THE PRINCIPLES OF THE BANK CHARTER:ACT:
• ' QUESTION AND ANSWER.
[The following letter, from a respectable source, asks a question of con- siderable importance and present interest. Wishing to obtain for it the most
■ tisfaltory answer in our power, we placed the letter in the hands of the individual best qualified to give the desired information: and his answer, under a signature of celebrity in the City, is one of the most lucid papers we have ever seen.]
TO THE EDITOR OF THE SPECTATOR.
Sra—I read with much pleasure and profit the very clear statement, signed A. B.; which appeared in your paper two or three weeks ago, upon the nature of the connexion between our metallic and our paper circulation. Your correspond- ent, stripping this perplexing question of all extraneous matter, presented it to the mind with so much simplicity and force as was calculated, in my opinion, to convince all but the prejudiced. He;waved that the issues of paper should be governed by rules as stern and unbending as nature and necessity would them- selves impose if the whole currency were metallic; that any departure from such rules, though for a time apparently attended by alleviation, was certain to be followed by injurious consequences. With clear conciseness, he recapitulated the leading features of Sir Robert Peel's recent measure; one of the principal of which was, that as we might assume that the circulation of the country would never fall below a certain amount, the Bank of England might safely be empow- ered to issue paper equal in representative value to that amount, without possess- ing bullion commensurate.
Now, I have a difficulty connected with this part of the subject which I should like to see removed, though it is apparently of so elementary a character that I am somewhat ashamed to own it. I would ask, in what manner was this certain amount of circulation ascertained? Where did Sir Robert Peel procure the data on which he founded his calculations? And since it is admitted that as the na- tion increases in population and wealth the lowest necessary amount of circula- tion must be enlarged, and with this that the issuing power of the Bank (un- founded on bullion) should be extended, again I would inquire, how are such en- largement and such extension to be determined? how are their limits to be de- fined, and within what periods ought the readjustments to take place?
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