AD MEMORIAM GEORGE J. GOSCHEN.
[To ma EDITOLL OP THE " SPECTAT0R:1
SIE,—The question of our gold reserve, which was upper- most a year since, is again portentous, nor is the phenomenal increase in our exports bringing to our money market the relief anticipated. The writer is not a business man, and has come reluctantly to the business man's view that some reform in our present system of reserves is required. The immense and increasing production, of gold is apparently being absorbed by the world-wide rise of prices, for which rise it is account- able, so that there is no surplus available to relieve the market stringency. Thus the position to-day, without being critical, is not entirely free from anxiety, and especially is this the case if we consider the voracity of the prospective demand in America. The Times of January 29th, 1891, contains the speech at Leeds of Mr. Goschen, then Chancellor of the Exchequer. I revert to this speech not altogether without stirrings of conscience. Mr. Goschen, as he states in more than one passage, submitted his proposals to the authorities of the Bank of England ; the moment for action had, be thought, arrived. Read carefully after the added experience of fifteen years, I admit that his proposals win greatly on the public attention. I had several opportunities of discussing them with Mr. Goschen. Prices generally were falling dangerously ; his proposals, though from a financial standpoint correct, yet required a further reduction of our legal tender currency in circulation. Thus the plan was to contract the currency at a time when men's minds were running on the propriety of expansion. I was able to pledge the opposition of a party at that time not without influence, and I think it not improbable that our opposition was decisive. The Leeds speech makes it clear that Mr. Goschen had matured a plan for a second gold reserve, and that his plan is in the archives of the Bank of England. In discussing currency questions it is well to remember that Mr. Goschen com- bined the professor and the banker in an eminent degree, and it is not impossible even yet that his Leeds speech may mark a turning-point in our financial history. I cannot ask for space in the Spectator to quote it, nor even to review it ; but it is easily accessible in the files of the Times. After all, it is half-a-dozen men, or at most a score, who can pass a copy from hand to hand, who will decide whether a proposal of this kind is to be followed up. The question is a question for experts, not for the public, not even for business men. The conclusion to which Mr. Goschen came—and he elaborated it to a not very friendly deputation a few days later at the Treasury—was this. He believed that a central gold reserve supplementing the Bank reserve was necessary. The opinion of his audience at Leeds clearly was that the sovereigns in the pockets and tills of the lieges should be bought up with sub- stituted pound notes. But Mr. Goschen, and as I think properly, refused this solution. He knew that such a process would both tend to raise prices, and thus throw the balance of trade against the country, and would also reduce for the time the Bank Rate ; both these conditions operating together would be certain to drive gold abroad and aggravate the difficulty. His own plan was this. There are some sixty millions of half-sovereigns current. A large proportion of these he wished to collect in a central reserve, a reserve not to be trenched on when the exchanges are against us. These half- sovereigns he would have purchased by an issue of ten-shilling notes secured by silver, their legal tender, as in the case of silver, being limited to forty shillings. These paper issues, the legal tender thus limited, would not, he considered, raise prices, and thus would have no effect on trade imports and the exchanges. Mr. Goschen thought that this central reserve— say, fifteen to twenty millions of gold—would conduce to security and to steady Bank rates ; also that the ten-shilling notes would be popular for remittance and in saving the trouble of counting silver in paying wages. Mr. Asquith, when looking up this project of his predecessor, may usefully bear in mind that there would be a profit of five millions or more on the operation at the present gold price of silver bullion. Such, very briefly outlined, was the substance of Mr. Goschen's Leeds speech. Time has dealt gently, even generously, with it. Then prices were falling, and the contraction of our full legal tender currency which it involved seemed to inter- pose a serious objection. To-day prices are rising with an almost inconvenient rapidity, and thus the withdrawal of a majority of our half-sovereigns and a slight contraction of our currency would involve no hardship to the debtor, the producing classes. But whether or no the Leeds proposals are adequate, they remain an interesting legacy from a master- mind in finance.—I am, Sir, &c., LATONA.
Previous page
