"WHY MARS DID NOT SIGNAL!"
[To the Editor of the SPECTATOR.] Sin,—Mr. Kitson amusingly attacks a delusion that there is a necessary connexion between the supply of gold and the supply of money. All merchandise in demand, gold included, is a basis for money ; the intangibility of the medium puzzles the mind. To avoid fiat or managed currency with all its evils a standard of value is required, and gold has the requirements transcendently and was the customary standard in English commerce before its legal establishment in 1819. Subsequent bitter experience proved that a central reserve could not be held in a trading establishment without periodic ruin, and in 1844 Peel was persuaded to create a statutory passive department with a rule of gold for notes .only. The flaw in the Act of 1844, under which we now live, was allowing a free use of a similar note- without a deposit of gold to the Government agent to avoid paying a debt. The so-called Bank of England notes are thus worthless as warrants, and in times of stress the hoard must be locked up to prevent its disappearance.
The remedy is the redemption of the fiduciary portion of this issue : freedom could then be allowed this banking -reserve ; the interest necessary to arrest an undue drain would be the measure of interest for safe credit, the exchanges could come to their proper par, which alone will protect our enterprise from so-called foreign competition.—I am, Sir, &c., T. W. H. UTRECHT FAIR.
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