The currency question : considered in relation to the Act of the 7th & 8th Victoria, chap. 32, commonly called the Bank Restriction Act / by George Combe.

  • Combe, George, 1788-1858.
Date:
1856
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Licence: Public Domain Mark

Credit: The currency question : considered in relation to the Act of the 7th & 8th Victoria, chap. 32, commonly called the Bank Restriction Act / by George Combe. Source: Wellcome Collection.

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    of exchange had been turned against Paris, the correspondents of the London houses would certainly draw gold for them and send it to England. We shall take leave of the subject in a very few further remarks, which, however, we think it better to give in a short concluding article. [From the Scotsman of December 15, 1855.] For the reasons stated in our last article on the currency, it is highly improbable that gold should be drawn from the Bank of England for exportation, unless England is in debt to foreign nations. And there is no mystery in the present drain upon the Bank. England has purchased largely in foreign markets ; she has a large army on foot, and two large fleets afloat, supplied more or less by foreigners with things necessary for their use ; she has sub- scribed to a Turkish loan of five millions, and to a Sardinian loan of one million, and from all these causes she is in debt to foreigners , and she is bound to send gold in extinction of her obligations, cost what it will. The war is at present highly popular, and we do not utter a word against it; but we must screw up our courage to encounter its con- sequences. We are spending large amounts of capital in it, which are withdrawn from manufactures and commerce; and as these can- not safely or permanently extend beyond the limits of the capital which sustains them, collapse in trade is the inevitable temporary result of our war expenditure. This expenditure by England in foreign loans and in maintaining fleets and armies abroad, must be provided for ; and there is no provision that will suffice but to ex- port our own produce to an equal amount, or to pay in gold. It depends on the will of foreigners whether they will take our goods or not, and when; and a demand on the Bank of England for gold is simply a proof that at present they are not purchasing commodities from us to an amount equal to our debts to them. The Bank has no alternative but to furnish gold and to contract the circulation, and thereby to deprive our merchants of the means of spending more money abroad, and also to cause such a fall in our home prices as will tempt foreigners to renew their purchases and send back the gold to us. This will happen, sooner or later; meantime, our pre- sent embarrassments are the price we are paying for the war and for the foreign produce which we have consumed beyond the value of the goods which we have sold. We must here advert to an argument on which the opponents of a convertible currency place great reliance. They say, What we desire is, a currency for home circulation which shall be adequate to the wants of trade, leaving the merchants who deal with foreigners to buy gold like any other commodity, when they need it, to pay their debts abroad. But the difficulty lies here. If the home