THE MONEY CRISIS JN ENGLAND. 565 inconvertible! Thus, if it were necessary for us to import thirty millions of dollars of food or merchandise in one year more than usual, and there were no corresponding increase of the exports, the difference must be paid in coin: in such case the danger of a suspension would be imminent an act of Providence, or perhaps an act of Congress, would be the cause. This proves nothing against the sound policy of a judicious and well regulated credit system, which in truth is indispensable; it only shows that, like our system of government, and all other human inventions, no matter how perfect, it is occasionally accompanied by evils, but which are amply compensated by the benefits which it permanently confers. Our State legislators may well be excused for errors and inconsistencies, when similar incongruities have been sanctioned by the distinguished ex-Premier of England, in his Bank Bill of 1844. The recent changes in the protective policy of that country, no matter how wise that policy may be, are doubtless exercising some influence. Interests of magnitude grew up under the fostering care of Government, which the present system has doubtless seriously injured, and has consequently caused great loss of capital. The most remarkable departure from the policy which was so rigidly adhered to by British statesmen during two centuries, was the adoption by Parliament, in 1833, of the Negro Emancipation Act. It was then that fanaticism and party calculations triumphed over the interests of the country, and indeed, as time is developing, over the cause of humanity, in whose name that monstrous wrong was perpetrated. That transaction increased the national debt £20,000,000, and inflicted losses on British merchants and capitalists to more than double that enormous sum. Some of the failures which have recently astounded the world, may trace their cause, in no small degree, to the effects of that suicidal act. The withdrawal, then, of so large an amount of capital from trade and manufactures for the construction of railways, is the immediate and overwhelming cause of the present financial crisis in Englandthe severity of which is the greater, from the effects of the other causes alluded to. The question naturally presents itself, When will this crisis end? It is clear the cause must first cease: the railway expenditures must be arrested, or those works must be completed by the aid of Government, by means of which the surplus capital of other countries may be obtained. Objectionable in many respects as such a measure may appear, it cannot be avoided without producing evils of alarming magnitude, including the suspension of cash payments by the Bank of England. Efforts to arrest the railway expenditures have so far proved unavailing; and it does not seem probable that those works can be arrested, so long as the necessary capital can, by any means, be obtained. It appears, also, that the merchants of Liverpool have recently applied to Government for a relaxation of the restrictions on the circulation of the Bank of England, and for such relief as was granted to the merchants of London in 1793-namely, by the Government advancing to commercial houses, on good security, some five millions of pounds, Exchequer bills; and it is asserted that these propositions have not been favorably received by the ministry. It is well, perhaps, to recur to the precedent on which this latter proposi tion was based. In 1793 there was a financial pressure of great severity, ascribed, at the time, to many causes, but all widely differing from those now producing similar consequences, which threatened the existence of all the principal houses of London: many, indeed, succumbed. The Bank of England being alarmed, as at present, for its own safety, refused all aid. It was then Mr. Pitt agreed to loan five millions sterling of Exchequer bills to merchants, on good security, and Parliament sanctioned the measure. The immediate consequence was the restoration of confidence, and not half the amount was asked for, nor was there a shilling lost by the Government, of the amount loaned. Although this measure was objected to on sound financial, as well as constitutional grounds, yet its success silenced all opposition. It proved by its effects what was before but little understood-how important an element of national prosperity is confidence. Whether the adoption of such a measure now, would be productive of similar results, is very questionable. The advance of such a sum would be but equal to six weeks' railway investments, after which a further advance of Exchequer Bills would probably again be necessary. Those securities are now at a discount, and there is reason to apprehend a deficiency in the annual revenue of the Kingdom, of over £5,000,000. It is also proposed, by some, that gold shall cease to be a measure of value and medium of domestic exchange, and that Government notes shall be substituted. Anti-gold leagues are being formed, to carry this project into effect. If they succeed, it will inevitably lead to repudiation of public and private debts, to an extent equal to the depreciation of such a substitute-which would necessarily be very great. The Government may well consider before it ventures to act on the various plans of relief suggested. On the one hand, if such relief be granted, it can be but temporary-inasmuch as whatever lessens the pressure of the money market, will facilitate the investment of capital in Railways, and thereby augment the evil which it would seek to alleviate. On the other hand, if no relief be granted, and these troubles be left to work their own cure, the failure of Banks, Bankers, Merchants and Manufacturers will continue, until few will be left standing; hundreds of thousands of persons dependant on their daily labor for their subsistence, will be deprived of work; and social evils, of which in this country we can form but a feeble conception, will afflict the land, and perhaps endanger the stability of the Government itself. The Economist, an English commercial periodical conducted with much ability, suggests as a remedy for the existing troubles, the issue of one pound notes. It assumes that such an issue by the Bank of England would, within a year, bring into the coffers of the Bank, twenty millions of the thirty millions sovereigns supposed to be in circulation in the Kingdom; that two- thirds of that sum might be THE MONEY CRISIS IN ENGLAND. 567 used as capital of the Bank, secured by an equal amount of Government securities, adding that much to the active capital of the country; the other third to be retained in gold in the vaults. If this were a correct calculation as to the amount of gold which would be exchanged for one pound notes, it is obvious the plan of the Economist would add but about £13,000,000 to the available capital of the country, equal to four months investments in Railways; and it is estimated one year would be necessary to effect the change, when four months' railway investments would be equal to the whole amount. It seems more reasonable to believe, under existing circumstances, that not more than ten millions of sovereigns would be thus wihdrawn from circulation, and that consequently the extent of the relief from that measure would not exceed, during one year, £7,000,000; while, during the same period, forty millions of capital would be required for railways. That the measure proposed by the Economist is good to a very limited extent, cannot be doubted; and that the popular prejudice which theoretical economists had created against one pound notes to which Mr. Peel in 1819, without his characteristic pliancy, lent himself should be discarded, is unquestionable: the condition of the currency in England in 1825, and the effects of the stringent measures adopted for its reform, then sufficiently proved it. But we must be allowed to differ from the Economist in another respect. It says in the number of October 2: "We have had an experience of twenty years more, during which the whole system of our banking and Banks has been greatly improved, and the principle has become universally admitted, and proved by experience, that Bank notes against which a certain reserve of coin is held, the remainder being represented by interest bearing securities as a guarantee for their convertibility, form a currency in every respect as efficient and safe as coin itself." This is true in times of prosperity and under ordinary commercial revulsions; but it unquestionably is not true on emergencies like the present. Unless the "interest bearing securities" are at all times, and under all circumstances, convertible into gold, the issues based on them are not as safe as coin itself. Most, if not all, English writers on this subject, are influenced to a singular degree by the peculiar condition of the capital and currency of their country. In treating of principles, this often leads them into remarkable inconsistencies. Thus, they always speak of their Government securities as the equivalent of gold-as the basis of the circulation of Bank notes; and yet within three years these securities have diminished in value over eight hundred millions of dollars! and all the world knows that a political revolution would probably annihilate the whole. Sir Robert Peel is opposed, in principle, to the Bank of England issuing one pound notes; yet he sees nothing wrong in that institution issuing fourteen millions of pounds sterling of notes of larger dénomination, without being obliged, or even expected, to retain as much as one pound in gold for its redemption! In 1810, during the suspension of cash payments by the Bank of England, when the celebrated report of the Bullion committee was made to Parliament, in which the existence of an excessive paper circulation, and its injurious effects on the interests of the country were demonstrated, and preparations for a resumption of cash payments recommended, Mr. Vansittart, afterwards Lord Bexley, on behalf of the Government, opposed its adoption, and proposed in opposition the following remarkable resolution, which was adopted by overwhelming majorities of both Houses: "Resolved, That the promissory notes of the Bank of England have hitherto been, and are at this time, held to be equivalent to the legal coin of this realm." At the time of the adoption of this resolution, the current price of gold in London, in Bank of England notes, was £4 16 0 the ounce ! What was done then, may occur again. But let us hope, that whatever may be the extent of the calamities to which Britain may be exposed, from the seemingly irresistible causes which are now prostrating the energies, the fortunes and the commercial character of her people, she may be enabled to surmount them; and that in no event the example of the Parliament of 1810 will be deemed a precedent worthy of her imitation. New Orleans, Nov. 24, 1847. *Since the above was written, the news by the steamer Acadia has reached us. It confirms, in many important respects, the views of our correspondent; his prediction that the crisis was in no manner occasioned by the restrictions of Sir Robert Peel's Bank Bill of 1844; and that any additional issues of paper by the Bank of England would only increase the evil, has already, it appears, been singularly verified. ED. COM. REV. Note. This number has been delayed by unavoidable difficulties, growing out of the establishment of a new Printing Office, devoted to the publication of the Review. These difficulties being now removed, the utmost promptness in the delivery of the work will be insured. We regret to say that our bound volumes for 1846, though re-printed and published, have been detained in New York longer than could have been anticipated. Our subscribers may rely upon receiving them in January. We solicit additional orders. We are indebted to the publishers for many late works, which shall be noticed in our next. ments. Our thanks are due to Senator Johnson, of Louisiana, for public docu |