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TAIT'S EDINBURGH MAGAZINE.

NOVEMBER, 1847.

THE CRISIS AND THE CURRENCY.

We did not anticipate last month, that before | Rothschilds have paid eleven per cent.," as if, at our present issue the Currency Bills of 1819 and last, we had reached the lowest depth, and in 1814 should present so many strong arguments that fact got to the worst of the whole matter. against their preservation as they have given. If Two gentlemen in a Scottish town wanted to pay we had indulged any expectations of that kind, fifteen hundred pounds in London ; but as one they would have been accompanied by the con- of them was to be on the spot, they applied to a viction that the Government would have heard banker for a letter of credit for the amount. The the alarum which these measures, self-acting in order was obtained, and was good for fifteen hunthat respect, have sounded loud enough to rouse dred pounds, as, from the stability, resources, everything short of incurable deafness. The and numbers of the partners in the company, it Indians say that Great Spirit made certain would ha good for fifteen millions. It snakes to rattle as they moved, that their intended was presented to the London agents, and accepted victims might be warned of their coming, and by them ; but the holder wanted his money at avoid their dangerous foe. Peel's snakes rattle the date of acceptance, and desired them to disalso, and rattle loudly, but thoy enjoy the power count their own bill, which had not more than of fascination, and have charmed vitality, or voli- twenty-one days to run. The request was detion, out of those who should fly from their ap- clined. There was*no difficulty for houses in good proach. Their virtue was to consist in their self-credit obtaining money; but this house was not action. They were to be the perpetual Bude lights in good credit with itself; and yet it had some. of commerce, casting their rays in uninterrupted thing to do with the origin of the Bank Charter cheerfulness over its darkest wastes, and becom- Act; is making more than one thousand pounds ing brighter as the gloom grew darker from every daily by following the trade of the Cornish other point. The promises made for them, like wreckers in commerce; and returns thanks steaDelphic responses, have been realised. They are dily, and in its way sincerely, for this long-conself-acting, they are self-warning, and they are self-tinued and seasonable storm. We know not the illuminating. Commercial men may have under-amount for which the bill sold ; but one very stood these promises in a different sense, but they good bill at three or four months—an admirable have not at least been broken to the ear. Their bill for a thousand pounds, partly run-fetched alarms, however, fail to move politicians. The the highest possible price of eight hundred Chancellor of the Exchequer, at the close of last pounds, being at the rate of sixty to seventy per month, had indeed discovered that houses in cent. discount. It was, however, a very good bill, good credit experienced no difficulty in procuring and done low. money-at the end of this month, he regrets the Looking at the rates of discount publicly stated existence of intense mercantile embarrassments. —6.63 and 7 per cent. in Scotland ; 6.64 and 7 The last month's opinion of the Chancellor of the per cent. in Ulster ; 8 to 10 per cent. in London ; Exchequer was not void of truth. There was not 9 to 11 per cent. in Liverpool ; 71 to 8} per cent. then, and there never was, much difficulty for in the Bank of England—it may be asked, how houses of good credit in obtaining money ; but can such sacrifices as £200 on a good bill of the credit of houses was greatly reduced. The £1000 be made by some men? The answer is difficulty really seems to be in finding anybody quite obvious. Bankers have a choice of custothat may be said to be in good credit. It cannot mers, and although willing to accommodate perbe the Chancellor of the Exchequer, for his bills sons who regularly transact business with them, are at a discount. President Polk is but in very slim yet they have sufficient anxiety to keep their orcredit, for his paper is neglected. Louis Philippe dinary business in motion without taking up new has lost caste, and can barely raise ten millions. parties, who were in the habit of dealing with Even the Roman Pontiff can rouse the dead, and bill-brokers, or with private bankers, now unawaken the latent life of Italy ; but he cannot willing to lock up capital, unless for such temptaraise two or three millions. In the mercantile tions as have been current for some time. world men look serious, and say, “Why, the The progress of the money plague has been

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VOL. XIV.NO. CLXVII,

during the last month rapid and decisive. The portunity, that supply will regulate demand ; history of British commerce has many disastrous that Government should not intermeddle with pages, without one containing a record of depre-commerce ; that business should be left unfetciation in property so rapid as that of the last tered ; and yet he fetters and binds the moving month. Rich men in August are in penury with power of all business and all commerce. Now, October. The cautiously-hoarded and hardly when commerce is in its agony, those who speak gathered earnings of individual toil and care for and write for him while he is silent blame many years are swept into Peel's gulf; but Sir railways ; and yet this statesman could have laid Robert Peel and Samuel Lloyd Jones are weal- his hand on any railway bill, or any number of thier than they were a few months since. We railway bills, and interdicted their progress; but he dare not say that Peel's legislation was intended never interfered except to lift the first sod of a line to enrich himself and his family. We must not which saves some distance on a long journey, hint that he laboured for his order and for him whilo some of the great trunk lines in these self irrespective of the public interest. We are | islands remain incomplete. They blame, again, free, however, here to declare, that if his per- imprudent corn speculations; but this statesman, sonal aggrandisement had been the sole object of and other statesmen, by circulating unguarded his legislation, he could not have devised more alarms and gross miscalculations-by permitting fitting measures for his purpose than those of themselves to be deceived by interested persons 1819 and 1844. In all cases a man's interest fed this speculation; and even in the month of naturally bends his mind. The most Aristidean June last, the present Premier and the present men are somewhat moved by an almost imper-Chancellor of the Exchequer gave the weight of ceptible and invisible influence springing out of their official information to the mistaken rumour their own interest. There is a natural bent in the that the potato crop had failed. Then, in such mind towards whatsoever advances its personal cases as those of Larpent, Cockerell, & Co. : objects. Men are apt to think that good for others Reid, Irving, & Co.; Lyell, Brothers; Barclay, which is good for themselves. Concession to Brothers, and houses similarly engaged in the this feeling ripens into political turpitude, Louis colonial trade, the public have been told that there Phillipeism, and all descriptions of jobbing on has been over-trading, with insuficient capital the minor or major scales. Resistance to it con- and an artificial credit, that should be brought stitutes political virtue, and disposes men to exa- down. Few statements can be more cruel. Each mine very carefully such measures as seem to of these houses had clearly a very large capital in promote their own fortunes, before they yield its business. The accounts of assets and liabili. them their support. Sir Robert Peel is a man ties do not at first show the extent of this ca. and a minister of expediency. 'He does not think pital. They do not profess to give the result very deeply on abstract subjects, but applies his of examinations into the affairs of the houses power to the purposes and the necessities of the named farther than is necessary to educe their day. He may never, therefore, have given this existing means. The accountants, in these subject any consideration, but merely followed in cases, did not seek to unravel more than the his monetary legislation the latent current in his paying power at the disposal of their clients, mind that induced him to consider certain steps and did not enter on the causes which have led to right, because they were to him steps on the lad- its reduction. These causes are, however, quite der of fortune ; and he may have followed that well known. Investments in colonial property course without a perverse, determined, and cri- have been almost destroyed by recent acts of the minal intention. His followers, and many of his Legislature, supported by Sir Robert Peel and by opponents, will call this statement illiberal and the present Ministry ; who, in islands of the ut uncharitable. Charity is certainly a very neces- most fertility, where land is cheap--where, insary virtue, but even charity is not wide enough to deed, aný quantity of land can be had for little cover all the occurrences in this world. There is a more than its reclamation--have created and spurious charity—a mere cant and pretence—that maintained an aristocracy of work, and say that would paint the Ethiopian white and the leopard they are trying a great experiment of free-trade unspotted, without changing the habits of the man against slave labour, while they refuse to allow or the nature of the beast; but it is not suitable for free-trade in labour, and seek to have a fixed eur our day and circumstances. We find a statesman rency of workmen as they try to have a fixed cirlegislating on monetary affairs directly against culation of five-pound notes in this country, and a the entreaties and remonstrances of the bankers fixed price for one leading element in coinmerce. of London and the bankers of Scotland ; the two We have glanced at these subjects in order to classes of men, from their position, their ex- make some estimate of the breadth of charity reperience, and their success in the various details quisite to cover all the personalities in these transof their business, best qualified to form an opinion actions, which are destroying the capital of indion this topic. We see a statesman avowing his viduals, overthrowing the high mercantile characpreference of free trade principles, and zealously ter of this country, and subveiting the means of establishing a monopoly of money, the great fly feeding and employing our population. wheel of all trade, while in every other depart- The devastation caused by famine in Ireland ment ho is endeavouring to obliterate even the last season is to be rivalled by distress in Eng. shadow of monopoly. We hear a politician de land in the coming winter, if the sympton of the claring, in every possible form, and on every op- 1 country be not changed. By just or unjust means

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the monied interest has subjected all classes. I but it was avowedly a supplement to the Act of Capitalists hug their dividends, their discounts, 1819, by the same author ; and ever since 1810 and their bargains, forgetful that in general disas- a small school of clever men have been schemters these also must perish. Bankers ponder over ing and dabbling in currency, to the great distheir bill-books and lengers for the means of merely advantage of this country, and endeavouring keeping above water for a time. Merchants who, to secure objects in their nature impossible of until lately, never dreamed that suspended pay- attainment --- and, in their character, valuements were amongst their contingencies, are en- less, if they could have been attained. Under gaged in a death-struggle with insolveney. Manu- the protence of advancing public interests, they facturers stop their furnace fires, pay off their have unquestionably promoted some private forhands, and let their machinery stand, as being at tunes and ruined others; and it is certainly no releast a longer road to ruin than that of persever- commendation of panics that they are not new. ance in their business. Industry, checked at every You say to a man suffering from gout, “Be turn, grows sullen, and idle labour speculates re- patient, for you have been so often victimised garding the means to dine. Idle labour-impa- you were prostrate in January-down again in tient labour, cannot afford to think long. It must March-and confined in June ; remedies are not act. It must be fed. It has not many days to in your way ; you should throw physic to the lose in deputations. Its drafts are all payable on doctors or the dogs, for you are not quite so bad sight, or on very short notice, and all questions re- as you were in February, 1815." You bid a man garding its immediate subsistence must be imme- who has been robbed avoid alarming the police, diately solved, for no bank on earth can renew its because he was robbed half-a-dozen times bebills.

fore. You say to the lady who has lost her There are differences of opinion regarding the purse in a crowd, “ Don't cry stop, thief,' because, coinparative approximation of the nation to ruin once before, you may remember that your pocket and penury. One gentleman at Iull, on the 22d, was cut away." You advise the robbed gardener declared that we were nearer the rocks in 1825. not to make a noise in the neighbourhood for these Some other gentlemen say that we were quite as

grapes and pea

that are stolen, seeing that his nearly crushed at some other dates. Nero fiddling apples and pears were abstracted some time preas Rome burned, acted much in the manner of viously. You stand by the river, when its waters these gentlemen. We assume that Nero scraped have gone over the land, and count the sheaves of his instrument at such a distance from the blazes harvest, and the wrecks of industry floating past, that he was not particularly inconvenienced by hopelessly and profitlessly, to the sea, but you their heat. We think it event probable that Nero say, “ Do not build more embankments-do not had so many suburban villas or country houses restrain the natural play of the waters--this is that he could always shift with the wind, so as to not yet quite so bad as the Morayshire floods." avoid the smoke. It may be also reasonably sup- You watch huge heavy waves rolling in and over posed that the Roman Emperor had taken the a rocky shore, from the broad ocean, and you see precaution of building his houses fire-proof, as them bear the broken fragments of noble ships--we do not read of fire insurance societies in those the spoiled fruits of distant industry-and the days. Porhaps, also, Nero may have had an in lifeless forms that once had battled with the terest in property out of the range of the fire, storm ; but while some sense of sorrow comes and thus the hope of a rise in rent inspired his stealing even over your granite hearts, you make cheerful notes, and he swept away at " Blythe baste and memorialise the commissioners of lightan' merry we's be a'," not from any love of mis- houses not to erect a beacon on that fatal chief, as has been generally supposed, but from spot to guide the embayed mariner in the bitterrespect to three per cent. additional. If these ness of the blast and the darkness of the night suppositions be nearly correct—if they be at all not to erect a beacon-and why? Why, because reasonable suppositions--then one readily under other vessels were shivered-other cargoes wero stands what otherwise is inexplicable in the ex- scattered and other crews were found dripping tremely sanguine temperament of his succes- and drowned on that same coast, amongst theso

They are resigned, not to loss and suffer- rocks, at different times, after various storms, ing, but to apparent gain and aggrandisement. long since. Yet the sun shone out again, and the Their homilies are, however, impolitic. A man moon cast a pale clear light on rock and headland, who lost a thousand pounds yesterday is not con- and the sea flowed so softly beneath the cliffs, that soled by being reminded that he also was minus scarce its current could stir the green and gentle nine hundred and ninety-nine pounds, eighteen sea-weed that fringes them around ; while hardly, months since. That is one reason why he should it has oft since then been so sweetly calm, will the not have lost one thousand now, We do not breeze sometimes stir a single leaf of the long know that Napoleon would have thanked any round grass, that grows upon the graves, in the very friend who, observing him turning his horse's small churchyard amongst the bents, where you head from Waterloo, might have tried to console buried the drowned sailors ; and you say it will be him with—“ Please, Sire, you were defeated at thus again--there will be clear and quiet days, and Leipsic.” The memory of former disasters is soft calm nights, when the raging of this storm merely evidence against the system on which, for shall be hushed—when all its broken fragments a considerable period, the country has been mis- have been gathered together, distributed, and led. The Bank Charter Act dates only from 1844, 'forgotten; so you say build no lighthouses, lest sailors, trusting too much to their warnings, With the exception of foreign railways, we had grow rash, speculative, over-sailing, and come no similar transactions in 1846 ; but we required too nigh the rocks.

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to buy a quantity of foreign corn, and we failed Is this system of yours not very base, when you in obtaining it in exchange for manufactures. defend it on the score of its absolute rottenness, Hitherto, however, the quantity of gold exported and would have it left to cumber the ground for has not exceeded seven millions, and it is folly to many years to come, on no better account than say that the export of seven millions of gold that it has cumbered the ground for many years could in any way account for the tremendous that are past?

depreciation of all stocks during the last thir. Is it true, however, that 1837 or 1825, or any teen months, if the currency were on a sound other period, was commercially worse than 1847? | basis. Is what these gentlemen say correct, because, We deny that there has been any such appaheated with argument, gentlemen will sometimes rent cause given in ordinary trading, or in any. forget the truth, and deal in a very different article? thing whatever not directly chargeable on the

Consols have sold for less within twenty-five legislature, for the panic of 1847, as existed in years than the price to which they have hitherto 1825 and similar periods; but we also deny that fallen. In February and July, 1826, they were at any other panic in the century has equalled in £77 2s. 6d. In February, 1831, they were at intensity and magnitude that of the present year. £77 15s. In February, 1823, they were quoted at It is singular that Manchester, the centre of £73, and in August at £82 15s. In February, the Anti-Corn-Law League, and dipped deeply 1821, they had fallen to £73 2s. 6d., and in in free-trade principles, is said to have a vulner. August they were sold for £76 2s. 6d. In Feb- able heel respecting the currency. The Man ruary, 1820, consols were sold at £68 5s., and in chester merchants have made no movement, to August of that year they had fallen to £67 12s. 6d. the date of our writing, in a right direction on The lowest price for twenty-seven years was that subject. They had a meeting regarding therefore in 1820—immediately after Peel's bill railway calls; and, full of free-trade principles, of 1819 was passed, and one-pound notes were they seemed to suggest some Legislative intersuppressed in England.

ference with this branch of trade; neither to reguThe depreciation in consols in thirteen months late fares, nor to secure the safety of passengers, to the middle of the present month, is £17 15s., so far as that may be accomplished, and which say 18 per cent., and on £800,000,000, for other would be consistent with the acts regarding mines stocks have fallen in a similar proportion, the and factories; but actually to prevent the public difference is £144,000,000! Shares in the London from expending more than a given sum annually and North-Western Railway have fallen from on iron roads. They have not, however, taken £248 to £138 10s. ; in the Midland, from £194 any step regarding the currency; and yet freeto £100 ; in the Edinburgh and Glasgow, from trade in money must be equally desirable with £85 to £48 ; and on many lines, such as the free-trade in bread. Money may be so wrought Great Western, a yet larger proportion. On as to make free-trade in corn a perfect nullity. share property the depreciation has not been less It is at present in this state, that half the mathan £100,000,000 ; and we make a moderate chinery in Manchester is idle, and there are uncalculation in saying that on other property the executed orders in the country. reduction has been equal to another hundred Is there anything in the nature of money to millions--giving altogether nearly half of our make it exceptional from a general rule? Is ponderous national debt.

there any reason why the principles of free trade, In 1825 the crisis was caused by the foolish in- applied to corn and cattle, cannot be applied to vestment of money in foreign funds. That capi- currency? The bullionists answer this question tal was directly withdrawn from the country. It in the negative ; and their answer is, we believe, made no immediate return, and a considerable founded on a series of blunders. Originally men part of the sum has never paid interest. At this exchanged their surplus commodities by barter. moment, when the numerous and gigantic bank- Merchants carried the natural products of one ruptcies in this country are rendering it a specta- land to exchange for those of another ; and in cle to the world, there is no nation that has one most cases accompanied their consignments and tenth of our foreign debts. All America and all transacted their business personally. The IshEuropean nations that borrow are our debtors. maelites were journeying to Egypt with spices Spain owes us more than forty millions—the when they purchased Joseph ; but their spicery United States of America, by its individual go- was not of value to the desert shepherds, so they vernments, perhaps stands twenty millions—the paid for their slave in bullion, exactly as AbraSouthern republics are still deeper on our books; ham paid for the field which he purchased. and with the world's indebtedness to Great Bri- Barter is the original state of society, but is netain, the enormous sums sunk in European Stocks cessarily of short duration, and rapidly supplanted would go far to mitigate the plague of our by the use of some precious metal. The EgypNational Debt. Wherever there are mines tians and Arabs used silver as a precious metal, wrought, railways constructed, canals dug, docks and gold came rapidly into use amongst these excavated, bridges built, there British Capital nations as still more valuable. Upon the sarnecon: will be found ; and the mania for foreign invest- tinent, however, and amongst other races, fit iron" ment reached its greatest development in 1825. was used nearly four thousand years efter the

period referred to, as a precious metal, and in com- for, in these circumstances-not unlikely occurpetition even with silver and gold dust. Any metal, rences—there would be more sellers than the or any other substance that happens to be of ex- Bank, and very few buyers. The convertibility treme value in the circumstances of society, will of the circulating medium depends, therefore, enconstitute money. Gold and silver are universally tirely on public confidence in the public stock. adopted amongst civilised nations as the types of Whenever that becomes largely depreciated, value and the instruments of exchange, either in the circulation will no longer be convertible. reality, by the actual use of so much gold and Every sarcasm cast by the bullionists against silver, or in representation, by the promise of re- Birmingham reverts thus upon themselves; for no sponsible individuals to pay so much gold or silver arithmetical proposition can be clearer than that when it may be wanted.

the destruction of public confidence must insure There are two parties connected with the cur- the inconvertibility of bank notes. rency question ; one who cling to the present While these pages are in the printer's hands, ruinous laws; a second who want to establish a the Government has issued their license, if we free-trade in the issue of paper money, along with may use that phrase, to the Bank of England to its convertibility ; to whose opinions we refer in break the law. In that letter the Premier and the subsequent remarks, The first party are the Chancellor of the Exchequer express their almost entirely located in England ; the second hope, that any over-issue of notes which the Bank date their practice and principles from Scotland, may make will be gradually recalled. We doubt wherever they may have succeeded in infusing whether the Bank will ever require to make an them,

over-issue. The balance of two and a half millions The idol of the first party is “convertibility,” and in the banking department may suffice to restore their bugbear is “depreciation.” To secure the a healthy tone to commerce, now that it can be first and avert the last, they are sacrificing every let loose ; but, however that may be, the charm interest of the country, and rendering certain of the Bank Charter Act is broken. those evils which professedly they seek to avoid. Nothing tends more clearly to show the igno“ Convertibility” is an utter and baseless fiction, rance of the Cabinet on this subject, than that except so far as public feeling, for public conve- the signatures, John Russell and Chas. Wood, nience, and through public credit and confidence, appear to a letter in which this indefinite relaxatolerates its existence. There is no such thing tion of the law is styled a temporary measure. as convertibility, in the absolute meaning of the The nature of the case forbids the use of tempoword. The circulating medium is the means of rary measures. The act must be, like Cæsar's ultimately repaying debts; and is any man suffi- wife, above suspicion-above the suspicion of ciently simple to believe that this circulating being set aside under any circumstances—to be medium ever can be convertible? The supposi- of the slightest utility to its framers. tion, although thereon rest all the arguments for There was a tradition current in our school-boy recent enactments, utterly childish.

Can the days regarding the Dutch mode of punishing cerBank of England convert its notes into gold ? tain criminals--a mode that certainly had its adCan it keep its word, and pay them when pre- vantages in Holland—where, as the story ran, consented? We do not know, while we write, that victs were condemned to learn industry under pain the nation is not on the eve of a terrible panic. of drowning, by working a pump for so many hours There is a strong probability that this is the case, daily in such a situation, that relaxation on their and an absolute certainty that the Bank of England part insured a rise in the water so steadily that could not keep its feet against a substantial run a man had merely to do nothing in order to comfor a week. Let people once generally suspect mit suicide. The efficiency of the punishment that they should exchange notes for gold, and arose from the fact that there was no relaxation hoard their sovereigns—let this suspicion prevail of the inward current. It was at the option of for a week in timid minds, and the bubble, con- the labourer to stop the flow out, but the flow in vertibility," will be exploded."

was as completely out of his control as the lapse In round numbers, we may state, that the Bank of time. He therefore pumped steadily ; but if, of England has nineteen millions of notes in cir- when the water reached his shoulders or his chin, culation, and holds eight millions of bullion ; but the convict had been assured, from precedent, it is evident that eight millions cannot pay nine- that the inward current would be relaxed, then, teen, if the holders demand payment. The Bank doubtless, the regularity of the works would have holds stock, and can throw it on the market ; but been sadly interrupted, and the pumps would what will be its value during a panic? It is now have often been wrought at leisure. £79 10s. It has been lower within a few days. So it is with the Bank Charter Act. It can But will it bring £79 10s. when the Bank sells be relaxed, and the circumstance will be rememfor the purpose of drawing in gold to pay its bered. An act that needs to be occasionally renotes? If the bank broker put one million on pealed had better be entirely destroyed. the Exchange, will he obtain £75 ? If he places One Currency Act, however, cannot be destroyed two millions, will he obtain £70 ? Should he re- without substituting another. The repeal of quire to sell three millions, would he receive £60? the Act 1814 cannot be carried alone. There or, for four millions, could he command £50— must be a substitution of some other scheme for or anything? One or all of these questions that which recently existed, which is, indeed, only must be answered, undoubtedly, in the negative ; I suspended. Three modes of arranging the issue

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