PAMPHLETS ON PAPER CURRENCY.

THE number of pamphlets on the Currency, and the character. and pursuits of their authors, at once mark the importance at- tacked to the subject, and the limitations of the public mind with respect to it. The Bank of England, the Joint Stock Banks, or at the very utmost our present system of Banking, is the theme of the six productions before us ; the principal mooted points being —whose misconduet has caused the present pressure on the money-market? and what is the best means of remedying it in future, the existing system being preserved in its forms, though somewhat modified in its nature ?

Of these six pamphlets, two may be dismissed at once. Mr. JOPLIM'S appendix to his Examination of the Report of the Joint Stock Committee, called " An Account of the late Pressure in the Money Market," merely consists of a tough story, carrying its own refutation on its face, about the cause of the disasters of the Northern and Central Bonk. Mr. PENNINGTON'S addition to Colonel TORRENS.S Letter to Viscount Melbourne, does not alter our former opinion—that the gallant economist has made the extraordinary discovery that one sovereign may be in two persons' hands at the same time : we cannot get over this physical stumblingblock at the threshold, to pay much attention to the speculative ingenuity which may be found further on.

The names on the titlepages of the four remaining pamphlets would of themselves indicate the commercial interest and impor- tance of the subject of which they treat. HORSLEY PALMER, the protecting deity and oracle of the Bank—the god who inspires the Pythoness of Threadneedle Street; the clear-headed and prudent SAMUEL JONES LOYD, of the well-known banking-house in the same locality ; SAMSON Ric 4RDO, the brotherof the great econo-. mist, and DAVID SALOMON% neither so eminent as the two pre- ceding names, but still with a civic fame ; such men as these were not likely to have exposed a substantial reputation to risk by entering the public arena of science and letters, unless they felt the occasion one, when no volunteer, who deemed he could render serv.ce, was justified in holding back.

Before entering upon the debated questions in these produc- tions, it may be as well to note their points of agreement. Each, then, coincides in questioning—we might say in denying=the safety of' having more than one bank of issue. From the pages of each it may be concluded, that the present plan of making up the average accounts of the Batik of England is defective or delu- sive. Each conceives, that w hat is commonly considered a "rata. rally unfavourable rate of the exchanges—when the country, having bought more commodities than it has sold, is compelled to send away gold to pay the difference—bad little if any thing to do with the present distress. And all (unless Mr. RICARDO be excepted) agree in tracing the origin of the evil to the mea- sures adopted—hastily, rashly, obstinately adopted by the Govern- ment, in what they called Fel t i ng the Bank Charter, in opposition to all warnings ; that settlement extolled by Lord BROUGHAM at Inverness and other Scottish towns in 1834, and (more extraor- dinary ignorance and folly !) by CHARLES IV oonat Halifax, in the autumn of 1836, when its mischievous efil!cts were becoming fear- fully obvious to the most igoorant and thoughtless.

Quitting points of agreement, let us come to those of difference. Here our authors are three to one. Nit.. ciasanv PALMER defends the Bank through every transaction of the last three years (March 1834—February 1837); traces some of the evils of our present condition to the demand for gold consequent upon the American change in their monetary system ; and lays all the blame upon the gambling speculations in the Foreign Stock Exchange from July 1833 to May 1835, and upon the over-issues of the Joint Stock Banks. On the other hand, Mr. LOYD, Mr. SALOMON% or Mr. RICARDO, or all three, deny his conclusions upon the subject of America, and his facts and conclusions upon the Foreign Stock Exchange and Joint Stock Banks; and, on the best examination we can give the subject, we think conclusively. Mr. LOYD, after laying down the principle that a paper currency cannot have any magical power beyond the qualities of the metals it represents, truly observes, that if any European or American State offer to England an effective demand for gold, gold will be exported though our currency should be purely metallic. For the Bank to lament over this exportation, or to attempt to check, or to remedy 41,6)64141y ti,eless. and indeed mischievous : the only course to follow, is M lessee the paper curiency by the amount of gold sleeve out, anti', affitirs having naturally righted theme Ives, the geld is returned to be exchatigtel fir paper. But the Bunk have not followed this plan: and from their eanduct on this and other etetasione, and from Mr. Hottseev Pstesset's defence 411 theM, Mr. Lovn doubts whether the Ex-Gesernor or the Bank Di. rectos truly understatid the nature and proper functions of the piper currency it is their duty to nianage,—entertaining a sort of cottfused notion, that thsir bank paper possesses some occult virtue which tenor r. it hPt'er ('tali gold.

Mr. S st.omoes and Mr. Riceeno, however, deny the fact of gold hosing been exported to any extent en necount of the Spanish and Portuguese Letitia. They also maintain, that so far from transactions ni solvent Foreign Funds being sn mischievous that they o glee' (as Mr. Plasma sugeests) to be dealt with by the Legislature, these seem lees are of the go ave.! use in regulating the exclialiges and assisting our money system, be their importa- tion for sale iii England u hen the exclitieges are in our favour, and when against us by their transmission abroad instead of gold. By this meal's, Mr. Ss1.01KON4 asserts that our large importations of f coign own in 1829 and 1830 were paid fer; and that during 1836 " the amount of export of foreign European funds, and remittances to this country for the dividends di e on them, greatly exceeded the import of such securities, and thus assisted the ex- changes at a most eventful period."

Dismissing Europe and America,. we come to the Bank of England versus English and Irish Joint Stuck Banks; where we think the npiements of Mr. PALMER have a still better case against him. The rivet age amount of the circulation of English Joint Stock and Pt eat° Batiks, in March 1834. e as 10.200,000/.; in June 1836, 12,200,0001.; in December 183G, 12.000,0001.; being an extreme increase of two millions. The circulation and bullion of the Bank A' rhughitel for a corresponding period, but brought down to a later date, is as follows.

Cir■•■latinn.

March 1834„E18.700 000

£9 829,000

June 18.36, 17.899 000 7,062 000

December km. 17.:360.000 4 545.000

January 1837, 17,420,000 4.287.000 February 1837, 17,868,000 4,032,000

So that, taking the two extreme points, the Bank of England has had bullion drawn from its coffen s, not suddenly but gradually, to an amount of nearly six millions, and has only reduced its paper by nine hundred thousand pounds ! No matter what ex- cuses may be offered for such conduct, or what glosses may be put upon it—it is difficult to allow the Bank to escape from the charge t f an unacquaintance with the nature of the currency the Directors profess to regulate, or of a disregard to the public safety in an anxiety to increase or sustain the profits of the share- holders. We have seen. the fact of an exportation for Foreign Loans denied, but the fact is of little consequence to the argu- ment; for Mr. PALMER admits that all the gold, at least, came back again after the panic of May 1835. The attempt of the former Governor of the Bank to trace the fault entirely to the Joint Stock Banks, must equally break down. For, passing Mr. RICARDO'S assertions about an extended local business, and an alleged displacement of Bank of England paper by Country Banks, (as these points are difficult of proof. and are perhaps part of the questions at issue,) " it will," as Mr. SALOMONS ob- serves, "require an extraordinary degree of ingenuity on the part of those who contend for the infallibility of the Batik of England, to show bow the increase of less than two milieus of paper by the Country Banks, could have abstracted nearly six millions of bullion from the Baulk of England." Even adding an additional million for the Irish circulation, will still leave half the difficulty unexplained. And had the Country Banks drawn away the whole, it was the duty of the Bank of England to have proportionately restricted its issues.

The gentleman from whom we have just quoted also attributes

much, if not the whole of our evils, to the facility with which the Bank lends itself to forward the financial operations of the Govern- ment; always deranging the channel, and often increasing the quantity of the circulation. In making this charge, he lets out the curious fart, that these operations are invariably watched and prepared for by a certain class of speculators, and fraudulent, or at least unreal preincts, ate got up according to the prevailing taste, and timed into the market. Thus the paying off the Dissentients of the Four per Cents., in 1824, gave rise to a variety of bubbles, which added to the terrible distress of 1825. Preparations were made against the similar operation in 1830 ; but they were defeated by the " Three Das s" and the Belgian Revolution, which induced a caution approaching te timidity. The last affair of the kind was the reissue by the Bank of the deposits upon the West Indian Loan, and of a large sum of idle capital borrowed for a temporary period from the East India Company, and which, says Mr. SALO- MON% by causing a temporary increase in the circulation with- out furnishing legitimate means of employing it, gave rise to many of the speculations of last year. Some misgiving as to these transactions, indeed, appears to have pressed upon the minds of the Bank Directors; and Mr. PALMER struggles hard to put a bold face upon the matter. With regard to the East India Company, he adopts the old eicuse of the boy who stole the apples—" If !do not take them, somebody else will ;'' though it seems scarcely consistent with the dignity of a company like the Bank to do a doubtful thing merely for the sake of the profit at- .4■•••■•• tending it. The excuse for the West India Loan is of a lOinilar kind—the Bank stipulated for the return of the money, by th tints it would be wanted; which was nothing more than protect. ing itself. Still further to complicate, we will not say to mystify, these sums are classed and called extra deposits' though, as Mr. LOYD remarks, no one could tell from the Bank returns that the Directors made such a division in their deposits, or that a practical operation followed it. To us it appears, that large sumo 1 deed fur a limited period, and obviously waiting a certain destination, should be issued, by a power professing to control the currency, with .far greater scruple and care than is used sith the arrange amount of deposits.

Passing from the evil itself, the next question is the remedy; and fur this, recourse must be had to Mr. Love, who has investi- gated the subject with a penetrating and philosophic spirit, and bases his proposition on a clear end intelligible principle. Main- taining that a proper paper currency should exactly represent the metals fin. which it is a substitute. fluctuating as they wouhlitsc. Mate, tie conceives that the rule one-third bullion two-thirds cur. rency would be perfectly safe ; but that the reverse is the case with the regulation of the Bank, which clubs circulation and deposits together, and lets its specie fluctuate as it may, so lung as it can keep the amount of its securities fixed—which, however, it has not dune. And the perception of this error leads him to the discovery of its cause, in the anomalous chs. racier of the Bank, which acts at the same time both as u bank of issue and a bank of deposit, and is subjected to the coull:ce ing pressures that spring out of such opposite natures; their functions us bankers tempting, indeed compelling theta, to do that which it is their duty as issuers of currency to refrain from. We much regret that we must content ourselves with referring the reader to the pamphlet fir the author's lucid and powerful expo- sition of this subject. We can, however, give his concluding pro- positions; the two first of which have our cordial approbation, as being the nearest approximation to an improved mode of action, consistent with safe and present adoption. If the word public, in the third, could be substituted for " Government," we would subscribe to that also; but we have suffered too much from the Government's interference with the Bank, from PITT'S Restriction Act down to this month of March 1837, willingly to consent to its having a recognized position in the Directorship, doubtfully as the Directors may have acted.

it 1. The propriety of securing, strengthening, and, if possible, extending the monopoly, as regards currency, of the central issuer, with the view of rendering the indirect control which she can exercise over subordinate issuers more power- ful and effectual.

" 2. The propriety of making some gradual approach towards the separation of banking functions from the management of currency, with the view of render- ing the hotly which undertakes the latter duty free from all conflicting interests and motives, and at the same time making her responsibility distinct and com- pleie, and the nature of her proceedings simple and easily understood. ' 3. The propriety, in the mean time, of a distinct separation in the accounts of the Bank of the manageineut of currency, from every other branch of her business, of subjecting the superintendence of this department to a separate Committee of Currency, and of assoc;ating with this C lllll inittee a representative of the Government, whose presence should always be requisite to constitute this Committee efficient fur business.

" The effect of such a re;ulation would he, to check that tendency which will inevitably exist in every body which combines the functions of banking with the issue of paper money to consider the amount of her issues as liable to vary in accordance with her own wants, and to be rendered subservient to her own convenience; thus neglecting, or at least partially suspending, that one great principle by an exclusive reference to which all paper issues ought to be regu• hoed. The presence of a member of the Government in all the deliberations of this Committee would prevent the Bank in any tendency to abuse her power over the currency fur the promotion of her banking purposes, and the Bank would exercise a similar restraint over the Government. Add to this, a full and intelligible publication of the proceedings of this Committee, and the public will thus be. enabled to exerebe a sufficient control over this body in any case in which it may he conceived that the two patties united can have a common interest in neglecting their duty to the public."

Although we believe it difficult, if not impossible, for any dis- interested person to investigate the case without coming to a conclusion against the Bank, yet something may still be said for

the Old Lady, though not amounting to an excuse. The demand for gold for America was a novelty ; but we suspect that there was another demand at home, quite as effective probably, though secret and invisible. The prospect of an unsettled state of poli- tics, owing to the balanced state of parties, and the mystery which it pleased and pleases our Whig Ministers to throw over their intentions—the fears of a scarcity, and the apprehensions of a commercial crisis—gave a gloomy appearance to the signs of the times, which is not yet altogether dissipated. Very prudent or very timid people, in such circumstances, might naturally prefer to keep gold rather than notes ; and gold withdrawn for the pur- poses of hoarding, would go " and make no sign," neither in- fluenced by the rate of exchange nor figuring as exported in the Customhouse returns. Has Mr. PALMER himself any suspicion of this, or of a similar kind ? When discussing the subject of guarding against depreciation, lie observes—" If paper money ever become discredited by a political convulsion, it can then only be upheld by the power of the Government; and in such times it becomes the duty of the Ministers of the Crown to undertake the responsibility of upholding public credit." Threadneedle Street is not, indeed, in very good condition just now for bearing an exten- sion of the experiment of May 1832 ; but we have no apprehen- sions on that score. The People do not expect so much from the Whig Government, that they would be likely to stop the Bank, and destroy all the artificial property of the country, for the sake of any of the " grand measures" of the MKLBOURNI Ministry.

Were it otherwise, an interference of the Government would be Atal to itself and useless to others. The days of Bank Restric- tion Acts are gone. There is but one man in the country, who

with the nerve, is likely to possess the position during an inter- regnum, to propose it to Parliament, and even he might pause :

and though an order in Council or a vote of the Legislature might save the Bank, it would not save the greater part of the country from bankruptcy.

In publications of this kind, the facts communicated, or the rea- sonings upon them, are of more importance than any literary merit. Each of the four pamphlets, however, has a distinct character of its own. Mr. SALOMONS has a good deal of floating knowledge, clearly but not powerfully stated : he is deficient in general views and scientific acquirement. Mr.RICARDO is rapid, embraces pretty nearly the whole points of the subjects, and possesses the skill of an economist ; but, from being last in the field, he seems deficient in novelty, to those who have read the others in the order of their appearance. The late Governor has a rotundity of style, and a kind of confident official swagger of manner, which looks imposing ; but, probably from the nature of his case, he is defective in arrangement : a logician, who knew little of the subject, would say the whole was a logical insufficiency —that his premises neither cohered together nor supported his conclusions. Mr. LOYD is the facile prineeps of the band. He renders a subject, in its nature abstruse, perfectly lucid; he displays an easy power which is not only rare in pamphleteering, but even in book- writing ; in demolishing the arguments of. Mr. PALMER he exhi- bits a quiet satisfaction which has the effect of irony without its offence; and what is more, be grapples with the principles of the subject, yet, when founding his suggestions upon them, he puts forward nothing extreme or unpractical. A fortnight since, when reviewing MORRISON'S Observations on the Metallic Cur- rency, we remarked, that " we cannot for many years remain as we are." The prophecy of alterations appears likely to be fulfilled sooner than we expected. Assuredly when such men as LOYD and PALMER suggest great changes in banks of issue, the ques- tion is not done with.