TOPICS OF THE D
REASONS FOR A FURTHER. MODIFICATION OF LORD .ALTHOR FS BANK PROJECT.
TGE week has made sad havoc with Lord vritorze's Battk plan. The project for a Treasury regulation of the Country Currency is postponed: and the " legal tender " clause has been, in the soft phraseology of its parent, "altered without making any difference ill the principle of the plan."
If it be too late to postpone without danger the remainder of the scheme, unless the postponement be accompanied with the ()whiles of some safe and comprehensive plan that should finally settle, or prepare the way for the future settlement of this gi,,antie question (and a plan of this kind it is clearly useless to expect from Lord ALTHonr), a still further modifieation of the Ministerial project, both with regard to the duration of the Charter, and more es- pecially to the " legal tender" clause, seems absolutely necessary. First, beeause nobody appears clearly to understand the operation of' the said clause: which, indeed, has not yet been intelligibly expounded even by its author. Secondly, because if it answers the avowed objects of its ori!iinators, its beneficial effects will be confined to times of panie, which may newer now r : whilst itS till:Allier oils results w ill be immediate and continual. Thirdh., on account of its vast and complex and (if we may SO speak) its all- pervading mita re. I It et eeonomical questions, the mischief of' injudicitius legislation -is limited and comparatively slight; it is mostly capable of a quiek remedy. If' what turps out to be an impr,per t;tx is imposed, it can be repealed, with a tem- porary inconvenience to the tax-payer. Should an interest be improperly—or it may be properly—deprived of advantages by a legislative measure, it can lie replaced in its cornier state; and in the interim, the parties affected Ill 1/ 1011:11 111 partially or wholly inactive, al/Cl live upon their capital, or as best they reay,—a process productive of loss, and Nvry probably lit great distress, but still finite in its operation, and not absolutely ruinous. Even the East and West ILdian questions, great and important as they are, are yet limited to those colonies, and to the interests connected with them. But no prudence or caution call guard against changes in the value ot money, or against the panics they induce, and which alike alli‘ct the producer and the non-producer. It is not only the commercial classes NV lin inav be involved in rain. The fundholder, by an "action on the currency," may have a practical inquiry into hi8 monetary system forced upon him, which may end ill the conviction that the value of his _fixed income is virtually re- dueed one half. The annuitant may wake in the morning., and find that a panic, which is "to cut a figure in history," has caused his annuity to drop before his life. Even the fruAres• consumere nati may discover, that whilst the "relaxation" of the currency has reduced their protecting duties by 50 per cent., their tenants have followed the fashion of their district and stopped payment.
But it may be asked, are these evils, or any thing approaehing to these evils, to be apprehended front the " legal tender" plan? This is the querstio vexata. It is the (hub/attendant upon the ope- ration of the measure, that we should wish cleared up by further inquiry: or altogether removed, by renewing—if we are driven to this alternative—the Bank Charter for a few years without any alteration, save in the reduction of' 1.20,000/. a year for the management of the Debt, and in the publicity of the accounts. So far, however, as we are able to foresee the effects of the legal tender, either in its former or in its altered shape, its tendencies are all on the side of mischief. That it s% ill increase the issue of paper, is admitted by its author; and very many support the measure expresslv on this account. That the general distrust of. notes " current in Westminster Hall " may convert a prstial into a universal run, seems highly probable. That, since the suppres- sion of' one-pound notes, it was at all necessary, or that it will ever operate beneficially to any extent, seems extremely question- able. Under the first plan, as is observed by the Nen, dlonthly Magazine (and the observation has since been adopted by the Leading Jour' ad), " Iii peculiar or pat tial panics, hank-notes. to those bankers who hare the MMUS or credit to Ferule it are, since the suppression of small notes, as useful as gohl. .1 distrust ing tile, ,dveney of a flint, or suspecting the credit of his dist . ill be happy enough t. wreive hauk-110tCS Without demanding sovvreit..7n,. i I he be the holder of one local note, the probability is that he would pr, fer hank paper."
As regards the modified plan for rendering a five-pound not.: payable in gold, it seems pretty well to put an end to the dimwit: utility of the legal tender clause if it be fully carried into circot.
" Those who are is yditors to the country banker in considerable sum.... says the Times, " or in other words, who would have to tin, amount of 10/. rr :10/. of their notes at the thee of a run, are persons who .ypreeiate the solvency of the Bank of England. and would he satisfied With being" paid in its paper Without any compnl.ory operation of the law; or if, on the contrary, tluy had any doubt of the crrd it of Threadneedle Street. could easily send the sane, • legal tender ' notes to be cashed, anti woldd thus only delay the crisis by a few days or hours, accot ding to their distance front the metropolis."
The last new project is likely to do more than this. By creating in times of panic a great distrust of paper, it may originate a run upon the Bank itself; which that establishment, relying upon the effect of the tender clause, may be more unprepared to meet than it would otherwise have been: so that the scheme, even in its modified form, may precipitate the ruin it would avert.
But whatever may be thought of the plans, no one can object to the richness of the discussion. Never was a heavy subject so
lightly handled. Comedy has nothing to equal the dialogue be- tween my Lord and Sir ROBERT on the subject of change for a fire-pound note. The object of the proposed alteration, one would have thought, was not to guard individuals against the incivility of a country banker refusing to accommodate his customers with change, but to preserve the present standard of value all over the country—to maintain a metallic circulation in the common trans- actions of business, and to guard against a depreciation by an over- issue of the lowest denomination of paper. This check, to be operative upon the bankers or useful to the public, would obviously depend, not upon the number of the-pound notes which any single person might be lucky or unlucky enough to hold at a certain pe- riod, but upon the proportion which the number issued bore to the -wants of the district, and to the liability of their value being de- manded in gold. Yet so crude and ill-considered are the schemes of our Finance Minister—so lightly dues he take up projeos, so lightly does he lay them down—that, in making a el— e w huh went for to nullify the principal feature of his measure, he Was not at the pains of working it out a single step, and never even dreamed of wie person having two five-pound notes for which he might -xant gold ! When the possibility of this very obvious oc- ClIrrente was pr,,‘sented to him, the good gentleman was bewildered 'at the extent of his own alteration, " And back recoiled—he torn. not ;thy—
Scared at the plan binisell had made."
Mr. Pou LIM THOMSON also took a part in the piece. He began by covertly Meliorating that his leader was ignorant of his own intentions.
" I te thought that all the discussion which had taken place had arisen front a mist-env/mon of the Mject 01 riot, in making bank-notes a legal mule... It was riot so notch to meet the den-lauds upoll the country bankers for their notes, as for their deposits. The amount of notes issued by tlie country bankers bore but a very small proportion to the amount of their engagements and deposits."
To this it was answered, that if by deposits was meant sums lent at interest, these sums could not be withdrawn until after notice. If by deposits cash-accounts were meant, the Government project could (and if the panic were general, it certainly would) be defeeted, by drawing checks for less than 5/. But, after Lord ALTHORP'S reading of the new legal tender clause, some much nieer points suggest themselves. If a customer, during a panic, draws a check for 201., altd gets it cashed by four 51. local notes, and either really or nominally pays away these notes, are the holders entitled to demand j- uncut in gold : or is one note only to be changed for sovereigns, awl it which? Will it depend upon the number of the note, or the priority of presentation, or the relative position of the holder to the drawer of the check ? 'Upon whom is the owls probandi to be thrown? Is the holder to wait for change for a five-pound note till a lawsuit is ended; or is the bank to pay the di-tumid, and in case of stoppage, have an action for damages against the demander ? "This is excellent sport, i'liiith;" yet we cannot help thinking of the fable of the boys 1toltin!2; the frogs. When the property of thousands is at stake, we are not in the humour thoroughly to enjoy the blunders of a Finance Mir.ister.
But to return. If it be too late to rescind the vote of the House of Commons without creating alarm in the minds of capitalists, and consequently deranging the industrious undertakings of the country, there can be no danger in rejectine. the "legal tender.' clause, and giving the public power to terminate the Chatter in five years instead of ten. We trust this, at all events, may yet be done. The first Ministerial majority subsequently fell off by 10'2; the minority rose by 73 ; and little as we think of the Reformed Parliament, this circumstance induces us to hope that it will not be forced by Ministers to sanction a measure whose operation is not clearly understood, and which, if. it fulfils the most san- guine hopes of its projectors, can only be of use in a state,of affairs unlikely to occur, but which, if it accomplishes the predictions of many of its opponents, may end by renewing the tremendous scenes of November and December 1$25.
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