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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    the fact and practised on it; yet hear the advice given in the “ money article ” of the New York Herald, of 28th November, 1855, to the merchants of that city, who are in monetary difficulties, occasioned by the contraction of their credits in England, and other causes. Our Chamber of Commerce, in such a case, would pro- bably say: “Never mind the foreigners, let us look to ourselves— issue more bank notes, and keep the currency fullbut not so writes the Herald. It says:— “ We have not merely our local affairs to look to in the present emergency. We cannot trust to our internal resources to extricate ourselves from financial difficulties, in the event of our European creditors demanding large payments. We must, before the avalanche of our stock securities comes upon us, prepare ourselves for it by contraction in all our domestic credits. We must provide ourselves available means to meet any foreign demand that may arise, by the sale in our own markets of our own stocks, for foreign account; and we must by contraction of credits, reduce prices so that our export trade will become more active, and our import trade more restricted. The financial policy of Great Britain is at present just this and no more. Any advance in the rate of in- terest by the Bank of England, produces a contraction in commercial transac- tions, reduces prices at home, gives a great impetus to the export trade, and ultimately turns the current of specie from all parts of the world into the ports of the United Kingdom. These things operate actively, and soon the required result appears in all the channels of commerce. To counteract the effect of such a policy on the part of England, we are forced into the same system. To prevent our markets from being flooded with foreign manufactures—to prevent our banks from being drained of gold—to prevent, if possible, the return of our securities in large amounts—we must restrict credits and commercial transac- tions, and that can only be done by a contraction of bank loans. We have not an interest sliding-scale, and must therefore apply the remedy at once directly to the root of the evil. If the pursuance of this stringent policy; if, in destroy- ing markets for foreign manufactures, we reduce prices for our own products, it must be considered as only partial evil for universal good; for the very fact of reducing prices for our staple products would give such an impetus to exports as ivould at once remove all apprehensions of further shipments of specie.” This is simply a recognition of the law which everywhere controls the transactions of commerce, and from which no nation can eman- cipate itself by artificial devices. [From the Scotsman of February 14, 1856.] In another column we have inserted a letter from Mr. W. Little on the Bank Restriction Act, which he promises shall be his last. In making a few observations on it, we hope that we shall be spared the necessity of reverting to the subject, at least until it come before Parliament in a substantive form. Mr. Little, in common with many other persons, assumes that the great object of th6 Bank Restriction Act of 1844 was to prevent com- mercial convulsions ; but this is a mistake. Sir Robert Peel, it is true, stated that this was one of its objects; but its main design was to ensure the instantaneous conversion of bank notes into gold on demand, and thereby to avert the panics which occurred when the failure of several banks to redeem their notes excited suspicion of the solidity of all, and caused a sudden and general run upon them