If this alternative did not exist, the expectation entertained, that a diminution of amount in the circulation of the Bank of England's notes shall enforce a like reduction of notes of country banks and a general diminution of paper-circulation, might be well founded: provided no other expedient remain to the private circulator. Without stopping to inquire whether other expedients may probably be devised, and are likely to be adopted, it is enough for the argument to observe, that the alternative, which has been mentioned, cannot be excluded. In a scarcity of money, it is not impracticable to have recourse to an exchange of debts and barter of credits, for the liquidation and adjustment of all pecuniary transactions, in like manner as recourse is had to the barter of goods under circumstances of scarcity of currency. The prevailing practice of country banks, and their mode of dealing, together with the manner in which a daily settlement of accounts is effected among bankers in London, have paved the way for the complete introduction of a system of barter and exchange of debts and credits: by which a common medium of currency, unless for small change, may be entirely dispensed with. Notes of country banks are payable in London, or by drafts on London. They are there paid, like payments originating in London, at the house of bankers. The holder of the draft pays it to his banker, has credit for it, and draws against it for any payments which he himself is to make good. The London bankers mutually settle daily their accounts of the day; and the final balance of the whole account among the whole body, may as easily be adjusted by a transfer of credit with the Bank of England covered by unexpired bills previously deposited with the Bank, as by actually passing notes of the Bank from the hand of one banker's clerk to that of another. The practice of opening an account with the Bank, and maintaining a credit there by a deposit of discountable bills, is an established one: and nothing can be easier than such an use of it. In the whole of these transactions not a piece of money, nor a Bank of England's note, is needed. All is effected by transfer of credit among parties step by step known to each other. It is only for small payments, and between parties not known to and trusted by each other, that a current medium of circulation is indispensable. In every part of Great Britain, besides London and its immediate vicinity, with a single distant county, that want is supplied by notes of the country banks. It appears by no means improbable, that as fast as notes of the Bank of England shall be withdrawn, notes of country banks will take their place in the more distant as well as in the nearer range of the currency of the metropolis, if not within the metropolis itself. A much less circulation of Bank of England's notes may suffice, as their place becomes supplied by circulation of country notes; without any consequent diminution of the aggregate amount. On the extreme supposition, which has been before admitted, that the Bank of England may be driven to withdraw the whole of its notes from circulation, it yet does not follow, that no device or contrivance may be hit upon by private persons to furnish the metropolis with a paper-currency in the absence of bank-notes and metallic circulation; or that the urgency of the public wants may not give birth to the introduction of a substitute, without deliberate art or contrivance, and simply in a natural course as a result of the emergency. In less exigency, recourse has formerly been had to the issue of tokens by individuals. Other means, not contrary to law, might be now pointed out as likely to be resorted to, if the object of these speculations were to suggest a prospective remedy for a contingent evil. Enough has been said to show, that it is far from an admitted truth, that all the data, upon which the reasoning here controverted was founded, can be assumed as certain and inevitable. If there were no other criterion and measure of the value of paper currency besides its scarcity or abundance, then the argument for an expectation, that its value shall follow the scale of its copiousness, might be just. Perhaps when that argument was put forward, it might be entirely correct; no other criterion existing, besides the standard value of the denomination of money borne on the face of that currency. But paper, whether consisting of Bank of England's notes, or exchequer-bills, or private acceptances, or country notes, represents debt, or an obligation of payment; which will be fulfilled by transfer of a credit in nominal money, that is, the pound sterling; the value of which is now fixed at the mean price of divers sorts of corn: two bushels of wheat, and four of barley; nearly six of oats, and three of rye, &c. Bullion may fluctuate in price; gold and silver may be scarce or abundant; both may disappear from circulation: Bank-notes may follow in the train, and be withdrawn from circulation: all the while the mean worth of the pound sterling remains, amidst the vicissitudes of metallic currency, regulated and determined by the average price of corn. The pound sterling is not a fourth part (more a few grains) of an ounce of gold; nor is it a little less than four ounces of silver; but it is the mean price of two bushels of wheat, and certain other proportions of other grain. "Vain then will every endeavour be to establish and preserve a metallic currency, while the real standard of the value of money is corn, and not gold nor silver. The endeavour may be attended with serious inconvenience. It may produce much uncertainty and Confusion much distress and difficulty. It cannot be effectual: until the corn-laws are altered, and the pound sterling is measured by gold and silver, instead of wheat and barley. I am not unapprised of very cogent reasons against re-agitating the important question of the corn-laws. But, if indeed it be forbidden in prudence to amend those regulations, we must be content to abide their consequences: among which the most prominent is an utter impossibility of retaining gold or silver currency, while the regulated price of corn materially differs from its arbitrated price and true value in exchange for bullion; and an emergent call for importing a foreign supply of necessaries of life is matter of occasional recurrence. It is with a deep sense of the vital importance of these topics, and the intimate relation between them, that I have ventured to touch upon the subject. It is one that should be approached with no bias or prejudice; with no party feeling, nor personal animosity; with no selfish sentiment; no tincture of resentment of the past, nor angry anticipation of the future. If the public interests require, that an arbitrary value of agricultural produce should be maintained, to uphold the national income, and support the revenue of the state which is derived from it; and thus enable the nation to bear its burdens and fulfil its engagements; be it at the same time felt and remembered, that to maintain that arbitrary value, an artificial currency must be supported. If the public interests may be better consulted by promptly returning to the wholesome condition of a metallic currency, upon par with the rest of the civilized and commercial world, be it understood and recollected, that the price of every other commodity, of labor and all its productions, must adapt itself to the same level. By that par, and by no arbitrary value, must be determined the worth of agricultural produce, the amount of the national income derived therefrom, and the sum of the public revenue levied. Whether the nation may be able to face its engagements, and support the consequent burdens, is matter for serious consideration. If it be impracticable to accomplish the one object consistently with the other, what course is to be followed to shun impending evils? To pursue this subject through all its bearings, and thoroughly examine the momentous question, is beside the purpose of this essay. Profoundly impressed with the notion of an intimate connexion between two matters, one of which is a topic of universal disquisition, while a prevalent disposition is apparent to blink the other as a hazardous and unwelcome question, I have been desirous, with deference and caution, to convey to the minds of others the impression which is deeply felt by myself. Let the option of prolonging an artificial state of currency, or reverting to the more natural condition of it, be well weighed and dispassionately determined. But let it not be forgotten, that another, and not less momentous, question is involved in the decision; that the choice lies between artificial currency, together with a great income drawn from sources raised to an artificial elevation, or the re-establishment of natural prices with metallic currency and reduced national income. One part of the election is inseparable from the other. Let that be chosen, which is most conducive to the public interests: and let that option be made without fear or favor. |