 gluts in the money market, which now so generally follow upon 
 a panic. One of the worst of the many pernicious evils which 
 result from extreme fluctuations, is their tendency to transfer the 
 surplus profits of trade, from the active hands of manufacturers 
 and traders, who would otherwise continue them in trade, into 
 the hands of bankers and capitalists, who, when confidence 
 returns, do not employ them in trade or manufactures, but place 
 them at call with the discount houses and joint stock banks. If 
 more of these surplus profits were continued in trade, there 
 would be the greater and sounder increase of trade, and the less 
 
46 
 
 of surplus wealth in the non-productive hands of bankers and 
 capitalists, whose competition renders money so excessively 
 cheap in periods of prosperity. 
 
 79. — If also an amendment of the law of partnership could 
 be obtained, which w ould admit of capital being embarked in 
 trading operations, without liability beyond thelimount invested, 
 a large portion of the surplus capital which now finds its way 
 into the Joint Stock Banks and Discount Houses, would then 
 be employed in that way. There are numbers of clever, intel- 
 ligent, and experienced men in every branch of trade, capable 
 of becoming the heads of new houses, and wanting only the 
 capital ; and the capital would be readily advanced, but for the 
 indefinite liability which the law in its present state would im- 
 pose upon the owner so employing it. 
 
 80. — All this however may prove inadequate to protect us 
 against the evils of cheap money, if the Bank of England be 
 still disposed, and be still permitted, improperly to depress the 
 rate of discount as she has done repeatedly since 1844. We 
 cannot dictate to private individuals, or private partnerships or 
 joint stock companies, who have surplus cash to invest, the terms 
 on which they shall invest it. But the Bank of England is a 
 public institution, the creature of the legislature, and the banker 
 of the government ; and the government balances which she 
 acquires in that character give her at certain times the ab- 
 solute command of the money market. Any undue depres- 
 sion of the rate of discount, is in effect a depreciation of 
 the currency, and produces the same unwholesome results, 
 in stimulating over-trading as would a profuse issue of 
 paper money. Ought the fiinds of the State to be used for such 
 a purpose ? We think not : and if some judicious rule of action 
 should not be adopted by the directors themselves, we think that 
 some moderate degree of restraint in that respect, may fairly be 
 demanded by the public, and should be imposed by parliament. 
 
47 
 
 81. — We shall thus be enabled to enjoy free trade in gold, as 
 in all other commodities, in perfect harmony with our present 
 standard of value; to derive all the advantages which that stan 
 dard is capable of conferring, without suffering the ruinous 
 consequences which at present it imposes upon us. 
 
 82. — In regard'to the fourteen millions of notes which the 
 bank now issues against government securities, the scheme 
 necessarily assumes that the Government Debt to the Bank 
 must be paid off, and the country be saved the interest thereon ; 
 and that the notes now issued against it will be replaced by 
 the bullion notes, which are to be substituted for the whole of 
 the present bank note circulation. If, hovfever, Parliament 
 should be of opinion that it would not be necessary or expedient 
 to keep so large an amount of Gold in wasteful inutility in the 
 bank vaults, it may determine that, upon the same principle as 
 all bankers necessarily act in regard to all their liabilities — 
 only a certain reserve of gold need be kept, and that a 
 certain proportion of the bullion notes may be issued and 
 remain in circulation, (as now) without gold always in hand 
 to meet them. Without expressing any opinion, as to the 
 wisdom or expediency of such a course, we may remark 
 that the objections urged against such issues by the bank will 
 not be equally applicable to such issues by the Mint. The Mint 
 will in that case have to provide gold for all such proportion of 
 its notes as are likely to come in for gold, but its means of pro- 
 viding that will be infinitely greater than the bank ever pos- 
 sessed. The Mint will not, at the same time, have to pro- 
 vide for the payment of the government creditors (as the 
 bank now has) nor to meet the possible claims of its own 
 depositors, to the extent of millions (as the bank now has) nor 
 will it require any reserve for a body of clamorous discount 
 customers (as the bank now requires.) As notes to the amount 
 of fourteen millions and upwards always have remained, and are 
 
48 
 
 always likely to remain outstanding, and not to require gold, 
 there seems to be no good reason why the country should not 
 have the benefit of that circulation. But it is not necessary to 
 discuss here the mode in which the government debt and the 
 securities the bank holds should be dealt with ; nor the manner 
 in which the bullion notes should be substituted for the Bank 
 of England notes in circulation ; nor the proportion of bullion 
 notes which may be properly issued without gold. These are 
 all topics of great interest and importance, but they involve 
 principles and details not necessarily falling within the scope 
 of this essay, the design of which has been to shew: — 
 
 1. — That the present system has lamentably failed; and 
 
 that the extreme fluctuations in the value of money and 
 
 commodities which it has caused, have proved ruinous 
 
 to our trade and commerce. 
 
 2. — That free trade in gold is not incompatible with the 
 
 maintenance of our present standard of value. 
 3. — That the adoption of free trade in gold with the Bul- 
 lion Note representative ojp the standard proposed, 
 would produce more equable rates of discount — prevent 
 ruinous fluctuations in prices and panics — and be im- 
 mensely beneficial to the commercial, and every other 
 interest in the country. 
 
 Vt. HILL, MACHINE PEINTEE, WESTMINSTEE EOAD. 
 
EE ASO]!f S 
 
 ALTERATION IN THE LEGAL TENDEE, 
 
 ^tkxm m i^t €uxxtuq. 
 
 BY ROBERT SLATER. 
 
 LONDON: 
 EFFINGHAM WILSON, ROYAL EXCHANGE. 
 
 1861. 
 (Frice One Shilling.') 
 
LEGAL TENDEE AND CUEEENOY. 
 
 On 7th November, 1860, the Bank raised its rate of discount 
 from 4 to 4.1 per cent. 
 
 The Times' City article of Wednesday, 14th November, 1860, 
 opens thus : — " Tuesday evening. — The Bank of England have 
 ' raised their rate of discount from 4| to 5 per cent. The step 
 ' was adopted this evening after ordinary business hours, in conse- 
 ' quence of a withdrawal during the afternoon of ■£'300,000 in 
 ' gold, on account of the Bank of France, and which it is under- 
 ' stood will be forthwith followed by a further sum of £200,000. 
 '...." The Joint-Stock Banks and Discount Houses will to- 
 ' morrow most probably increase their allowance for money at call." 
 — [On th« previous day the Times informed the public that the 
 Bank of France had raised its rate of discount from 3| to 4J per 
 cent.] The Times' City article of this day states, (Wednesday 
 evening, 14th November) — " It appears that the contract made by 
 " the Bank of France with the London bullion dealers, is for 
 " jei, 000,000, instead of £500,000, as reported yesterday. In 
 " addition to the £300,000 then withdrawn, .£335,000 has been 
 " taken to-day, and .ie365,000 is expected to follow." On Thurs- 
 day, the 15th, the Bank raised its rate from 5 to 6 per cent! 
 Three separate advances in the rate in the space of one week, 
 amounting to 50 per cent, on the previous rate of discount ! 
 
 These announcements are of so grave a character, that it would 
 almost seem England may be successfully invaded by France with- 
 out the necessity for that mail-clad naval armament, the probability 
 of which has recently almost frightened the country out of its pro- 
 priety, and in perfect indifference to our volunteer movement — the 
 serious part of such an aggression being directed against our 
 trade. — The country would seem to be exposed at any moment to 
 the most calamitous consequences which can befal a commercial 
 people — ^namely, the loss of all control over their own capital ! 
 
 Peace and War! — These may be regarded as financial terms, 
 Peace, armed at a cost equal to actual war, is a national calamity 
 almost sufficient to justify war in order to put an end to so intoler- 
 able a state of things. In France, a standing army of such 
 immense magnitude is not merely a menace to her neighbours, but 
 
 B 3 
 
4 LEGAL TENDER AND OCERENCY. 
 
 is a huge monster feeding on the very vitals of the nation, and must 
 be fed on specie; were it kept on a paper diet, it might sicken and 
 become dangerous to the State. What a comfort it, must be to the 
 Emperor to reflect that he can always rely on his trusty, money- 
 making, shopkeeping ally across the Channel, to supply ad libitum 
 all his wants, whatever may be the occasion for them ! But what 
 a reflection it must also be to ourselves, that if he has a design on 
 our dockyards or our coasts, the Bank of England must of necessity 
 help him towards the accomplishment of such an object ! — These 
 are small mercies to be thankful for on this side of the Channel. 
 It is scarcely a question that, large as the French army is, the loss 
 to England in that memorable week between the 7th and 14.th of 
 November, by the advance in the rate of discount, and the depre- 
 ciation in the value of property, arising solely from demand for 
 gold for France, is far more than would be sufficient to keep the 
 whole French army for an entire year. 
 
 How stands the question ? The Bank of England by statute is 
 bound to supply gold, not only for every note it has issued, and for 
 every deposit it has received, but theoretically, even for every 
 country bank note, as well as deposit in any of the local banks in 
 the kingdom. There is no mistake about this as a practical fact 
 — not only because local notes are, in the event of a run, met as a 
 legal tender by Bank of England notes held by country banks ; but 
 because country bank deposits, chiefly held for employment by their 
 agents in London, are, to a great extent, represented by the surplus 
 unemployed capital in the hands of the Bank of England, known 
 as " other deposits." By the return of 7th November, these 
 amounted to 6&13,114,251, nearly suflicient of themselves to absorb 
 the gold coin and bullion held at the same date, which amounted 
 to £13,160,440, independently altogether of the bank notes in 
 circulation, or the other branches of currency founded on bank 
 notes. 
 
 The question for immediate consideration is, the influence of 
 foreign action on the position of the Bank of England j and the 
 effect of that influence to weaken public confidence in that insti- 
 tution, from the utter helplessness of the Bank, as the supplier of 
 the great bulk of the currency, to resist it. 
 
 The Bank of France, whatever may have been its original con- 
 stitution, is at present under the complete control of the French 
 Government. If the Emperor for whatever purpose requires money, 
 he commands it by means of the Bank, An imperial decree is 
 
LEGAL TENDER AND CURRENCY. 5 
 
 sufficient for that purpose. The charter of the Bank, although 
 nominally extended to 1897, is really held at the pleasure of the 
 Crown, by whom its. chief officers are appointed. His demands 
 may be excessive or impolitic, or unpalatable ; but the Emperor 
 alone is the sole interpreter of the " salus populi," To all intents 
 and purposes, therefore, the Bank is an engine of the State, irre- 
 spective of the interests of its shareholders, and may be used most 
 disastrously to the interests of his neighbours, should his policy 
 dictate such a course. 
 
 The Bank of England, on the other hand, is altogether indepen- 
 dent of the Crown. The Charter is founded on an act of the 
 British Parliament. There is no power whatever that can interfere 
 with it, except Parliament, which conferred on it its privileges; 
 and in this free country Parliament is supreme. Here the Bank 
 Charter is supposed to exist for the benefit, of the people, and the 
 people have got the power in their own hands, through their re- 
 presentatives, of modifying its conditions, if the interests of the 
 country demand it ! 
 
 But there is a vulnerable point in the principle on which the 
 Bank of England is by law established. Not only is the whole of 
 its capital lent to the Government, but to the extent of that loan 
 it is authorized to issue bank notes, theoretically founded on gold, 
 but intrinsically on the security of the State, The proprietors' 
 capital is £14,553,000. Their issue of notes, on security of the 
 State, is £ 14,475,000.* Every note issued beyond this latter amount 
 must, by law, be represented by gold. If, by war on the continent 
 of Europe, in which this country is called upon to interfere, public 
 confidence is materially shaken, (and who can say that this may 
 not speedily happen), — the 3 per cents, might fall to 47|, as they 
 did in 1797. In that case a £5 bank note would be exactly worth 
 £2 7s. 7id., or 9s. S^d. per pound, were it possible to convert it 
 at all. 
 
 It is upon this vulnerable point of our currency that the country 
 is exposed to the aggressive policy of our neighbours. That policy 
 may for the moment be perfectly innocent on their part ; but we 
 have, nevertheless, placed a power in their hands which they can 
 use to our serious disadvantage. We are not at war with each 
 other. If we were, they might use such a power fearfully to our 
 detriment. We are at peace, — and our allies only occasion to us a 
 partial inconvenience, by compelling the Bank of England to raise 
 
 * This was increased to J14,650,000 in July 1861. 
 
6 LEGAL TENDER AND OOBKENOI. 
 
 its rate of discount. But it is this partial inconvenience whicli by 
 reducing the value of all commodities, operates so disastrously to 
 our commercial interests. 
 
 Let us see the operation of this foreign influence on the condition 
 of the Bank of England, in the course of this one memorable week :- 
 
 LIABILITIES. 
 
 Account for week ending— 7th Nov., 1860. 14th Nov., 1860. 
 
 Notes issued £27,635,440 . . . ^36,997,655 
 
 Deduct reserve 6,429,370 ... 6,338,385 
 
 Circulation 31,306,070 ... 30,669,370 
 
 Add Bank Post Bills ... 830,934 ... 778,797 
 
 Public Deposits 4,968,173 ... 5,804,023 
 
 Private Deposits 13,114,351 ... 13,603,793 
 
 40,109,437 ... 39,845,881 
 Best 3,168,580 ... 3,191,718 
 
 £43,378,007 ...£43,037,599 
 
 ASSETS. 
 
 Securities £39,380,933 . . . £39,722,788 
 
 Coin and Bullion 1 3,897,085 . . . 13,314,811 
 
 £43,378,007 . . . £43,037,599 
 
 The Comparison shews : — 
 
 A Decrease in the Circulation of £588,937 
 
 A Decrease in Private Deposits of. 510,459 
 
 A Decrease in Bullion and Coin of 583,374 
 
 An Increase in Securities of 341,866 
 
 An Increase in Public Deposits of 835,850 
 
 The Decrease in the Circulation, and in the bullion and coin, is 
 partly explained by the simultaneous decrease in the private 
 deposits and increase in the securities. This to a great extent 
 may arise from bills drawn by the Continent on England, forwarded 
 here for discount, in order to obtain bullion ; or even by English 
 bills of exchange, discounted by the Bank of France at its 
 recent lower rate. But a great portion of the withdrawal of bullion 
 has unquestionably arisen as a trading operation, arranged between 
 the Bank of France and the bullion dealers and capitalists here. 
 
LKGAL TENDEE AND CURRENCY. 7 
 
 The operation is purely trading, and not banking j and our great 
 object is to ascertain its effect upon our system of currency, and the 
 means we ought to take to correct its pernicious influence. 
 
 The Balance of Trade between this country and the Continent 
 of Europe does not sufficiently explain the anomalous position in 
 which this country is placed with respect to the power possessed 
 by the Contibent over the stock of bullion held by the Bank. It 
 does not arise from legitimate trade alone. Were it so, the balance 
 of our commercial indebtedness being met, the exchange would 
 speedily rule in our favour. But it is well known that the British 
 funds for many purposes are a convenient mode of investment for the 
 potentates of Europe ; .and, besides that, there are large capitalists 
 here, more powerful than most of these potentates, whose resources 
 are always equal to the occasion. 
 
 The Bank is, therefore, particularly assailable through her de- 
 posits.* It was only within the present year that a leading discount 
 
 * During the panic of 1857, the Bank held (on 18th Nov.) £19,443,000 of 
 deposits, and £21,406,000 of bank notes were in circulation, — while at the 
 same time its total amount of bullion was only £6,484,000. This led to the 
 Government letter ! But what a breach of the Constitution ; — that a solemn 
 law should be abrogated by the act of a Minister of the Crown ! If this 
 principle can be maintained under the plea of necessity, the integrity of 
 Magna Charta, or any other of our great charters, may also be violated on 
 some similar pretext. Between the 26th September, 1857, and the 17th 
 of November, the deficiency of bullion was i7,950,000, chiefly arising from 
 foreign action on our currency. 
 " 1. The Bank purchased only £434,000 of the bullion im- 
 ported; the remainder was exported, say £2,566,000 
 
 (Throughout October and the first days of November, 
 there was a heavy and continuous drain to Prance, 
 partly for the purchase of silver, of which £1,800,000 
 was sent to the East, chiefly supplied from the Con- 
 tinent.) 
 
 " 2. The Bank sold, during that period, about 782,000 
 
 "■3. The Bank, up to 17th November, lost sovereigns to the 
 
 extent of 4,660,000 
 
 ^' 4. The balance includes the demand for Silver Coin, &c..,. 52,000 
 
 £7,960,000" 
 (Appendix to Report, No. 12.) 
 
 This account proves that the Directors might have redeemed their position 
 as to bullion if they had chosen to do so. They only bought £434,000 of 
 bullion, the bullion market being open to them ; while during the same 
 period of about six weeks they sold or " lost" ^£5,532,000 of bullion. There 
 is a close, if not an identical, affinity between banking and mercantile busi- 
 
8 LEGAL TENDER AND CURRENCJ. 
 
 touse in the City operated on the Bank reserve to the extent of 
 nearly two millions, by withdrawing that amount, which was stand- 
 ing at its credit. The consequence was an immediate advance of 
 1 per cent, in the rate of discount. Discount houses are dealers in 
 money. An advance in its price, if they happen to hold a large 
 amount, is a certain profit. If other banks holding large deposits, 
 had simultaneously taken the same course, (and it is quite in their 
 power to do so at any moment), the Bank would have been placed 
 in great jeopardy. It is not necessary that banks should combine 
 in a common action of this kind from any feelings of spite or oppo- 
 sition, — ^but there is no means to prevent their doing so at any time, 
 if their object is to raise the rate of discount. There is no doubt that 
 such a course would be most disastrous to trade ; but no one has a 
 right to complain of the way a banker, any more than a merchant, 
 chooses to employ his money, so that he employs it legitimately 
 in the course of his business; and there is no law which can 
 prevent any one from withdrawing his deposits from the Bank, if 
 it is his interest to do so. Neither is^there any law to prevent 
 any large capitalist contracting with foreign governments to supply 
 any given amount of bullion. These operations are strictly within 
 the province of trade. But the public have nevertheless a right to 
 complain that the interests of the country — the value of all property 
 of what kind soever — are so completely under the influence of the 
 Bank Charter, (6 and 7 Vict., c. 32), that they are left at the 
 mercy of any capricious or concerted movement in finance, on the 
 part of any potentate or capitalist who may choose to take advantage 
 of the defective character of the statute. During the monetary 
 crisis at the end of 1857, the losses to the community by the failures 
 in trade, and the depreciation in prices on stocks held, were enormous. 
 (See Appendix A.) 
 
 How complacently, — how coolly, — do some of the writers in our 
 public journals express their opinions on the effect of an advance 
 in the Bank rate of discount ! When the minimum rate rose to 
 10 per cent, on 10th November, 1857, the editor of the City article 
 of the Time& highly approved of the course adopted by the BaBk. 
 
 ness ; which leads to the conclusion that this must have arisen from bad or 
 interested management. Why did not the Bank go into the market ? Was 
 it deterred from a desire to raise their rate of discount by allowing their 
 bullion to be reduced ? There is certainly something portentous in the 
 months of October and November in the Bank's management. All our finan- 
 cial d istresses occur at these periods. How is this to be explained ? Is it from 
 political considerations in anticipation of the ensuing year ? Trading and 
 manufacturing interests at that season require an opposite policy. 
 
LEGAL TENDER AND OTJEEENCV. ' 9 
 
 " The fact is, no one with sufficient credit to obtain discount at all 
 " cares in the least about an additional 5 per cent, for a month or 
 "two. For a single month the difference is 8s. 4(3 „ and every 
 " bne feels that before the lapse of that time the worst of the 
 " trial will be over. In rigid justice, so long as any members of the 
 " mercantile body are found to play info the hands ofthepanic- 
 " makers, it would be satisfactory to see the rate carried to 20 or 
 " 25 per cent., or any point that would at least be regarded as an 
 " outlay not safely to be incurred on unreasoning selfishness." 
 What a strange hallucination that most astute and able writer must 
 have been labouring under, when he published opinions like these ! 
 Little did he imagine the enormous depreciation which was at the 
 very moment taking place in the prices of all stocks of goods held 
 by the traders throughout the kingdom, from the morbid sensitive- 
 ness of credit alone,— a depreciation ranging from 30 to 70 per 
 cent. ! — a fact well known to every trader from Stocks of goods 
 thrown on the market for sale by tender !— He merely looked at the 
 simple fact of an increased discount on Bills of Exchange, irre- 
 spective of any other consideration. In his eyes it was only a 
 question of 8s. 4d. in ^100. He might have done the State some 
 service if at that period he had boldly denounced the conduct of the 
 Bank of England, in affording undue encouragement to the reckless 
 practices of some of the local banks in Glasgow and Liverpool, and 
 elsewhere, by its readiness to re-discount or advance on the deposit 
 of a worthless mass of spurious paper, brought in by certain Bill- 
 Brokers ! That, assisted by the demand for gold by France, was 
 the real cause of the mischief ; and the Bank, penetrated by a deep 
 sense of their imprudence on that occasion, have since seen good 
 reason for changing so loose and disastrous a system. There can be 
 no disguising the fact — the widely-spread manufacture of accommo- 
 dation paper would not be so generally resorted to, were the banks 
 more tenacious of their discounts. This is a truth which Bankers 
 and Bill-Brokers only learn by the disclosures made in the Court of 
 Bankruptcy, although with marvellously small effect as a warning to 
 themselves for the future. But for the facilities afforded by the Bank 
 itself, that panic of 1857 never would have taken place. Between 
 the 4th of November and 30th December, the Bank discounted : — 
 
 At lOpercent £10,118,015 
 
 lOi „ 48,638 
 
 10^ „ 154,488 
 
 11 „ 349,097 
 
 12 „ 31,653 
 
 c •• 
 
10 LEGAL TENDER AND CURRENCY. 
 
 How stood, at the same time, small wholesale houses, possessing 
 moderate capital, and doing prudent husiness ? They could not 
 obtain discounts at all, — unless outside, at a ruinous rate. Theirs 
 were the goods sacrificed to raise the means for meeting their engage- 
 ments ; or (having suspended payment) whose stocks were thrown 
 on the market for sale for what they could bring, in order to divide 
 a few shillings in the pound amongst creditors who would otherwise 
 have been paid in full. TJie country is now undergoing the same 
 process of purgation ; and it is difficult to foretell where it will end, 
 so long as our present monetary system continues. It is not in 
 England alone that this depression is felt. In France trade is laid 
 prostrate, while the Bank there has just raised its discount to 7 per 
 cent. (8th January, 1861) placing itself on a par with the Bank of 
 England ; while in neither country {except from political conside- 
 rations) is there any sound reason for raising the value of money. 
 On the contrary, it occurs at a time when trade is otherwise in a 
 perfectly healthy state (with the exception of the ribbon manu- 
 facture, owing mainly to a change in fashion) — when there is the 
 complete absence of anything like wild speculation, when manu- 
 facturers and wholesale warehousemen are making preparations 
 for the ensuing Spring trade, and when every possible facility 
 which prudence would dictate, ought to be given for the employ- 
 ment of labour and capital. But, what say some of our most 
 enlightened public writers on this state of things ? We quote from 
 the Economist (13th January) : — " The duty of the Bank of 
 " England, in the face of the peculiar policy of the Bank of 
 " France, is clear and simple. They must oppose all the obstacles 
 " which they can to the withdrawal of bullion from the market." 
 (That is a sound policy ; but what follows ?) — " They must raise 
 " the value of capital to whatever height may be necessary for 
 " that purpose, and then, having done what they can, they must, 
 " Me the rest of the public, wait the event." This is very cool ! 
 May God protect the poor weavers, as well as the interests of trade ; 
 for it is very evident the banking or monied interest have no lack 
 of advisers to protect themselves at all hazards. 
 
 - It is a patent and unquestionable fact, as we have shewn, that 
 by the united action of large depositors, and even of one large 
 depositor, the Bank reserve can be materially reduced, and the rate 
 of discount enormously increased. The experience of this memo- 
 rable week in November proves this. One of two conclusions neces- 
 sarily follows ; namely, that the Bank ought either not to receive 
 deposits at all — if it hopes to maintain its perfect independence — or 
 
LEGAL TENDER AND CURRENCY. 11 
 
 receiving deposits, — that it ought not to have the power of issuing 
 notes ! — The whole of the mischief attendant on our present system 
 of currency seems founded on a system of legerdemain, — so far as 
 the Bank is concerned. It receives with one hand all sorts of 
 credit currency, — cheques on bankers, notes on local banks, and all 
 other descriptions of that which passes conventionally as money, but 
 which the law, strictly interpreted, does not recognise as such, — 
 and, with the other, — the Bank hands over an equal amount of 
 legal tender founded on gold I It is scarcely possible to imagine 
 a greater act of simplicity than to adopt such a principle as the 
 basis of a currency for a great commercial country. 
 
 A bank note is either worth what it represents, or it is not. For 
 the week ending 14th November, we see there were bank notes and 
 post bills in circulation to the amount of ^^31,438,067 
 
 There were public and private deposits, amount- ) i o ^^ir qi ^ 
 ingto.. J 1^07,814 
 
 <■ 39,845,881 
 
 While the gold coin and bullion held was only 13,314,81 1 
 
 Shewing a deficiency in gold of .ie26,531,070 
 
 to meet the call on the Bank, in the event of an immediate demand 
 for conversion, — that is, in the event of a panic. This would pro- 
 duce in such a case 6s. Bd. in the pound irresjiective of the securities' 
 held by the Bank j but in such an event, (improbable though it 
 may be), what would be the worth of the securities ? Mark,— this 
 is the present result, when the Bank has comparatively a large 
 amount of gold in its coffers. If the bullion become reduced, as it 
 may be,* and as it has been within only a few years past, to a sum 
 not amounting to a million, the assistance of the Government will 
 be invoked to stop the further efflux of gold. In that case the 
 public would be thrown back on the security of the Government alone. 
 Is there no means of providing against the consequences of so grave 
 a calamity ? Before this pamphlet can be published, the stock of 
 gold may have materially decreased, notwithstanding the constant 
 importations of bullion ? Surely there ought to be a remedy for this. 
 
 The Bank raises the rate of discount /or its own preservation, at 
 the expense of the community ! There would seem to be an anomaly 
 in this ; as the natural advance in the value of any commodity what- 
 
 * The coin and bullion on 16th January, 1861, had fallen.to ^£11,004,845, 
 including Jl ,469,843 of silver bullion, part of the recent exchange of gold 
 for silver with the Bank of France,— a/oZ? of two millions, in two months 
 
12 LEGAL TENDER AND CTTBRENCY. 
 
 ever, money included, is governed by the law of supply and demand. 
 And with the enormous amount of lanemployed deposits in all 
 Banks, there seems no natural reason, far less any extraordinary 
 necessity, for an advance in the value of the circulating medium. 
 But this anomaly is explained, when it is considered that our cur- 
 rency is founded on gold, and that the Bank of England is the 
 sole supplier of that currency. It is here that the public have a 
 right to complain of the delusive character of the Bank Charter. 
 In that Act no provision whatever is made against the dangerous 
 action of the Bank deposits, either public or private ! There is not 
 a single clause in the Act of 1844 which makes the least allusion 
 to them. Any reduction, therefore, in the stock of bullion, ox any 
 sensible action on the Bank's reserve, compels the Directors to raise 
 T;he rate of discount, in the hope of checking the demand for gold 
 coin and bullion, always accessible through its issues of notes. It 
 is, indeed, their only alternative, and. will , continue periodically to 
 embarrass and obstruct the operations of legitimate trade — reduce 
 the value of all property — and materially interfere with the 
 employment of labour, so long as these deposits are allowed to 
 possess the necromantic power of transforming themselves into a 
 legal tender, founded on the standard of value ; and so long as the 
 entire circulating medium is founded on the fallacy of a legal 
 tender. These deposits are essentially Bank notes. The second 
 section of the Act of 1844 enacted that every note issued beyond 
 the Government debt of £14,000,000 (since permitted to increase 
 to £14,475,000), must be repre&ented by gold. Who can doubt 
 the intention of the Legislature on this point ? Is not the opera- 
 tion of these deposits, therefore, an evasion — a manifest violation 
 — of the Bank Charter ? 
 
 It is true, the Bank allows no interest on deposits ; but this is 
 more than compensated to the depositors by the enhanced value 
 given to their deposits. Were it not so, why do the Joint Stock 
 Banks and Bill-Brokers hold out the inducement of interest on 
 money at call, at 1 per cent, less than the Bank rate of discount ? 
 Is it not that these deposits commanding gold, have acquired a 
 value they otherwise would not possess ? - Indeed, the great bulk of 
 the profit is thrown into the hands of the Joint Stock Banks — a 
 fitting retribution on the Bank of England, for the bitterness of its 
 opposition to them soon after their establishment was permitted by 
 law. This is evident from the last returns of some of these banks.* 
 
 * For the half year ending 30th June, 1860, the London and Westminster 
 Bank divided 10 per cent., being equal to 20 per cent, per annum, free of 
 
LEGAL TENDER AND CUREENOY, 13 
 
 One of our greatest mistakes in legislating'on the currency, both 
 in 1819 and 1844, was by adopting the principle of founding it on 
 the Government debt. In its very essenc^e, currency is the property 
 of the people, and not in any sense the property of the State, or an 
 engine to be used for the protection of the Bank. If it is right to 
 found currency on the principle of a legal tender, it is wrong to 
 establish it concurrently on the credit of Government, which at best 
 is but a variable, if not an uncertain security. It requires no other 
 evidence to establish this fact than the fluctuating value of the 
 public funds. 
 
 What is the legal tender, so far as the mercantile and conven- 
 tional habits of the community are concerned ? It is, in theory, 
 a thing almost practically unknown ; and is the exception, not the 
 rule, in all contracts. The great bulk of the transactions in busi- 
 ness is conducted on a principle of credit ! The confidence which 
 exists between man and man in their trading operations, is not 
 only the basis of our trade ; but the question of a legal tender never 
 enters into a single contract where credit is concerned, and is at 
 variance with the conventional habits of the people. Our trade 
 is built up on cheques, letters of credit, bills of exchange, and in 
 numerous other shapes, — even on barter .'—Is there any trader so 
 short-sighted in his business, knowing the pecuniary respectability 
 of his customers, and his own interest, who would refuse either 
 the one or the other, simply on the ground that such a mode of 
 settlement is not a legal tender? Who would refuse Messrs. 
 Rothschilds' cheque for such a reason,— or doubt that it could be 
 immediately converted into gold ? 
 
 Gold itself is the foundation of the legal tender ; but gold forms 
 a very small portion of our trading operations ; or even bank notes, 
 
 income tax. " TKe profits exceed any previous occasion, and would have 
 been larger, but for the confusion in the leather tv2iAe"—{Eaonomut, July 
 21st, 1860.) This is independent of ^10,000, to meet any losses from that 
 circumstance ; and of ^11,222, carried forward to next half-year. The 
 London Joint 8tock Bank divides at the rate of 12| per cent., cariying for- 
 ward a balance of ^25,534 13s. 9d. to profit and loss new account,— losses 
 being anticipated in consequence of the recent failures in the leather trade. 
 The Commercial Bank of London declares a dividend of 8 per cent, per 
 annum ; making a provision for bad and doubtful debts— and making 7i 
 per cent, for the last twelve months ; also carrying forward a balance of 
 ^551 2s., and making allowance ^3,984 lis. 4d. for rebate on current 
 bills. The City Bank divided at the rate of 6 per cent, per annum, with 
 15s. per share bonus, equal to 7i per cent, per annum ; carrying forward 
 .•£8,037 17s. 9d. against contemplated heavy losses from failures in the 
 leather trade. 
 
14 LEGAL TENDER AND CURRENCY. 
 
 which are supposed to represent gold. By an analysis appended 
 to this pamphlet (Appendix B.), it is proved that bank notes 
 form actually less than 7 per cent., and gold and silver only 3 per 
 cent., of the currency ! To persist, therefore, in continuing a legal 
 tender on its present principle, as the basis of all our mercantile 
 and commercial operations, is a fallacy most disastrous to trade, 
 as it is simply an anomaly, destructive in its operation to the 
 interests of the community. Where and when does the question 
 of a legal tender arise ? The courts of justice themselves do not 
 recognize it, as between creditor and debtor, — purchase and delivery 
 being proved, securing a verdict in favour of the plaintiff. 
 
 The legal tender is, therefore, a mere fiction of the imagination, 
 and ought not to be longer held the only onerous consideration in 
 the basis of trading contracts. Bank of England notes, to the 
 entire extent of its issues, are legally based upon and made payable 
 in gold, although practically not represented by gold. If deposits 
 represent bank notes, although not issued in any shape — if country 
 bank notes may be represented by Bank of England notes, as the 
 law prescribes, country bank notes are equally represented by gold, 
 were it possible for their issuers to hold a sufficient supply of 
 Bank of England notes to meet them. It necessarily follows that 
 the entire currency of the kingdom, whether in bank notes or 
 country bank notes — whether in Bank of England deposits — 
 whether in joint-stock or private bank or provincial bank deposits, 
 is falsely represented ; indeed, every possible system of currency is 
 virtually founded on Bank of England notes, and consequently on 
 that miserable modicum of gold which may remain in the hands 
 of the Bank in the event of a run upon it. It is impossible to 
 construct a fallacy of a more dangerous character to the trading 
 interests of the country. 
 
 Indeed, as regards the legal tender, the question resolves itself 
 into this simple consideration— whether it ought to be founded on 
 capital or credit? Capital is here taken in its most restricted 
 sense — it means — gold of a fixed purity and weight as the standard 
 of value. In that sense capital will be perfect in its security ; but 
 a legal tender, founded on credit, is imperfect, and therefore insecure. 
 Any description of capital founded on credit,— of whatever kind, 
 must be uncertain in its value. The public funds — land — mercantile 
 bills of exchange — goods held in security — every imaginable 
 species of property other than the standard of value itself — are, 
 all liable to depression under particular circumstances ; and are, 
 therefore, as a basis for a legal tender, altogether unfit to command 
 
LEGAL TENDER AND CURRENCY. 
 
 15 
 
 the confidence of tlie community. This is proved unquestionably 
 in the instance of government stock and railway shares. Anything 
 which does not possess a fixed and unalterable value is wholly unfit 
 for the basis of a currency, simply because it does not, and cannot, 
 in a period of national difiiculty, command the confidence of the 
 community. 
 
 The Economist of 17th November, 1860, has a very able article 
 under the title of " Where is the Gold gone ? " It shews that the 
 Banks of France and England, taken together, have lost £10,400,000 
 of bullion since the corresponding period of last year. 
 
 " On the 16th November, 1859, the bullion ) j, g ggQ b^q 
 
 in the Bank of England was j ' ' 
 
 The bullion in the Bank of France was 23,336,989 
 
 Taken together =e40,197,669 
 
 The corresponding return for November 15th, 
 1860, is 
 Bullion in Bank of England £13,314,811 
 Bullion in Bank of France... 16,483,567 
 
 £39,797,378 
 
 Deficiency £10,400,391 
 
 And the change is still more remarkable if 
 
 we go back as far as August, 1859. 
 The bullion in the Bank of England then was =^17,281,888 
 The bullion in the Bank of France 25,109,000 
 
 £42,39.0,888 
 
 Shewing a loss of ^£"13,593,610 in the total reserve of the two 
 Banks in fifteen months. 
 
 The causes of this deficiency cannot be explained by th^ ordinary 
 principles of trade. Let us analyse the difference in the deficiency 
 between the two Banks at the end of the fifteen months : — 
 
 In the Bank of England the deficiency is =^3,967,077 
 In the Bank of France 8,636,533 
 
 £13,593,610 
 
 The drain on the Bank of France is so much greater than on 
 the Bank of England, that we must seek for its cause on the 
 Continent of Europe, — in fact, in France alone. As regards 
 England, its cause is too well known. 
 
16 
 
 LEGAL TENDER AND OURKENOY. 
 
 If we compare the debtor and creditor account of the Bank of 
 France as published in the Moniteur, in November, 1859j and 
 November, 1860, the diflferences appear to exist in the following 
 items ; leaving out of consideration those points, such as capital, 
 profits, reserve, Government stock reserved, and hotel furniture, — 
 in which there appears no difference during the past year^ and in 
 the supposition that the return is an honest statement of the 
 position of the Bank of France — viz, : 
 
 DEBTOR. 
 
 
 November,1859. 
 
 November, 1860. 
 
 Increase. 
 
 Decrease. 
 
 Notes in Circulation. 
 
 Bank Notes to Order . . 
 
 Receipts payable at sight 
 
 Treasury AccountsCurrent ) 
 Creditor . . . . j 
 
 Sundry Accounts Current ) 
 Creditor . . • • / 
 Do. with Branch Banks 
 
 Dividends payable . . . 
 
 Discounts (sundry interests) 
 
 Commission on deposits . 
 
 Re-discounted the last 6 mo. 
 
 Sundries 
 
 Francs 
 706,920,775 
 5,627,751.56 
 8,754,493 
 
 199,673,301.31 
 
 174,460,736.77 
 
 29,863,688 
 
 698,209.25 
 3,772,692.17 
 8,977,303,49 
 1,761,106.05 
 4,376,339.92 
 
 Francs. 
 757,413,025 
 6,616,370 
 10,076,752 
 
 133,342,637.80 
 
 176,654,877.49 
 
 31,358,265 
 811,410.75 
 4,084,611.33 
 9,257,765.65 
 1,216,416.20 
 4,276,871.31 
 
 Francs. 
 51,492,250 
 
 887,618.44 
 1,322,259 
 
 1,194,110.72 
 
 4,494,567 
 113,201.50 
 311,952.16 
 280,462.16 
 
 Francs. 
 66,230,666.51 
 
 634,668.85 
 099,468.61 
 
 Total . . . 
 
 1143,776,398.52 
 
 1137,008,055.53 
 
 60,096,460.98 
 
 66,864,793.97 
 
 
 CREDITOR. 
 
 
 
 
 November,1859. 
 
 November,l860. 
 
 Increase. 
 
 Decrease. 
 
 
 Francs. 
 
 Francs. 
 
 Francs. 
 
 Francs. 
 
 Cash in hand .... 
 
 211,776,302.64 
 
 H4,'984,323.19 
 
 
 
 96,791,979.16 
 
 Cash in Branch Banks . 
 
 361,647,415 
 
 319,580,964 
 
 
 42,066,451 
 
 Commercial Bills overdue 
 
 293,538.68 
 
 987,049.48 
 
 693,510.90 
 
 
 Commercial Bills dis- 
 
 232,682,018.90 
 
 261,612,587.24 
 
 29,030,568.34 
 
 
 Do. in Branch Banks 
 
 272,219,043 
 
 301,768,629 
 
 29,549,586 
 
 
 Advancedon dep. of Bullion 
 
 13,200 
 
 4,927,660 
 
 4,911,160 
 
 
 Do. by Branch Banks . 
 
 638,500 
 
 2,073,800 
 
 1,435,300 
 
 
 Do. on French Pub. Sees. 
 
 28,773,000 
 
 27,120,600 
 
 
 
 1,646,400 
 
 Do. by Branch Banks , 
 
 11,050,000 
 
 16,905,700 
 
 1,915,700 
 
 
 Do. on Railway Securities 
 
 50,416,800 
 
 49,283,900 
 
 
 
 1,132,900 
 
 Do. by Branch Banks . 
 
 35 180,260 
 
 32,049,250 
 
 
 3,131,000 
 
 . Do. on CreditFoncierScrip 
 
 768,600 
 
 617,900 
 
 
 110,600 
 
 Do. on Branch Bank Scrip 
 
 367,600 
 
 423,850 
 
 066,250 
 
 
 Do. to the State on A- 'J 
 gree. of June30„1845 ) 
 
 65,000,000 
 
 35,000,000 
 
 
 30,000,000 
 
 GovernmentStock disposabh- 
 
 52,198,332.13 
 
 63,708,840.38 
 
 1,610,508.25 
 
 
 LandedProp. of BrnchBankb 
 
 6,722,605 
 
 6,195,366 
 
 
 627,239 
 
 Expenditure of Management 
 
 1,621,761.80 
 
 1,899,929.85 
 
 275,178.05 
 
 
 Sundries ...... 
 
 2,660,069.12 
 
 1,907,246.29 
 
 
 752,822.83 
 
 Rentes Immobilis^es (law ) 
 of June, 1857) . . .) 
 
 
 100,000,000 
 
 100,000,000 
 
 
 
 1336,911,P26.17 
 
 1330,143,595.43 
 
 169,391,061.5J 
 
 176,159,392.28 
 
 Note.— On 11th January, 1861, tte Returns of the Bank of France 
 showed a decrease in cask of .6,286,000 (82,150,000 Francs) ; in Treasury/ 
 .fiflZance of .£2,045,000 (61,126,000 Francs) ; and an increase in Banl; Notes 
 of ^1,270,000 (31,75p,000 Francs). 
 
LEGAL TENDER AND OrEKBNOT. 17 
 
 We need not travel far for an answer to the question, " Where 
 has the Gold gone ?" We have only to look to the operations of 
 the French Government itself. And we may well ask, — la the 
 abstraction of Gold a " nest egg,"" for war in the spring ?— has it 
 been wanted to support a large standing army, — or (as the British 
 Funds are 91 to |, and comparatively unaffected as yet by the 
 abnormal demand for gold,) is it a speculative movement, with the 
 view of reducing Consols by compelling an advance in the rate of 
 discount here, with the view of re-investment ? It is very evident 
 the gold movement is the result of some preconcerted plan, alto- 
 gether irrespective of the natural demands of trade. 
 
 The Bank of France in November had reduced its bullion during 
 the previous fifteen months, to the extent of J8,636,433 sterling, 
 — and the French Government had operated on the funds of the 
 Bank, during the preceding twelve months, as follows : — 
 
 Francs. 
 Decrease in Treasury Account Current Creditor 66,230,666 
 
 Increase in Government Stock disposable 1,510,508 
 
 Advance to the State 35,000,000 
 
 Rentes Immobilisees (not disposable) 100,000,000* 
 
 203,741,174 
 or £8,109,6U 
 
 The commercial action of the Bank, or reduced confidence on 
 the part of the -people, readily explains the difference between the 
 larger amount and the demands of the French Government. 
 
 The whole capital of the Bank was recently only 91,250,000 
 francs, ■ but which, within the last few years, by a decree of 
 the Emperor, was doubled, and now represents a capital of 
 182,500,000 francs, based on the security of the State. This 
 amounts to £7,300,000 sterling, so that the wants of Govern- 
 ment during the last twelve months have exceeded the whole 
 capital of the Bank by £809,644.. No wonder -that the French 
 Government is anxious to prevent a further rise in discount by the 
 Bank of France, as they see panic looming in the distance. If 
 they follow the example of Austria, by restricting specie payments, 
 and enter into war, it may occasion a revolution in France, The 
 " Assignats" issued -during the French Eevolution of 1789 are not 
 likely to be speedily forgotten. But that is a question which the 
 French people will have to settle with its government. Our business 
 is to keep a firm grasp on the coin and bullion which as yet remain 
 
 * This operates virtiinlly as a reduction of the Bank's Capital. 
 
18 LEGAI. TENDER AND OrRRENCT. 
 
 in our possession ;* not to wait until it is exhausted, but to protect 
 it by an> order in Oouncilj or a Government letter, until the Parlia- 
 ment meets in February, when the Bank Charter, in Us principles, 
 should be submitted to the consideration of a Select Committee. 
 
 In drawing the detached threads of these facts and arguments 
 together, we seem naturally to arrive at the following conclusions : — 
 
 1st. That the legal tender, as it exists, is not a perfect security; 
 In its essence it is a legal fiction, built up on a most illogical 
 foundation. It states in reality that bank notes shall be payable 
 in gold when presented, although there is no gold to meet them. 
 This is simply an absurdity. 
 
 2ndly. That gold alone, of a fixed weight and fineness, so long 
 as it continues the standard of value, ought to be the only legal 
 tender, or notes payable in gold when presented, — because there 
 will he gold ready to meet them ; such notes being the evidence in 
 themselves of gold actually in possession. 
 
 Srdly. That the Bank of England, as the supplier of the legal 
 tender, ought not to continue to receive deposits ; or, receiving 
 deposits, ought not to be continued as the issuer of the legal tender. 
 
 4thly. That such legal tendei*, in periods of commercial prosperity, 
 and in the absence of all internal speculation, exposes the country 
 to the speculative influence of foreign action on our currency ; 
 whether that action arises from the pecuniary necessities of other 
 countries, or from political considerations adverse to the interests 
 of England.t 
 
 * On the evening of 12th November, 1867, the Bank in their banking 
 department only held — 
 
 Gold coin in London £274,953 
 
 Ditto at Branches 83,255 
 
 ^358,208 
 
 Silver Coin in London .£41,106 
 
 Ditto at Branches 50,807 
 
 J91,913 
 
 Eeserve— London £68,085 
 
 Ditto — Branches 62,545 
 
 £130,630 
 
 [See evidence of S. Neave, Esq., and B. Dobree, Esq., 1858.] 
 
 t Since this was written, the result of the Presidential election in the 
 United States is of so serious a character, as to threaten a secession of the 
 
LBaAL TENDER AND OUKRENCY. 19 
 
 5thly. That under such circumstances it compels an advance in 
 the rale of discount /or the mere protection of the Bank of England, 
 against the possible disastrous consequences to itself which may 
 arise through the large amount of private deposits in its own hands, 
 and which may at any time be withdrawn in gold. 
 
 6thly. That an abnormal advance in the rate of discount is con- 
 versely a reduction in the value of all property of whatever kind 
 soever ; whether land, public funds, stocks, shares, goods, shipping, 
 labour, or any other commodity, and is, consequently, a manifest 
 injury to the people. 
 
 7thly. That in its principle, the existing legal tender is unjust, 
 immoral, and unnecessary. It is not now to be defended, or even 
 extenuated, on the ground that it was adopted at a period of 
 political difficulty in England, as the mischief it has inflicted, and 
 continues to inflict on the country, is incalculable. Nor is it 
 required on the plea of a scarcity of gold. It ought not, therefore, 
 to be longer tolerated as a principle, — in a country commanding an 
 extent of commerce and manufacturing industry unequalled in the 
 history of the world, and which is almost entirely founded on credit. 
 
 In suggesting a remedy against the evils incident to our existing 
 principle of a legal tender, it ought ever to be borne in mind 
 that gold or bank notes themselves, bear an infinitesimally small 
 proportion of the currency. The great bulk of the currency is 
 formed of cheques drawn against deposits, wherever these deposits 
 may be placed — not in the Bank of England only, but in all banks 
 throughout the kingdom. This can be ascertained, ta a certain 
 extent, through the medium of the clearing house in London, if a 
 return for the guidance of Parliament, on a question of such public 
 interest, were asked for in that quarter. But even cheques alone, 
 although perhaps the principal medium of currency, and in excess of 
 every other, are not the , only great instruments of exchange in the 
 trading operations of the country. Bills of exchange form a very 
 large amount of the circulation. By a calculation made by the 
 author from the returns of bill stamps issued in 1857, the result, 
 including foreign bills, may be fairly considered as amounting yearly 
 to one thousand millions of pounds sterling. (See Appendix C.) 
 
 There cannot be a greater mistake, during a period of pecuniary 
 
 slave-holding states. Many of the southern banks have suspended specie 
 payments, and the exchanges having fallen, a large demand for gold haa 
 arisen on England. 
 
20 LEGAL TENDER AND CURRENCY. 
 
 pressure, when crisis appears inevitable, tlian for the Directors of 
 the Bank of England to wait, {patiently, it can scarcely be said), 
 until the gold is all but exhausted, before they apply for Government 
 aid to enable them to tide over their difficulty. At the present 
 moment indications of that pressure are too evident, and the utter 
 impossibility of averting it so wholly beyond the power of the 
 Directors, as our currency is constituted, that as a matter of 
 expediency, the circulation of the country ought to be protected, 
 until Parliament in its wisdom shall adopt effectual measures for 
 its future safety.* 
 
 Let it be supposed that, with the view of effecting a permanent 
 reform in our system of currency, an order from the Privy Council 
 is issued, restricting the Bank of England from paying its notes 
 in gold. At the present moment there is £9,535,002 of gold 
 coin and bullion, and .se], 469,843 of silver bullion, in the issue 
 department of the Bank, exclusive of the gold and silver coin in 
 the banking department. Let this amount of gold held by the issue 
 department be at once transferred to the Mint, under the custody 
 of three Commissioners, specially appointed for that purpose ; and 
 part of whose functions it shall be to give certificates or notes, 
 always convertible when presented, for every parcel of gold {not 
 under £100), deposited in their hands. These certificates or notes 
 shall form tfie legal tender of the country, and be issued in various 
 amounts, in the same way as Bank of England notes, which circu- 
 late in that capacity. Even the Reserve in the Banking Depart- 
 ment would be so employed. These notes, if presented for gold to 
 a large amount, may be convertible in bars, if the bullion is required 
 for export, to avoid the trouble and loss attendant on-the melting 
 down of the coins. All banks holding gold throughout the United 
 Kingdom should have the power so to deposit it in exchange for 
 bullion notes, and every bank to be established hereafter, desiring 
 the privilege of issuing notes, ought to be required to deposit in 
 gold the amount o^ its capital with these Commissioners, for the 
 custody of the bullion. This can be attended with no difficulty, as 
 the trade in bullion is likely to increase for many years to come ; 
 and its quantity in the country must continue to accumulate. At 
 this moment it is estimated there may be from 80 to 100 millions 
 of sovereigns circulating throughout the three kingdoms. Gold is 
 always to be bought in the open market ; and the bullion notes 
 
 * The Bank of France suspended specie paymeuts in gold on 4tli July, 
 1861. — At present, it pays in silver only. 
 
LEGAL TENDER AND CURRENCY. 3l 
 
 received in exchange for such deposits can be circulated either with 
 or without a premium, according to the demand for gold. But it is 
 this premium which, as it applies to gold alone, ought naturally to 
 take the place of that advance in the rate of discount which at 
 present affects every other species of currency, to the grievous injury 
 ' of trade. ■ These bullion notes are, in fact, gold, without incurring 
 the loss or inconvenience attending its circulation, and would 
 effectually neutralize the baneful influence attending our present 
 system of currency. They would circulate not only throughout 
 the three kingdoms, but over Europe and America, and render the 
 export of bullion to a great extent unnecessary, except as a matter 
 of trade. A large demand for gold for the continent could only 
 be met by a corresponding supply of bullion notes ; but as these 
 would be so widely distributed, rather than concentrated, (as in 
 the instance of Bank of England notes), that demand could be 
 readily satisfied in the open market, and could have no effect on 
 the rate of discount whatever it might h^ve on the exchanges, — 
 Besides — as a medium of circulation, bullion notes would inspire 
 more confidence, as they would be secured by, as they are founded 
 on, the standard of value itself. 
 
 The form of such note may, perhaps, be as under : — 
 
 BKITISH MINT. 
 
 £50, Bullion. J50. 
 
 We undertake to deliver to Bearer on demand, 
 
 No. 31 206. FIFTY POUNDS. No. 31206. 
 
 in gold bars or coin, in conformity with Act of Parliament. 
 
 London, ist January, i86i. 
 FIFTY. * A. B.^J 
 
 * 0. D. y Commissioners. 
 * G. H., Treasimr. * E. F. ] 
 
 [Note. These certificates (or notes) of any specific amount from £5 up- 
 wards, ought to be executed in the very highest style of the art of en- 
 graving, and -with all the precautions which science has supplied, to 
 prevent forgery.] 
 
 By this means we shall acquire a perfect legal tender ; but the 
 lewal tender as it exists at present must be protected, until such 
 time as the reformed and more perfect tender comes into entire 
 operation. 
 
 The necessity is by no means imperative, that the circulation 
 should be entirely founded on gold, — a circulating medium (irre- 
 spective of cheques, bills of exchange, &c.), may exist concurrently 
 
22 LEGAL TENDER AND CTJBEENCY. 
 
 with gold, but need not necessarily be based upon it. It is to the 
 existing fallacy of gold being the foundation of our currency that 
 the public is subjected to the constant fluctuations which take 
 place in the value of money. And here the distinction may be 
 safely drawn between a cash and a credit currency. A circulation of 
 bank paper may be .based on either public or private securities, or 
 on both, to the extent of two-thirdSj or any other safe proportion, 
 of their nominal value ; but under no circumstances ought such 
 circulation to be considered as represented by gold. Such bank 
 notes would command gold in the open market, as a commodity to 
 be bought, even in cases of extreme pressure, although it might be 
 at the expense of a premium ; but, under ordinary circumstances, a 
 credit circulation such as this would command confidence, and be at 
 par with a gold currency ; because gold, as a commodity, may be 
 bought like anything else, at a price ] but its value will be deter- 
 mined by its quantity, and the demand for it — in such a case, 
 bullion notes actually representing coined money, or bar gold of a 
 standard value, may advance, but cannot be reduced below the 
 standard price. 
 
 Let us suppose that such an inconvertible circulation is permitted 
 in the case of the Bank of England, as a matter of expediency. It 
 will be secured by the capital of the Bank (which is lent to the 
 State,) and on public and private securities. There cannot be a 
 description of securities which, taken as a whole, are better calcu- 
 lated to command public confidence, short of bullion itself. But 
 still it must be regarded as a credit, and not as a cash security. 
 Political events, at present unforeseen,^or monetary crises, — may 
 seriously affect the integrity of States as well as the position of in- 
 dividuals. No man can put his finger on 3 per Cent. Consols, and 
 say they may not fall to 50 ; or point to the most powerful amongst 
 our capitalists, and pronounce failure in their case to be im- 
 possible. Such a circulation ought in no sense to be regarded as a 
 legal tender, as that term is at present understood, however con- 
 veniently and satisfactorily adapted to the ordinary operations of 
 business. Although not payable in gold, as a bank of England 
 note professes to be at present, it would be an equally available 
 medium of currency for all depositors, as well as all operations in 
 trade,— and be on the whole a safe, if not a perfectly satisfactory 
 medium of exchange, while such a circulation might be issued under 
 the authority, of Parliament and be unchallengable as the basis of 
 ordinary contracts where the actual legal tender is not made a 
 positive stipulation. The form of such notes might be as under :— 
 
lEaAL TENDER AND CTJERENOT. 33 
 
 ^•50 BANK OF ENGLAND. £50. 
 
 I promise to Transfer to the credit of Bearer on demand, 
 
 a7 
 
 b54,314. fifty pounds. ^54,314. 
 
 guaranteed by the Funds and Securities of this Corporation, 
 
 London, ist January, '1861 , 
 For the Governor and Company of the Bank oe England. 
 
 pounds. } MATTHEW MAESHALL, Cashier. 
 
 Local banks have an authorised circulation, as arranged under 
 the Acts of 1844 and 1845. Every return shows a larger amount 
 of gold in their possession than the law requires them to hold. No 
 greater boon could be conferred oti the English Provincial, or th& 
 Scottish and Jrish Provincial Banks, than an arrangement by which 
 they could hold a legal tender equal to the requirements of the 
 law, without the necessity of holding a surplus. At this moment, 
 by the last returns, the bullion held by thesa banks is many 
 millions beyond their authorised issues. It would be of great 
 advantage to these banks, if they possessed the privilege of holding 
 a species of currency which they might make available, as they 
 could do in the case of bullion notes, but which they cannot do 
 in the case of bullion itself, by issuing all such notes which they 
 might hold in excess of their legalized issue. In Scotland, at 
 least, the banks find it impossible to issue the excess of bullion 
 held by them, as it is not a currency which at present seems to 
 find favour with the people — :and in Ireland, the large excess of 
 gold held by the banks is a strong argument in favour of a 
 modified system of currency. 
 
 As a matter of security, it can scarcely be a question whether 
 the capital of all country banks of issue ought not by law to 
 be required to be invested in bullion notes. This, it is true, 
 is no security against the misapplication of such capital; but it 
 would be a certainty to the public, that the capital was at least 
 there to justify confidence on the part of its customers. Were even 
 a prescribed time afforded for such investment of capital, it would 
 enable all local banks to make suitable arrangements to meet the 
 requirements of the law, as they could always accomphsh this through 
 their deposits without disturbing their investments. 
 
 Trade in gold has sprung up during the last five years, — in 
 California, in 1851 — ^in Australia, in 1853. In the meantime, new 
 gold-fields are being discovered — in Columbia and elsewhere. Aus- 
 tralia itself seems an inexhaustible field. Who can predict the future 
 amount of gold importations ? From the experience we have already 
 
34 LEGAL TENDER AND OUaEENCY. 
 
 had, we are justified in expecting the importation of a far larger 
 amount than can ever be needed for the mere wants of currency. 
 
 It is a question whether under such circumstances it would be 
 wisdom to continue the present Mint price of £3 17s. 9d. per 
 ounce. Where bullion is deposited, and not coin of full weight and 
 fineness, it is but right that the expense of the coinage (where 
 coins are demanded in return) should be borne by the depositor. 
 If the price for uncoined gold were fixed at £3 17s., or even at 
 £S I7s, 6d., the result would more than provide for the extra 
 expense this alteration would occasion at the Mint. The yearly 
 importation of bullion to Europe is supposed to amount to about 
 £38,000,000. During the last eight years, the addition to the 
 stock of gold is estimated at not less than 6^300,000,000 (see 
 Edinburgh Beview for July, 1860, on the probable fall in the price 
 of gold, by M. Chevalier).* If only £30,000,000 were deposited 
 yearly in bullion, it would produce, at 4|d. per ounce, about £94,000, 
 while at lO^d. per ounce we should leave <i£'850,000, and if we add 
 the yearly average of £6,000 for notes lost or destroyed, and which 
 thereby becomes the property of the public, we shall have in the 
 first case £100,000, and in the latter i?856,000, towards the 
 expense of providing a circulation founded on gold alone. The 
 average net profit at present derived by the Bank from the 
 management of its issues is estimated by Mr. Weguelin and Mr. 
 Neave at £133,000. This would also be so much saved to the 
 community, as the issue of bullion notes would be wholly inde- 
 pendent of the Bank, and as the issue of the Bank's own transfer 
 notes, as here suggested, would be devoted to its individual banking 
 objects, and be founded wholly on its capital and its public and 
 private securities, it is only reasonable to assume that the expense 
 attending such issue would be borne by itself. 
 
 The question of a continuous influx of gold has already seriously 
 attracted the attention of landholders. They are even now fretting 
 themselves into the belief, that such is the progressive and con- 
 tinuous production and importation of gold dust, that gold will 
 speedily become depreciated relatively to silver, and a 3 1; a illy 
 making provision in some cases against such a contingency in the 
 renewal of their leases ! They alarm themselves quite needlessly. 
 The large importations of gold since 1851 have not prevented a 
 run on the Bank of England for gold ; and were such importations 
 to increase tenfold, it would only depreciate gold, by appreciating 
 
 * The Report of the Select Committee of 1858 estimates it at 
 ^107,500,000 in gold, and ^26,800,000 in silver. 
 
LEGAL TENDER AND CURRENCY. 25 
 
 or advancing in price all commodities of which gold is the measure 
 of value, and rents would be found amongst them. In the mean- 
 time, it is very questionable morality on the part of any landlord to 
 prescribe a mode or description of payment of rent at variance with 
 the established standard of value ; and it is very doubtful whether 
 he could maintain such a principle in a court of law so long as that 
 standard continues. 
 
 Sir G. 0. Lewis delivered in to the Select Committee a paper 
 on the subject of a national bank on the security of the State, 
 as suggested in a posthumous pamphlet by the late Mr. David 
 Ricardo, published in 1824; and an answer to that paper by Lord 
 Monteagle is also published in the Appendix to the Eeport on the 
 Bank Acts, 1858. The objection to that plan is, that it would 
 place the country in a worse position than it already stands, inas- 
 much as it would substitute the security of the State in the place of 
 the security of the Bank of England, founded not only on its own 
 capital, but on its public and private securities. The guarantee of 
 the State does not seem to comprehend such a security as would 
 command the confidence of the community under certain contin- 
 gencies which might arise of a political character, against which the 
 State could make no provision. This National Bank was proposed 
 to be placed under the management of five commissioners, who 
 should be obliged to buy any quantity of gold, of standard fineness, 
 exceeding 100 ounces in weight, at £Z 17s. 6d. per ounce, and 
 from the moment of the bank's establishment they should be 
 obliged to pay their notes and bills in gold coin. The natural 
 objection to this proposed system is, that in the event of a political 
 or monetary crisis no one would think of selling gold on Govern- 
 ment security at M 1 7s. 6d. per ounce, and the proposal to 
 accomplish that object by exchequer bills redeemable in six months, 
 would certainly fail at the very moment when its efficacy came to 
 be tested. Lord Monteagle's remarks on Mr. Ricardo's plan are 
 mainly directed to the inexpediency of placing so dangerous a power 
 under the control of any Government, without entering into the 
 possibility of other contingencies arising — such as commercial crises 
 — to affect public faith in such an institution, and there can 
 scarcely be a doubt as to the profound wisdom of such an opinion. 
 
 As a principle in legislating on an important question of this 
 kind, Parliament ought to guard against the possibility of any 
 such event arising as the suspension of specie payments where 
 notes are founded on gold. That portion of Mr. Ricardo's plan 
 which vested a discretion in the commissioners . to issue a certain 
 amount of notes against securities, is altogether at variance with 
 
26 LEGAL TENDEB AND CUKliENCY. 
 
 every principle of prudence. In other respects Sir G. C Lewis's 
 paper is merely a defence of the present system. As no one desires 
 to disturb the relations existing between the Government and the 
 Bank of England, with respect to the management of the public 
 debt and the receipt and payment of public monies, it is not necessary 
 to enter into the consideration of that branch of the question. 
 
 Nevertheless, a defence of the Bank was felt to be necessary (see 
 the Bank Solicitor's opinion in a paper prepared by him for the 
 information of the Chancellor of the Exchequer, in November, 
 1856.— Bank Acts Report Appendix, No. 17). In reference to 
 the Bank of England's double capacity of issue and banking, Mr. 
 Preshfield says : — 
 
 " No. 14. — Now it is clear that if a body carries on two busi- 
 " nesses, and becomes bankrupt, the funds of both become a 
 " common fund, and all creditors rank rateably. This was 
 " decided in the case of Strahan, Paul and Co., who had a bank 
 " and a Navy Agency House, carried on with different funds, in 
 " different houses, and under different names, but in Bankruptcy 
 " the assets of both were thrown into one common fund.'' That is, 
 that Bank notes and deposits are one and the same thing. 
 
 " 15. — But it is submitted that the question sought to be raised 
 " is of no practical importance, and tends to raising unnecessary 
 " apprehension. It may he that the division of accounts renders 
 " the administration of the Bank difficult. It is not necessary 
 " to discuss that point ; t?t,e objection implied in the question is, 
 " that the Bank would in an ultimate liquidation be less solvent 
 " in its lanhing department, which is a mischievous insinuation. 
 
 " 16. — The credit of the Bank is not, and never has been in 
 " doubt. It would be unwise to raise such a question if there 
 " were a doubt. It is still more so in the actual state of things, 
 
 " 17. — The risk to be apprehended is a drain of gold. Under 
 " such a drain the Bank has stopped payment heretofore, with 
 " little or no bullion in its coffers, but without the slightest dis- 
 " credit, and it is not likely to be now discredited if it should 
 " stop payment with ^3,000,000 or .£4,000,000 of gold in its 
 " coffer. 
 
 " 18. — Nor is it likely that discredit should arise from the 
 " state of the deposit accounts. Every one knows that the Bank 
 " has ample means to meet its deposits. The argument that the 
 " small amount of notes in reserve tends to discredit the Bank in 
 " the banking department is an argument against publication, or 
 " against the limit of issue, and not against the appropriation of 
 " gold in the issue department. 
 
LEGAL TENDER AND OUKEENCy. 27 
 
 " 19. — Assuming, therefore, the extreme case of a suspension, 
 " the difficulty would not be the discredit of the BanJc, but a want 
 " of circulating medium.'" 
 
 It is submitted that this is a strange process of reasoning, — what 
 is really wanted is the protection of the interests of the community, 
 not a defence of the Bank. The Bank is a common fund,— the 
 property of the people, — Why should they not talk about its manage- 
 ment or possible insolvency ? To them it is a most vital question,— 
 Mr. Freshfield's arguments (or rather his conclusions) are neither 
 sound nor logical; for while he admits the premises, he deprecates 
 discussion on them. If it is no discredit to the Bank to stop payment, 
 it is at least discreditable to Parliament to bolster up an Institution 
 liable to such a contingency. If the Bank cannot help itself, it 
 requires no defence, as there may be no accuser ; but he is manifestly 
 wrong in discussing the question of the possibility of the Bank's 
 insolvency, by describing it as " a mischievous insinuation." It 
 would be more to the purpose if he established the utter impossi- 
 bility of such an event. 
 
 The question as it affects this country, is a very large one, and 
 every man, woman, and child has an interest in it. The united 
 imports and exports of the United Kingdom approach in amount to 
 £400,000,000 sterling ; and this is altogether independent of its 
 internal trade. It has been estimated that the yearly realized profits 
 alone, arising from all source! — foreign and domestic, commercial, 
 manufacturing, and agricultural— are not less than £80,000,000. 
 If even the aggregate net profits reached only half that amount, 
 what a miserably small dwarf does the seven or eight millions of 
 our gold currency appear (the actual, not the fictitious, legal tender) 
 beside so colossal a giant as the exchangeable medium of this 
 country, which is not recognised intrinsically as the legal tender ! 
 The whole amount of the fixed issues of the kingdom is only 
 £31,000,000 ! The entire circulation is only £37,000,000 ; the 
 difference being held in gold.* 
 
 The great object of this paper is to direct the attention of 
 thinking men to the difference which exists in principle, between 
 currency founded on cash (or the standard of value,) and currency 
 founded on credit,— mi if possible to accomplish a legislative recog- 
 
 * 1. Fixed issue of the Bank of England ^14,475,000 
 
 2. Ditto of ISl Private Banks in England and "Wales 4,404,935 
 
 3. Ditto of 63 Joint Stock Banks in ditto 3,303,357 
 
 4. Ditto of 14 Banks in Scotland ., 2749 271 
 
 5. Ditto of Banks in Ireland 6,354494 
 
 £31,287,067 
 
28 LEGAL TENDER AND CURRENCy. 
 
 nition of that difference, — in other words, — to determine how we 
 can best cheapen and strengthen the currency, — how we can best 
 ensure its solidity, by founding it not theoretically, but practically 
 on a 'perfect legal tender, — to equalise as far as possible the rate of 
 discount, and protect the covmtry agamst those frequentli/ recur- 
 ring crises so disastrous to trade. It is scarcely possible to conceive 
 the loss of property and amount of commercial ruin which followed 
 the crisis of 1857, by the reckless and continuous advance in 
 the rate of discount by the Bank of England. Failures were 
 enormous, both in number and amount, involving many houses 
 not insolvent, who were thrown by the force of circumstances 
 into a state of embarrassment, but had no immediate means 
 of obtaining relief, simply by the difficulties arising from the 
 necessity of the Bank to protect itself at all hazards. But for 
 the maladministration of many of the banks and bill-brokers 
 in Glasgow, Liverpool, London, and other places, and which 
 in reality was encouraged by the Bank of England itself, 
 such disastrous results would never have happened. A Select 
 Committee of the House of Commons satisfied itself by enquiring 
 into its cause ; and here the enquiry ended, — nothing was pro- 
 posed and nothing has been done to provide a remedy ! — If these 
 disasters teach us such severe lessons, let us gather some benefit 
 from the knowledge gained by our bitter experience, and force the 
 settlement of a question which seems to affect us periodically, on 
 the attention of the legislature. If there is no political agitation 
 at home, there never could be a better time for considering the 
 question. If we are to be involved at no distant period in a 
 European war, which is by no means unlikely, there never was a 
 time when such a question more urgently demanded the deliberate 
 consideration of Government and the legislature. 
 
 The Bank of England has recently exchanged £3,000,000 
 of gold for an equal amount of silver with the Bank of France. 
 This is a very questionable arrangement. Its immediate conse- 
 quence was to reduce our stock of gold, the foundation of our 
 legal tender, while silver is only a legal tender to the extent of 
 forty shillings, thereby hurrying us the faster on to an additional 
 advance in the rate of discount, which, after being reduced to 6, is 
 again increased to 7 per cent. This not only proves the difficulties 
 of the Bank of France, but the helplessness of the Bank of England, 
 by conceding with a good grace what she has not the power of 
 resisting. From the pecuniary wants of the Emperor, for the support 
 of a large standing army (more despotic than even the Emperor 
 himself, and which he cannot co'^+^'^i'^ i*' i= imiinRsible to conceive 
 
LBGAL TENDER AND CUEEBlSrOT. 29 
 
 that a sum of two millions can satisfy, for any length of time, the 
 necessities of the Bank of Prance. It may be that a French loan 
 may speedily be offered in our market. As these aids may be 
 turned against ourselves, it is at least expedient that we should leave 
 the French Government to meet its own exigencies, — as we 
 have always to do in our own case. By shaking ourselves free 
 from external pressure, we may avert war and serve the cause of 
 humanity. This country never yet has had occasion to place itself 
 in so humiliating a position as to solicit pecuniary help, and it would 
 not suit either the taste or temper of our people to make so large 
 a sacrifice of our independence, as to ask assistance from the Bank 
 of France. 
 
 In the meantime fresh calamities are befalling us. We are not 
 only losing our gold, but we are losing to a great extent the chief 
 market for our manufactures. The unfortunate difference which 
 has arisen between the free and slave States of America is occa- 
 sioning a serious drain of gold from this country. Already it has 
 reached to nearly three millions, and every steamer carries parcels 
 of gold to be employed in discounts at 13 per cent, or upwards. 
 This has nothing to do with the balance of trade — unless it be a 
 trade in gold. — It is pure speculation. Such an investment by our 
 capitalists is a tempting one ; but if the secession of the Southern 
 States is accomplished, it is not unlikely to be attended with heavy 
 losses to those who have ventured on them ; as the question may 
 speedily arise, — how are such investments to be repaid ? At present, 
 the great bulk of the orders for goods from the United States to 
 this country as well as in France, have been cancelled, with little 
 prospect of an early orevival of trade ; while failures, even amongst 
 the leading houses there, are of daily occurrence. 
 
 It has been objected, that the concentration of so large an 
 accumulation of bullion in this country, as would be represented 
 by bullion notes, would be a great inducement to invasion. We 
 are not alarmists, and have no fear but that we shall be able 
 to keep our own, — let who may come to grasp at it. By our 
 present system of currency, however, we have the fear of Panic 
 constantly at our doors, and are utterly helpless in resisting his 
 attacks upon our property. There is no invader half so dangerous 
 as he is, and it would show greater wisdom to protect ourselves 
 against the evil consequences of our currency laws, than by erecting 
 batteries at an enormous cost to the country, to protect our coasts 
 against a foe never likely to invade us. The best and most effective 
 battery we can construct is within the walls of the Mint. 
 London, January 24th, i86i. 
 
APPENDIX A. 
 
 EVIDENCE PEODUCED BEFORE THE SELECT COMMITTEE ON 
 THE BANK ACT, by Mb. Egbert Slatee, 13th April, 1858. 
 
 Prices of Eaw Silks in 1857 and 1858, per Pound. . i 
 
 DesoriptioD, 
 
 July, 1857. 
 
 January, 1858. 
 
 Fall 
 per cant. 
 
 Bengal 
 
 s. d. s. d. 
 15 6 to 33 6 
 10 to 29 
 24 6 to 25 
 38 to 42 6 
 15 6 to 18 
 32 to 46 
 
 S. d. S. d. 
 11 to 24 
 6 to 7 
 16 to 17 
 11 6 to 32 
 10 to 12 
 20 to 38 
 
 28 
 
 66S 
 
 33| 
 
 46 
 
 34A 
 
 241 
 
 China 
 
 Do. (thrown) 
 
 Brutia 
 
 Persian 
 
 Italian 
 
 
 Fluctuation in Prices within a period oi? Two Months at the 
 
 END OF 1857. 
 
 Article. 
 
 Prices. 
 
 Tallow 
 
 s. d. s. d. 
 
 60 now 50 per cwt. 
 
 65 „ 35 „ 
 
 7 „ 6 per lb. 
 60 „ 50 per ton. 
 65 „ 45 per cwt. 
 16 „ 10 „ 
 30 „ 20 per lb. 
 70 „ 68 per qr. 
 40 „ 33 per cwt. 
 
 135 „ 122 „ 
 
 1 3 „ 1 per lb. 
 6 „ 3 „ 
 
 60 „ 30 per cwt. 
 120 „ 80 „ 
 28 „ 20 „ 
 36 „ 30 „ 
 
 Sugar 
 
 Cotton 
 
 Scotch Pig Iron 
 
 Saltpetre 
 
 Bice 
 
 Silk 
 
 Linseed 
 
 Do. Oil 
 
 Tin 
 
 Tea (ConeouV 
 
 Pimento 
 
 Turmeric 
 
 Shellac 
 
 Jute 
 
 Hemp 
 
 
APPENDIX B. 
 
 Analysis of the Description of Money which form ^1,000,000 of 
 
 OmiRENCY. 
 
 (Extract from " Observations on the Currency," by Eobert Slater.)* 
 " To prove how little of real m&ney, — that, of 'Bank of England notes 
 and gold, — enters into the operations of trade, it may be interesting as well 
 as conclusive on that point to refer to the analysis of a continuous course 
 of commercial transactions, extending over several millions yearly, and 
 which may be considered as a fair example of the general trade of the 
 country. The proportions of receipts and payments are reduced to the 
 scale of one million only, during the year 1856, and are as under, viz.: — 
 
 RECEIPTS. £ 
 
 In Bankers' Drafts and Mercantile Bills of ) goo 590 
 
 Exchange payable after date i ' 
 
 In Cheques on Bankers, payable on demand . . 367,715 
 
 In Country Bankers' Notes 9,627 
 
 — J900,938 
 
 In Bank of England Notes 68,554 
 
 In Gold 28,089 
 
 In Silver and Copper 1,486 
 
 In Post-office Orders 933 
 
 99,062 
 
 £1,000,000 
 
 PAYMENTS. 
 
 By Bills of Exchange payable after date 302,674 
 
 By Cheques on London Bank^s 663,672 
 
 966,346 
 
 Bank of England Notes 22,743 
 
 By Gold 9,427 
 
 By Silver and Copper 1,484 
 
 33,654 
 
 ^1,000,000 
 
 " These results may be taken as an illustration of trade in London, in 
 those great branches where capital and credit may be supposed to have their 
 free action. And they may be presunjed to exemplify the ramifications of 
 the currency amongst ti'aders generally throughout the United Kingdom. 
 It is here manifest that of the money received, Bank of England notes 
 amount to less than 7 per cent., and gold and silver to only 3 per cent, of 
 the currency. And of the payments made, Bank of England notes are but 
 2 per cent., and gold and silver only 1 per cent, of the currency. On the 
 other hand, payments are received on a ratio of about 90 per cent., and 
 are made at nearly 97 per cent., of that portion of the currency which is 
 formed of the credit and capital of the people themselves I It is scarcely 
 possible to produce more powerful evidence to establish the necessity for 
 correcting that overwhelming influence which the Bank of England 
 exercises over the whole money operations of the kingdom." 
 
 * Published by Letts and Son, Boyal Exchange, 1857. 
 
APPENDIX C, 
 
 BILLS OF EXCHANGE. 
 
 Bills op Exchange Stamps. — Eevenue for the following years, viz,, 
 31st March, 1855 ^617,658 
 
 1856 
 1857 
 1858 
 1859 
 
 448,643 
 532,320 
 625,138 
 475,185 
 
 ^2,698,944 
 
 Average of 5 years £519,788 
 
 Taking consecutively the Bills of Exchange received in the course of 
 business, up to the amount of J100,000, the result is as under :— 
 
 Stamps. 
 
 
 Price. 
 
 Amount of Bills. 
 
 Value of Stamps. 
 
 Average. 
 
 
 
 
 £ s. 
 
 d. 
 
 £ s. 
 
 d. 
 
 £ s. d. 
 
 21 
 
 @ 
 
 2d. 
 
 173 14 
 
 2 
 
 3 
 
 
 
 8 8 5J 
 
 96 
 
 
 3d. 
 
 1,774 7 
 
 4 
 
 1 4 
 
 
 
 18 9 8 
 
 144 
 
 
 6d. 
 
 5,325 2 
 
 5 
 
 3 12 
 
 
 
 36 12 . 7 
 
 99 
 
 » 
 
 9d. 
 
 6,177 19 
 
 5 
 
 3 14 
 
 3 
 
 62 8 1 
 
 82 
 
 » 
 
 Is. 
 
 7,201 11 
 
 5 
 
 4 2 
 
 
 
 87 16 6 
 
 137 
 
 >3 
 
 2s. 
 
 19,224 13 
 
 7 
 
 13 14 
 
 
 
 140 6 6 
 
 50 
 
 
 3s. 
 
 12,415 6 
 
 3 
 
 7 10 
 
 
 
 248 6 1 
 
 28 
 
 » 
 
 4s. 
 
 9,648 8 
 
 4 
 
 5 12 
 
 
 
 344 11 9 
 
 18 
 
 3) 
 
 5s. 
 
 8,110 14 
 
 3 
 
 4 10 
 
 
 
 450 11 11 
 
 16 
 
 
 7s. 6d. 
 
 8,746 11 
 
 
 
 5 12 
 
 6 
 
 583 2 1 
 
 11 
 
 » 
 
 10s. 
 
 9,584 14 
 
 1 
 
 6 10 
 
 
 
 871 6 9 
 
 5 
 
 » 
 
 16s. 
 
 6,973 12 
 
 7 
 
 3 15 
 
 
 
 1,194 14 6 
 
 1 
 
 » 
 
 20«. 
 
 1,665 11 
 
 6 
 
 1 
 
 
 
 1,665 11 6 
 
 1 
 
 » 
 
 40s. 
 
 3,977 19 
 
 3 
 
 2 
 
 
 
 3,977 13 9 
 
 708 
 
 £100,000 
 
 
 
 £61 19 
 
 3 
 
 £9,689 19 Hi 
 
 The Return of Stamp Duties collected for Bills of Exchange, for the year 
 ending 31st March, 1859, states the amount produced under that head at 
 £476,185. If £61 19s. 3d. (say £62) therefore produce £l00,000, the gross 
 revenue from that source, on an average of the stamp duties for five years, 
 will produce £830,367,752, without reckoning drafts at sight or foreign bills 
 of exchange. The gross amount of bills drawn yearly may be safely esti- 
 mated at 1,000 millions, and allowing an average maturity of three months, 
 there cannot be less than 250 millions always in circulation. But if that 
 circulation was to change hands on an average of four times, it would 
 represent 1,000 millions of currency. 
 
 BICHAIID BARBETT, nUNTEB, MABK LANE, LOKDOK. 
 
THE PEERS AND THE PEOPLE, AND THE COMING REFORM. 
 Peoples' Edition (1859). By Henry Brookes. Price Is. 6d. 
 
 Opinions of the Press. 
 
 " The starting point of the argument seems to be the denial of the modem theory, 
 that the Electoral Franchise has always been of a limited and restricted character, 
 analogous to that of the present time ; in fact, that it is not a iTust but a HgM originally 
 rested in tlm inhabitants qf this country at large. With evidence of some research, and 
 with much clearness, the original design of our Representation is traced from the earUest 
 times, and the mode in which it passed into the condition in which it existed at the 
 time of the Reform BUI of Lord Grey is delineated fairly and comprehensively. Those 
 who refer to the volume for its undoubtedly valuable, statistical mformation, brought 
 together in a very convenient and accessible space, will iind some things in the theoretical 
 portion of the work which are well worthy of consideration." — Daily News, 
 
 " This little volume is given to the public to enable those who know little about the 
 subject to know all about it, or all they need know. It shows what the Representation 
 was originally designed to be; what it had become before the Reform Act; how that 
 Act amended it, and what it is now. It thus enables those who have a bias towards 
 principles to be armed at all points for controversy. Not to say too much of it, it is an 
 interesting, comprehensive, and useful volume, strongly Radical but not intemperate." 
 — Stastdard. 
 
 " The only fault of this excellent book is its price. We could have wished it to circulate 
 in thousands, when it is limited by its price to hundreds. It is ably written and admir- 
 ably planned. We have read it with great pleasure, and would suggest that every 
 branch of the PoUtical Reform League should have one copy or more to circulate among 
 its members. The reformers of the country are deeply indebted to Mr. Brookes for his 
 timely and compendious work." — London News, 
 
 " This is a truly admirable book, and as opportune as it is clever. Though not 
 coming up to our pohtical standard, it is yet so replete with useful information that no 
 Chartist ought to be without it."— Peoples' Paper. 
 
 " Mr. Henry Brookes, in an ably written work, has pointed out the evils which have 
 already resulted from aristocratic influence. The increase of the Peerage, he says, is a 
 fact of pregnant import, and he insists, if he does not irrefragably prove, that the influ- 
 ence of the aristocracy has increased, is mcreasmg, and ought to be diminished."— C3j^ 
 
 " This little book gives a very interesting account of the past and present state of the 
 Representation, ana argues, with great force and pertinence, for some other reform 
 than Lord John Eussell s Bill would enact. The case sought to be made out is, that the 
 past as well as the proposed Reform Bill increased the Representation of the Counties 
 at the expense of the Cities and Boroughs, and so was the most aristocratic measure 
 ever passed. There are several tables showing how this was eSectei."— Weekly Times. 
 
 " In opposition to those who have got into the habit of thinking that the Franchise 
 was always limited to classes, Mr. Brookes proves that it originally belonged to the 
 inhabitants at large. Altogether, the little volume of Mr. Brookes is one of the best and 
 most patriotic expositions of the Reform question which has come under our notice."— 
 Morning Star. 
 
 ADMINISTRATIVB REPORMERS,WHAT HAVE THEY DONE? 
 A Letter to Samuel Morlet, Esq., Chairman. By Henrt Brookes. 
 "An eloquent and masterly exposition."— ilfominff Chronicle. 
 
 THE NEW REFORM BILL. (Session 1859.) 
 
 (a specimen or concise drafting.) 
 
 Copies may be had on application to the Publisher enclosing two postage stamps. 
 
 " Our only regret is that we cannot assure our readers that this Bill has been the 
 result of Cabinet deliberations, and that Ministers will introduce something like it 
 when Parliament re-assembles. The measure is speoiflc; it is simple; it is complete. It 
 has all the merit of being written in the plainest English, with clauses intended to be 
 understood rather than elaborated, and schedules that do not require intense application 
 and study."— 2%e Stm-. 
 
 THE RIGHT OF THE PEOPLE TO UNIVERSAL SUFFRAGE 
 AND ANNUAL PAELLA. MENTS, clearly demonstrated by the late 
 DXJKE OP RICHMOND, with Prefatory Remarks by Henrt Brookes. 
 
 London t Effingham Wilson, Royal Exchange; W. P. Metchim, 20, Parlia- 
 ment Street, S.W.