Blackwood's Edinburgh Magazine, Volume 63, No. 392, June, 1848. Various
such ruin to credit and capital but the immediate stoppage of employment, and throwing of millions out of bread? Even if the whole land in the country were seized and divided, it would afford no general relief – it would only shift the suffering from one class to another. What, under such a system, would become of the millions who now exist on the surplus expenditure of the wealthy? They would all be ruined – England would be overrun by a host of starving cultivators like France or Ireland. A plunge down to household suffrage would soon effect the work of destruction, by reducing us all in a few years to the condition of Irish bog-trotters. It is no security against these dangers to say that the working class, if they get the majority, will take care of themselves, and eschew whatever is hurtful to their interests. Men do not know what is to prove ultimately injurious in public, any more than they perceive, in most cases, what is to be for their final interest in private life. The bourgeoisie got the command of the country in France by the Revolution of 1830, but have they benefited by the change? Let the enormous expenditure of Louis Philippe's government, and the present disastrous state of commerce in France, give the answer. The workmen of Paris got the entire command of the government by the Revolution of 1848, and already 85,000 of them are kept alive, only working at the "Ateliers Nationaux," while 200,000 are lounging about, eating up the country with bayonets in their hands. The middle classes got the command of Great Britain by the Reform Act, and their representatives set about free-trade and restricted currency measures, which have spread distress and bankruptcy to an unparalleled extent among themselves. The Reform Bill, by establishing these measures, has destroyed a fourth of the realised capital of Great Britain.8 Household or universal suffrage would at once sweep away a half of what remains, as it has recently done in France. And in what condition would the 30,000,000 inhabitants of the British empire be if three-fourths of the capital – in other words, three-fourths of the means of employing labour, or purchasing its fruits – were destroyed? We should have Skibbereens in every village of Great Britain, and grass growing in half of London.
What, then, is to be done to allay the present ferment, and tranquillise the country, when so rudely shaken by internal distress and external excitement? Are we to sit with our hands folded waiting till the tempest subsides? and if the present system is continued, is there any ground for believing it ever will subside? We answer, decidedly not. We must do something – and not a little, but a great deal. But what is required is not to augment the political power of the working classes, but to remove their grievances; – not to give them the government of the state, which they can exercise only to their own and the nation's ruin, but to place them in such a condition that they may no longer desire to govern it. This can be done only by abandoning the system of class government for the interest chiefly of the moneyed interests, and returning to the old system of general protective and national administration.
The first thing which is indispensably necessary towards the restoration of confidence and enterprise in the moneyed classes, and consequent employment and happiness in the poor, is to repeal the Bank Charter Acts of 1844 and 1845; and in lieu thereof to establish such a system as may provide a safe, sufficient, and equable circulation for the empire. Above all, it is necessary to establish a circulation which shall be capable of expanding, instead of contracting, as specie is drawn out of the country. This is the one thing needful. Till this is done, every attempt to alleviate the existing misery, in a durable way, will prove abortive. Nobody wants to have French assignats issued amongst us, or to have every insolvent who chooses to call himself a banker authorised to issue currency ad libitum, and substantially usurp the Queen's prerogative by coining worthless paper into doubtful money. But as little can the nation go on longer with our circulation based exclusively on gold coin, and liable to be contracted as that coin is drawn out of the country; thereby doubling the evil, by first inducing speculation when specie is plentiful, and then withdrawing the currency when it becomes scarce. Still less can this be borne, when a system of free-trade has been established amongst us which has enormously increased our importations, especially in articles of food and rude produce, for which experience proves nothing but cash will be taken by the holders; and which, in consequence, has induced a consequent tendency outward in the precious metals, from which, if no corresponding increase in domestic circulation is permitted, nothing but contraction to credit stoppage to speculation, and ruin to industry is to be anticipated. Least of all can such a system of drawing in paper as the gold goes out, be endured when political circumstances have so much increased the demand for the precious metals in the neighbouring states; when the revolutions in France and Germany have at once rendered hoarding general in those countries, and deluged us with their bankrupt stocks, for which nothing but specie will be taken in exchange; and when the commencement of hostilities, both in Italy and Germany, has occasioned the usual demand for gold, as the most portable of the precious metals, to meet the necessities of war.
The way in which the dreadful evils consequent upon commercial credit, and consequently universal employment, being kept dependent on such an unstable equilibrium as that which gold must ever, and most of all in such circumstances, afford, is perfectly evident. What is wanted is something to equalise the supply of currency; to contract paper when the precious metals are abundant, and, consequently, credit is becoming dangerously expansive, and to expand it when they are withdrawn, and, consequently, credit is in danger of being ruinously contracted. Sir R. Peel's system does just the reverse of this: it pours paper in profusion through the country, and consequently fosters absurd and improvident speculation, when specie is abundant, and draws it in suddenly, and with frightful rapidity, the moment that the precious metals begin to be withdrawn, either from the effect of extended importations or foreign warfare. To go right, and obviate the dreadful evils which their system has introduced, we have nothing to do but to establish a monetary policy precisely the reverse. What is wanted is a sliding scale for paper-money, – a system which shall tend to contract paper issues when specie is abundant, and pour them forth with restorative and beneficial vigour the moment that it begins to disappear. Thus, and thus alone, it was that Mr Pitt enabled the country to combat the dangers and surmount the difficulties of the revolutionary war.9 Under Sir R. Peel's system, the nation, and every one in it, would have been bankrupt when the bank stopped payment in 1797, and we should long ere this have been irrecoverably rendered a province of France.
It belongs to practical men, versed in the mysteries of Lombard Street and the Stock Exchange, to say how this important object is to be attained with due attention to the security of the notes issued, and sufficient safeguards against an over-issue, and consequent injury to capital, by an undue rise of prices owing to that cause. That the thing is possible is self-evident. It appears to be essential to such a system that one of two things should be done. Either that the issuing of notes should be left to all banks, under the limitation that private banks should be obliged to take up their notes at all times, – in Bank of England paper or gold or silver– and deposit government securities to the extent of the notes so issued, to be appropriated to their payment in case of bankruptcy; and that the Bank of England should be bound to pay its notes in gold or silver, at the price those metals bear at the time of presentment. Or, that the issuing of notes, like the coining of money, should be confined entirely to government or its officers; and that the regulation of their amount should be entrusted to certain elevated functionaries – like the commissioners of the national debt – with instructions to them to regulate their issues by the price of gold and silver, increasing them when the rise in the value of those metals showed that they were leaving the country, and contracting them when the price fell, and it was evident that the necessity for an extended paper circulation was passing away.
Of course it would be necessary, under such a system, to impose some limit to the obligation of the Bank of England to pay in specie; but this might be done either by obliging that establishment to pay in either of those metals at the current price they bore in the market at the date of presentment, or by providing, that beyond a certain amount of notes payable on demand, as £40,000,000 for Great Britain, and Ireland, notes of a different colour, as red, should be issued, which were exchangeable for specie only when the precious metals had again fallen to a certain price in the market. These notes should be issued when gold rises to a certain price, and is evidently leaving the country – just as grain from government stores should be
This is within the mark. It, has lowered the funds from 100 to 80, or a fifth; railway stock on an average a third; West India property nine-tenths; and mercantile stock, in most cases, nearly a half.
Bank of England notes in circulation, —
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