TOPICS OF THE DAY.
WILSON'S PEEL'S ACT, EXTENSION (INDIA) BILL. WE now have a tolerably oomplete account of Mr. Wilson's pro- ject for a paper currency in India, in the abstracts which have been given of his speech, and in his minute, dated Meerut, De- cember 25, 1859 ; this movement initiated at Meerut unques- tionably being calculated to have more enduring effects upon India than the mutinous revolt which commenced at the same place. We gave a very intelligible account of his plan amongst our news last week ; if carried out it will, in regard to a cur- rency, place India perhaps second to England in the scale of per- fection. All are agreed that the precious metals are the best standard as the basis of a national currency. But even gold is a, comparatively bulky and weighty article, and many convenient methods of finding a substitute for it have been contrived. The one which is the most perfect of its kind is a Bank of England
note, because it issued under the Government guarantee ; the law makes it a legal tender, equally with the coined sovereign ; it is always convertible at head-quarters ; and is to all intents and' purposes of the same value for exchange, preservation, or any other monetary purpose as the same denomination in sovereigns. In no other country has the paper auxiliary of the metallic cur- rency the same completeness. Casting aside countries which tam- per with their currency, like Austria or Naples, and looking only to those which stand the highest in their credit, the comparison is still in favour of England. In France, the Bank of Issue gives no security to the state, and notes of the Bank are not a legal tender. In the United States, the state department holds full security for the issue of notes, but the notes are not convertible at the place of issue by maintaining a specie reserve far that purpose, and the notes are not a legal tender. No discredit attaches either to the notes of France or of the United States ; but no one will say for a mo- meat that they are exactly the same thing as so many sovereigns. The main purpose of Mr. Wilson's plan is to introduce this sys- tem of a convertible paper currency, which is a legal tender, on a definite metallic basis.
The plan is this. A public department is to be appointed, under three or more Commissioners, as an Issue Department. It will be wholly unconnected with any banking department. In this respect, it will differ from the Bank of England, very advan- tageously ; since, although the two departments are practically distinct in our Bank, the Native mind in India could never ab- solutely believe in the severance of the two and the independence of the Issue Department. The Commissioners will probably be appointed by the Governor-General in Council, bat will only be removable by the Secretary of State. The chief will be acting officer for the management and issue of notes. With him will be associated the Master of the Mint, which will very fitly be attached to the Issue Department. Around all the chief cities of India, as we understand the plan, there will be traced " a Cur- rency Circle," with a Deputy Commissioner appointed to each Currency Circle, in order to issue notes as they are issued by the branch banks of the Bank of England. The business of the Com- missioners in Calcutta will be to complete the manufacture of notes manufactured in England ; to exchange with the Treasury, and with private persons, on demand, notes of the district for coin, and coins for the notes of the distriots ; to purchase silver bullion and foreign coin at a fixed price, rendering the deposit of bullion available for the merchant. as money ; to keep the local issuing banks supplied with notes, and check their accounts ; to give orders upon district issuing banks for notes in exchange for coin, or in payment for Calcutta notes, on terms to be stated and published monthly ; and " to purchase and hold public securities, to whatever extent should from time to time be deemed advisable, and which should be in conformity with the regulations laid down by laws." In all its essentials, this plan is like our own English plan. ; the particulars in which it differs are non-essential. The Bank of Eng- land was pre-existing when we finally arranged our plan in 1844 ; and we minimized change when we abstained from rendering the Issue Department materially and topographically separate from the banking side of the Bank of England. Theoretically it is a flaw ; but practically, we believe, it does not much matter; though it would most seriously matter in India. The basis in India is to be silver ; silver happening to be the commodity actually most cur- rent in the East, for reasons of practical convenience ; while gold is the metal which our currency legislators found current amongst the people. The most serious departure from the English model is that one among the duties of the Commissioners inCalcutta which we have placed last, though it stands fifth in Mr. Wilson's own oategory.
"To purchase and hold public securities, to whatever extent should from time to time be deemed advisable, and which should be in conformity with the regulations laid down by laws."
The passage made us pause ; but we have an official explanation of it on the very highest authority :-
" These expressions," says Sir Charles Wood, " may convey an im- pression, which I am well assured is not Mr. Wilson's meaning, that the Commissioners might become constantly purchasers and sellers of Govern- ment Securities. " The sound principle for regulating the issue of a paper circulation is that which was enforced on the Bank of England by the Aot of 1844, that the amount of notes issued on Government Securities should be main- tained at a fixed sum, within the limit of the smallest amount which ex- perience has proved to be necessary for the monemry transactions of the country ; and that any further amount of notes should be 188Ued on coin or
bullion, and should vary with the amount of the reserve of specie in the Bank, a,ording to the wants and demands of the public." From these passages taken in conjunction, we gather that, sooner or later, the amount of public securities which the Issue Department shall hold as the basis of notes not based on bullion will be fixed. It will not be fixed arbitrarily, any more than it was in this country ; here it was taken from the test of practical experience, and some similar test will undoubtedly be taken in India. It might be supposed, from the passage in Mr. Wilson's Minute, that he was somewhat deviating from the Act of 1844, in order to comply with ideas which he has formerly put forward in his own writings ; when he was conspicuous amongst the very ablest of those who maintained a hopeless fight with Sir Robert Peel's principles in the Act of 1844. We remember Mr. Wilson's arguing that a dearth of corn and a large importation of it, with high prices, would place "a larger proportion of actual coin in the hands of the public." If we are not mistaken, the same financial authority has also argued that an increase should be granted by law to the amount of notes issued on securities, in order to elasticity," or to provide for increased transactions. Some persons, we know, believe that in strictly following the Act of 1844 Mr. Wilson is obeying, not his own sense of statesman- ship, but the rigid authority of Sir Charles Wood, the Chairman of the committee from whose report the Act of 1844 resulted. We must take leave, however, to doubt this assumption. In spite of those ideas which we could not help regarding as crotchets, no one would deny that Mr. Wilson possessed very unusual ability and perspicacity ; he has proved both in India, to a degree for which he did not obtain credit in England, although he was accredited with both by his ablest opponent, Colonel Torrens.* It is, indeed, a most remarkable historical fact, and one which the disciples of Peel cannot but view with great satisfaction, that that opponent who has perhaps possessed the greatest ability and the greatest opportunity, should have left this country, and should have acquired an entirely new repute for statesmanship, by apply- ing to the vast empire of India Peel's principles and Peel's mea- sure of 1844. But instead of assuming that, in accepting and so ably carrying out this measure, Mr. Wilson is acting merely as the reluctant journeyman under a stern taskmaster, we are rather bound to suppose that his own understanding has thoroughly convinced him, and that he is cooperating with his chief, Sir Charles Wood.
It would be altogether rash and ill-judged to, imagine for a moment that the practical success of the measure can depend exclusively upon its theoretical merits, or even upon its abstract fitness for India and the present case of India. It is at once an old measure, and an experiment • it is an old measure under entirely new circumstances. In India, there are practical men who completely understand it in all its bearings, and look to the difficulties with a friendly disposition to surmount them.
" We are to have," writes a friend from Calcutta, "a paper currency perfectly convertible and suitable to the wants of the country—notes from 5 rupees up to 1000 rupees; the privilege of issuing Bank-notes to be with- drawn from the three establishments who now possess it ; a separate esta- blishment to be appointed in the management. A Commissioner at each Presidency, with deputy Commissioners in the Provinces to preside over circles of districts ; the Commissioners to have in them treasurers ; one- third of their paper issued in coin, and to hold Government securities for the rest. The cash in all the Government treasuries to be available to the Commissioners. The scheme promises well, is simple and clear ; but will take some time before it can take root and be profitable. " The weak point is the two-thirds Government securities. We have no market where these are saleable immediately. A run for cash would be a want of confidence in Government; and the securities would not be sale- able beyond the English communities. The proposal amounts to taking Government securities bearing interest at 4 and 5 per cent out of the hands of the people, and placing in lieu thereof Bank-notes bearing no interest. Unless Government keeps a large cash balance there must be danger in this, and with a large cash balance there is no profit. The people here will be slow of allowing Government to make the profit; but in time it will do well, I have no doubt."
We have quoted our friend's words, although they were not written to, be printed,—we might almost say, because they were not written to be printed. They give us the genuine practical view taken by the independent statesmanship of finance in the head-quarters of Indian finance. We see remarks by other writers in this country well deserving of attention. One holds with Mr. Wilson, that the minimum of an Indian paper currency should be fixed; another, we observe, holds that, under a sound state of commerce, a larger amount of money would be required to meet the increased number of trans- actions. It may, however, be remarked that, where commerce extends, it provides its own currency in the form of bills, the balancing accounts, and other modes of clearance ; while, on the other hand, in a country so little developed as India, commer- cially, it is very probable that the amount of currency which might be fixed at a given time in this year 1860 would be wholly inadequate to the wants of the same country ten years hence. The existence of a facile and certain medium of exchange will unquestionably stimulate enterprise to a degree which we now can scarcely calculate. The thing needed, therefore, is to fix the bases and principle of a sound currency, not arbitrarily to deter- mine beforehand what shall be its expansion, what precisely its denomination, for we may see millions needed beyond any mea- * "The Principles and Practical Operation of Sir Robert Peel's Act of 1844, Explained and Defended." Third edition, revised and enlarged ; [with a critical examination of the Report of the Lords' Committee in 1848 upon National Distress, a notice of the curious principles of currency pro- pounded by Mr. Tooke, and. Mr. Wilson ; and Mr. John Mill's Chapter on the regulation of the currency.] Published by Longmans, and by Ridgway. sure that could be fixed now, we may find gold circulating where nothing better than silver is in the hands of the com- munity.
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