MONEY-LAWS..
TO THE rorroz OF THE SPECTATOR.
Slit—Tile brief sketch given in your last, of the nature of money, both (mined and paper, and of the laws necessary for its regulation, is admirable ; your ar- gument In favour of convertibility at a fixed standard, perfectly sonnd ; your proof that PEEI'S Bill, by restoring the ancient standard, occasioned no greater fall OIpriCeS than the difference between the standard and the Market price of the day for gold, or 44, per cent., unanswerable. If further proof of the last propo- sition were wanted, it would be found in the fact, that since the passing of PEEL'S Bill, and under its operation, prices have been as high as any one eau wish to see them ; viz. in 1824. What, then, has cruised the general and prolonged depression of prices since that period.?—which is the great practical evil of the day—which has lowered profits and wages in every business, driving masters by hundreds into the Ga- zette,' and their men by thousands Upon the parish, to America, or into gaol ? Not PEEL'S Bill, as we have seen. That Measure, by fixing too high a value on the pound sterling, unquestionably, at the time, injured all debtors, to give an undue benefit to their creditors. But, from the effects of this blow, our elastic industry would long since have recovered,—ay, in spite of the weight it added to the public debt,—had no other cause of evil been at work. Her pro- longed sufferings are owing to the continued decline of prices, down to the pre- sent day ; and this must be accounted for by something else than the point at which the standard was fixed thirteen years ago. /fad the Legislature of that day, while restoring its metallic value to the pound sterling, at the same time thrown open the trade of banking and the circulation of credit, there could have been no necessity for the permanent introduction of an ounce of gold into the circulation. A few individuals, from curiosity, might have applied for a few sovereigns; but gold would never have been required to auy extent; and the -whole internal commerce of the empire would have been carried on in paper is- sued by banks of unquestionable solidity,—for the example of Scotland proves, that under a free banki, .nn s-,ntem none-other can maintain themselves.„..etriffor- --timateW,-ParTiarfilint inrig-eynterir crippled by the monopoly of the Bank of England, but left in tbree the Act oftslii, which prohibited the issue of small notes. What was the necessary consequence? A demand for gold to the extent, first, of several millions to serve in the payment of sums under five pounds; and next, of many millions more to satisfy the reasonable preference of a large portion of the public, who, having seen and suffered by fhe breaking of two or three hundred country banks, in l814-16, naturally preferred gold to the notes of establishments which were prevented by the law from basing them- selveaon a sufficiently wide foundation to insure the confidence of the public. Thus was an amount of metal, by degrees, taken up into the circulation, of, even. in Mr..Maccussocu's estimation, not less than thirty millions of gold ; and of gold and silver together, fifty millions. Now this new demand on the part of Britain for the precious metals; must have been supplied from the bullion market of the commercial world, mid, you acknowledge, must have caused some rise in the value of bullion ; but, with Mr. Maccessocir, you consider this rise to have been but trI:tiLzg, inasmuch as " thirty millions bear but a small proportion to the entire quantity of gold in all the markets of the tvorld." Here is the point at which we separate. I cannot but consider this cause fully ode- - bate to account for the whole of the appreciation of the precious metals which has beggared our national industry ; anti, as I believe myself to have been the first to call the public attention to this view of the question, in a tract published in 1829,* I must entreat you to dwell with me a little on this circumstance, -which yourself and Mr. Ma ce ULLOCH dismiss as so unworthy of notice. The entire stock of precious metals that existed on the face of the globe in 1810, is loosely guessed at by Mr. JACOB as about a thousand millions ; of which the fifty millions in question would be one-twentieth. But few private individuals in Europe' much less in Asia or Africa, -Would think of melting down or selling their plate and jewellery, because of a rise in the value of gold and silver as compared with ether goods : any new demand, therefore, for these metals as coin, must be taken out of the much mere limited stock which is available for purchase, consisting of the coined money of the commercial world, and a certain quantity of bullion in the hands of the merchants. Now the total of coined money in Europe in 1832 is calculated by Mr. islACCULLOCH himself, after STORCH, to have been but 271 millions. If we addt30.millions for that of America, the entire steek will be about 1300 millions. As for•the loose gold and silver in the hands of bullion merchants, the vastly increased consumption of
these metals since 1810 in plate, jewellery, and the arts, must have wholly pre- cluded any of this being employed in supplying anew demand for coin ; and in-
deed, as Mr. JACOB maintains, must probably have trespassed considerably on
the stock of coin itself. The researches of this last author lead him to believe that the coin of the commercial world has in this way been diminished hi quail:thy by one-sixth since 1810. But, if we allow it to have remained undi • rninished, at all events it is clear that the fifty millions of metal for which England has since that date drawn on the bullion market, must have been wholly taken out of this stock of coin, which barely amounts to six times the quantity required ! . Now, what must have been the effect of a new demand like this, to the extent of one-sixth of the whole available stock ? Put a parallel case. Food is not more necessary for the support of life, than are the precious metals, under a system of metallic currency (which prevails through the greater part of the commercial world), for the support of its commerce. Suppose a sixth of the stock of food in the world to be abstracted : would this not be followed by a very sensible rise in the value of the remainder? But suppose, further (admit- ting it to be possible), that whilst food had been diminishing by one-sixth,- population had been increasing (as in truth it has increased since 1810) by one-
third. Would not the value Of food be probably doubled at least bv such a coin- cidence of increased demand and diminished supply? And will 1.14 the parallel circumstances, which are undeniable as regards the demand and supply of the precious metals since 1810, amply account for the doubled value of these sub- stances? If we did not know, by referring to the price-currents, that their value has been doubled, should we not be confident that under such circum- stances it must be so?
But those who, with you, refuse to account in this way for the appreciation of the precious metals, and consequently of money, are bound to find another
solution of the fact. That which you bring forward (and both the Edinburgh
Review and Mr. MAccuauoen take the same line of argument) is " the in- crease of goods in the market." Stop, if you please. You must mean, of course, the increase of all goods but gold and silver,—for this alone could raise the value of gold and silver relatively to all other goods. But pray, where is the difference between an increase of goods relatively to gold and silver, and a defici- ency of gold and silver relatively to goods? A general glut of ,e-oods is only
another phrase for a scarcity of money. But when it is asked what is the pri- mary cause of this unequal supply of money anti goods, lie must surely be it-Ira- -tooted who replies that it is the over-production of goods,. not the under-pro-
duction of money ; or who would attempt to remedy the ruin it brings upon -producers, by calling on them to produce less of all the good thinrs of life for
the general consumption, instead of calling on the Government to allow us to ,provide ourselves with more money with which to exchange our augmented stock of commodities. The one is practicable and beneficial, the other an iii- 'possible and destructive remedy. - The supply of money., we know, can be in- creased to any required extent, with the utmost facility, under a free credit * The currency Question Freed from Mystery. Ridgway. ' currency. The supply of goods., we know, cannot be diminished, except by keeping a 'proportion of oar workmen in idleness on the poor-rate, and &greying an equal proportion of our capital,—processes which, I acknowledge, have been largely going on for a long time past, but without much improving the circum- stances of our capitalists and labourers. What, then, is the remedy required ? Not a repeal of PEEL% much-abused, but comparatively. harmless-Bill—not altsration of the standard—not a depre- ciation of money in relation to gold and si it, by a detenioration of the coinage or a new Restriction Act,--but simply a depreciation of money in relation to goods, by the removal of all legal restraints which now hinder the production of money in proportion to the parallel production of goods ; by allowing. paper (issued under any security you please for its payment in gold on demand) to fill that part of our circulation which consists of sums between one pound and five; and by permitting the establishment throughout the kingdom of note-issuing banks, whose known wealth, number of partners, and pledged capital, shall secure the confidence of the country under every emergency, prevent the possi- bility of runs or panics, anti occasion the gradual disuse and disappearance of metal, at least of gold, from our circulation.
Then, as the fifty millions of specie, which, to the ruin of other nations as well as ourselves, we have painfully drained from the general stook of the commercial world, are gradually restored to it, the value of bullion will fall, and the prices of goods in every market rise in proportion. The iudustrious classes of all Europe and America will feel and rejoice in the change; for as there can be no doubt that we have impoverished them by raising the value of the metals, so we shall enrich them by reversing the operation. But We shall be the first and the greatest gainers. It is in our markets that prices will first rise, aud in the end we shall have exchanged fifty millions of barren and unprofitable specie for its equivalent in consumable life-sustaining or enjoyment- giving commodities. This amount of capital, at least, will be restored to our productive classes out of all they have lost ; and for the future they will be secured from similar losses, by being provided with a supply of the medium necessary for exchanging their products, from a source which can never fail, but must always remain lull, never in excess. Then, the more they produce of all consumable commodities, the more each will obtain for his own share. Then, their productive eriergies.can- not be too freely exerted. Then, neither their capital, nor their numbers, their machinery, or their shill, CA N increase too fast, nor without occasioning a proportionate increase of their remuneration, as Well as of the general enjoy-
ment. •
Let such a system continue but for a few years, and our debt avihi be felt but as a trifling incumbrance on the national wealth and income. Complaint Will no longer be heard in our streets, nor zepining in our fields and factories. Con- tent and satisfaction will diffuse itself anumg all classes. The rights of property and industry will be respected and secured. Peace,. if peace we continue to have, will no longer run the risk of being mistaken for a curse. Leisure and tranquillity will be afforded us for the improvement of our institutions, and domestic policy. Britain will have entered on a new Era, anti. her example must soon be followed and her prosperity shared in by every other eivffized nation.- I :ml, Sir, your obedient sei G. P. S.. -
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