Welsh Newspapers

Search 15 million Welsh newspaper articles

Hide Articles List

8 articles on this Page

! : TOPICS OF THE DAY. b-…

Detailed Lists, Results and Guides
Cite
Share

TOPICS OF THE DAY. b- I ^ONEY MARKET.—NO. V.-AN ESTIMATE But OF PEEL'S ACT. lIIia Ir It Peel's Act the beat mode of maintaining in t'I COIJItty ?Bcient banking reserve? We showed in Wt > i tt t last "?tthe position of the Bank of England ?la both ,!consistent and anomaloua,-we showed that it ? ??h.aure???hthe sole bullied reserve of the country, w4i, .h "4der a natural system of banking, it never ought to ? been '"? showed that it was also, in practice and by '?t?j. ? ?thn??' charged with the duty of making ad- ?%4e, thout li?it at a time of pressure on the discount C'? to the '???t?e community. We inferred that some ?liar co'?'? was necessary for an institution of h'?theBBP?' ?"nctMns were inconsistent and peculiar. i Ae conatlf.- °n created by the Act of 1844 the best ? It Cg gfanted tK some effectual restraint is necessary, is abeat ebtraint Th great ?mentfortheActoflS44-ora great arga- Even if, by an elaborate Htjj.^ination '6 should discover that a better check, a more L9 an^ flexiKi "P°? the Bank Directors could be Cd'itwo-irfr.??trBint. U^°n the Bank Directors could be %Qld"- tv"')"ld '??f!??s practical question whether, J?t '?f0?? '??keof a Promised advantage, we should unsettle our ??M ? Lis''s,lation 0Q °'?r *o abstruse as the currency. We ?N ti.alat- 1p0'a Oil aua,tter so abstruse as the currency. We eel," Act," a great check at any rate, if not a perfect ?eek Before .? go out on the waste of the currency ques- ?o before WL? .a speculative discussion upon which ??? ? ?eculat? ? ?'" have an opinion, and scarcely two the hj9' 'et Us as r,-aci"cal men look at the Act under which we ??' L lit,' See if L 6 °?°? mend that so as to make it sufficient  *ants It Well known that the present Bank Directors are trola g I 7 "1 favour of the legislative check which now exists k i, wtll known that al? th8 present race of statesmen who I Uv. aUy opinion abo!! ut ^th ^Sir C. Wood, Mr Glad- 4v,eRlly opinion about the "latter,-Sir C. Wood, Mr Glad- Itot, U r Cardwell,-incline to the judgment. We ??''t?dagreatpraS????? judgment; We Xtl ? currency queBtioL??? ?y' ??? ??'?' 'hAty upon which a Miniaw anT Oh ckerr fet'l.sure f being ?a. ?r14atly and cheeked ?y l?? ?'nte?tl'? gent pibho tirlior, W hatever diiiaent there may be from the prm" *&» Si1, 844. there is no doubt that tthhe*rre are T ten th.e prin- §?-"?'y.aup?porattepd vpt-?iM????t?h ten things as ^h}i»'• y are in f eX18tmg sbte of things 88 the," ? are in fAVour of any ? 13pecifm altera t ion. The ,,f,'r0qers are rad i cally and Insuperably divided, and ?t \?? ?'tbet?a?? J ? only ?ut tnumber the ?te of them D4t t '9'6tber 'hf ?°"?y outnumber any single sect ?-a?nY otL her distinct body agreed on what it  then Let then see what are the real objections to Sir R. eel, a Act, ail? OOMpare them with the objections to its sug- ,:t'\tst 8,1tuteø. J.'?t T? ? Ejected, and 88 we have shown, justly ob- t 'It the mere notion that there can be no more notes fact of a fixed legislative limit-is, under certain ii, th8t ?UCL?0, ??y mischievous. We have seen by ex- ktilell to that U Was so in 1847 and 1857, and so it will be ivn' 0? r ?'?ney system consists of three elements, of %iia "imn) credit, like bank notes, and complicated credit,  ? l'a'hequea upon bankers and their equivalents. If u)?" )atte* sudden destroyed, bank notes should be e "? to ul°n.a 8udden destroyed, bank notes should be t)take -1t' P'ace- The more refined credit, which ef'r'OL ,B 'i(t OL late s0 tage of mercantile development, being for (J^ent estroyed or impaired, we should fall back on the ?se a toa tee "ad ele,?ntary form of credit currency, which com- th?"? J.??'-ton first employs. No one has pointed out fa^ith Jr clearness or with so much pregnant con- t?eaa aa Ricardo The value of money and the cf'?ht of payments remaining the same, the quantity ? ?onev required must depend on the degree of "otny „ Ct!Sed in the use of it. If no payments i???adehV cheques on bankers, by means of which money Merely ? ?" o? one account and added to another, and h? to the ?? 0f ^iUi°ns daily, with few or no bank j> te# °r coin tu '?coin ???°S''t? obvious that considerably more fe^^cy wnnuft8'08' is obvious that considerably more t4rre 4ey  be required, or, which is the same in its ef- tt?' ? Mm money would pass at a greatly increased value, M ?OQld tJ, 444 Would ,therefore, be adequate to the additional amount ??y!aent. hene,er merchants, then, have a want of ?enoa "? each other, which disinclines them to deal on oe?t, ort ? accept in payment each other's cheques, notes, ?e bind'8 tt."? moneSt whether it be paper or metallic money, '?den"?nd; and the advantage of a paper circulation, when ?'t?.  ed On correct principles, is, that this additional ?'can be presently supplied without occasioning any !?'?j?"t°y a in the nlue of the whole currency, either as com-' okred *I- th bullion or with any other commodity; whereas, with 4 system of metallic currency, this additional quantity tk,4" the 80 readily supplied; and when it is finally sup- lIird the ??°? of the currency, as well as bullion, has ac- lu'r- an increased value." It a second phase of the same occasional destruction Of tj.h. ? credit, that bankers, whether of deposit only, Or 0j so, at moments of anxiety and pressure, "?''toQf .?o"!ation also, at moments of anxiety and pressure, ?t'on' hoard ?'? of England notes for their own pro- 1 n, 0third p hase that some other bank of circulation bay t'd ? metropolitan region, where the Bank of England had tbe monopoly, may fail, and that Bank of England ?the a o ? V ? to make up, are imperatively wanted to make up dcf I?Ctency. ln 686 ^ree various cases, when other forms of credit ?ten ? are omentarily extinguished, the Bank of Eng- j*Qd la,la "Ote-the unsuspected, the undisci edited form-ought to eis8ue to supply its place. This natural and beneficial 'l^Utu^r a Peel's Act now, and, without the expansive tj 10 we suggest, prohibits and prevents, though ?cla,, '??ued, would in case of need permit and sano- "h it  ° ?' ?? may be said, and justly said, that in certain the public mind the form of account which Peel's *ctp cca8ionB a tumult or aggravates an anxiety ?.' ?out „r occasions a tumult or aggravates an anxiety n'his. fpiPe8™ Very recently, we have had an instance "tobe? The pUbhcatJ?n of the account of the 5th day of i °tobo» lhs year, coming at a very excitable moment, and ? ?t? ?0? "?''ar state of the public mind caused a needless 04 t h .h 0 « September, tha reserve of notes £ 8.l3do ? of September, the resene of notes ??M. 7,531,098 (1 4 t 4 e ?? of October, it was reduced to. 6,294,695 \lId th' ?'ainution. 1,236,503 ??? ''???''edactioo caused much observation and re- t,?rk "oereas the accounts of the Bank for the two weeks y?.??'. -?t in the old form, were almost precisely alike. 4ey e IS follows WfiiT SEPT. 28. "It 11- ?"lat-??a. £ ASSETS. £ <'?\?- Securities. 31,298,584 b Ing BsTat Coin and bullion 13,121,123 ?oo bill,) 20751,741 ilubiI -t a d epoit, 7.083,958 Vate depa.it, 2,?'88,902 40,424,&Ji 44,419,707 40,424?1 44,419,707 LlAlILIT Irs. OCT.  ir°ilatS IÐ. £ ASSETS, £ tiroulaltI. on (in. Securities 31,530,895 c'uding j>an | '——???° 12,998,210 Do,, in 111L.) ank ,915,817 CoirA and bullion 12,998,210 illibli eposi 6,877,591 ilriyat de 11,731,746 I .n'bC\t}, 44,529,105 0(,'10 \lase th lases, there Was an aggregate liability of about ?"'SOO 000 "?'ust an aggregate reserve of nearly ..?Oe'O?oo" 'o one, however apprehensive, however BUS- l- e Ptibi 0, "Ould "? ??'' noticed or regarded the difference tl04t e"Ooulats *??°e up.  ? the cl ? 8e ?every quarter, something like a million of th? 80 ou » epa 90 out to  'r??<aBd the same thing happens at th 0 ? °??'"?ends. For the most part, this is tora I 01184ted by a deduction from the deposits. The reason it th?,4t Shlari,. ?re paid by the classes who keep banking ?'?ts to 'r?? ?' ?°? servants who do not keep banking ?""Ots a?"??? notes, which clerks use, increase, X-'?eco. in which the masters' money is kept, Ithil depositat the form  which the masters' money  kept, k, under a form of account in which both sorts of The transfer itself is very immaterial, te nder f. form p i escribed by Peel's Act it is very ma- Th'* ? *°?? prescribed by Peel's Act it is very ma- qu  inco '^°nvenience, however, is not in practice very fre- Iltl of uch ""Portance. It is only felt in some rare of ?? public mind, and then it is only e for If t e ?PP?hension which the idea of a limit, which eaL 801,, of the bank note issue at such times t ?s. Tf?" expansive clause to meet such panic were in- tro 'ed, TV, mischief now occasionally caused by the form of, ecount would be so much diminished in amount, that it %ld be unnecessary to consider it. j, ly- It is said that Sir R. Peel's Act, by making the Hol| e discount system hinge on the banking reserve alone, more frequent fluctuation in the value of money than >0 u'd be otherwise necessary. If, it i. saic4 the liabilities Of Bank were looked to as a whole, and there were ?.000,000 of bullion, the reduction of it to ?11,000,000 ot'Id not be very material; but when L2,000,000 are taken ttt4 banking reserve of 17,000,000, the Bank is alarmed, i?lt fitte of discount suddenly raised, and the public perhaps ned' ll;dbe objection, but we do not think in practice it is tt le. ?be use of the Act is, that by the very operation tt dtacri e e by the very isolation of the banking reserve k1*18 o^eoted to, the Bank Directors are alarmed, and com- tIJ8 ,d to take ???y' prompt, and effectual measures to coun- tere'et ft "?'Kn drain. It they could know beforehand for ?''?in at drain was likely to be great and what small ?i? .?'?? t Possible for them to refrain from raising the rate ll digBn ?cn the drain was sure to be small and tem- P°*&rv but as they can never know by anticipation the 114?,11 "tY or the duration of a commencing demand, they "?hf"?? ? cases to raise the rate of discount at once and ?tu this is exactly what Sir R. Peel's Act com- Del, th,r4 to do bCn?0uShtby some to be an evil that small drains of p?? cause a considerable rise in the value of '??ct?'? is thought to be a slight cause for so grave an e4,tt But, however this may be, it is not an evil produced Sir p Ptel's Act, but by a habit of trading on the prac- ? ??. '?'"° ? buUion reserve. If we cannot spare any fjfu "stock, We must take the best possible means of r Dl"ir ""g 't when di.i.i?hi.9 I and of preventing its being I fr'li&sh^v 8tiU further. We must raise the rate of discount '44 ?il ?tl"iO[k goes out, if we only keep just bullion enough to t4eet0"r "ecessities. ^Suhat we cannot contemplate the probable eJc« of any system in which more than the P.  Sllioerve would in the long run and upon an average e kerit Under what we consider to be the natural system bg^j 8 in which each bank keeps its own reserve, that fc uld find out bv trial and experiment what was ?me? ? ?!)i?? it could do ?i"tr and it would not keep any more. !?X P?pri?rs of t Bank might obJec If more 1¡ine:n aJ.equate reserve was as a rule andf ad8edly Jf ?<' ?m?'? all systems of banking, it IS the interest 0 the banu er' ? colloquial phrase, to run his ?e? fuie,- abd bec»Qe of this fine calculation and DIce adJl18tmen 0 even little bullion taken from the store must be ?co'ered ? <o.?' Possible, and no more must be permitted to ebb **ay 0 any account. It is the interest of a banker to keep ?? ?" ) reserve, and while reserves are small, the value 0 f8riable. ??It f ?. indeed, been proposed, that the Bank of EnglaBj 4h OUld e '?bsidised by the nation, and so induced to keep ? ?? fe reserve than it is her interest to keep. But tne amount of such a subsidy could never be fixed or the amount of the artificial reserve there would be an inevitable and eternal controversy between the Chancellor of the Exchequer and the Bank. And as after all a minimum of reserve would be kept in a natural state of banking where each bank kept its own reserve, it does not seem desirable to add a new arti- ficial element to a banking system which has eaough of such elements already. These being the objections to Sir R. Peel's Act, what are the competing schemes, and what are the objections succes- sively to them ? They are two First. It may be enacted by law that the Bank should always keep not less than one-third of its combined liabilities of notes and deposits in bullion or coin. But such an iron enactment would have the same evils as the limit on note issue under the Act of 1844. When in times of difficulty the limit was approached, the public would become first sensitive, then alarmed, and afterwards, perhaps, panic- stricken. The interposition of a stiff law into a delicate trade like banking must cause, in whatever shape it comes, grave inconvenience. Nor could any expansive clause be well adapted to such a law. When, as in the Act of 1844, there is from panic a fright that there are too few notes, it is easy to mend matters, for notes are easily made. But if there is a fright that the bullion is deficient, it could not be easily cured, for bullion cannot be obtained in a hurry or increased in a moment at the option of the Bank. Upon other grounds, no practical banker would support the enactment of a rigid clause regulating his trade. The liabilities of a banker are very various, and the amount of the reserve to be kept varies with their nature. If they are likely to be left a long time with him, if he can count upon them, he may keep but a small reserve against them but If they are likely to go out at any moment, on a sudden and without warning, he must keep a large reserve. The only use of a reserve is to pay debts when they are asked for; and the more likely debts are to be asked for, the more must be kept on hand to pay them. Not only the amount of the liabilities, but their species,—not only the obvious figures of the balance sheet, but the latent facts of business, must be taken account of before we can say even approximately what reserve a banker ought to keep. Under a natural system of banking, every bank under the penalty of failure would find out by experience what was its proper reserve, what the minimum it could get on with but no good would come of imposing on a single bank too great to fear discredit, and by position elevated 1above all possibility of failure, any rigid and irreversible rule. Secondly. It is said that the matter may be safely left to the discretion of the Directors, with the understanding that they are to keep about the same quantity of bullion that they have lately kept. And we not only admit, but maintain, for it is the essence of our judgment, that if the Bank Directors could really be trusted to act upon right principles no more would be neces- sary, but at present it is very dubious whether they could be trusted. They do not themselves think so. They approve of the existing legislation, and are most anxious to work it well; they have acquired great experience under it, and are able to work it well. If a system of which they disap- proved was thrust upon them, they would make endless errors in working it, they would not be sorry for those errors, they would regard them and try to make others regard them as indications that the new law was bad,—that the old law ought to be re-enacted. They would be neces- sarily novices, and they would be of the worst sort,- novices who are not converts they would have no experi- ence to look back on in the past, and they would look for, and they would scarcely be sorry to meet, a bad experience in the future, for it might be constructed into a confirmation o the theories they believe, and into a refutation of the theories they dislike. There can be no doubt that the managers of the Bank of England were deeply demoralised by the Bank Restric- tion" Act, as it was called, of 1797-by the Permissive Act, as we should be apt to call it-to issue notes without being forced to pay them in bullion. At the end of the last century, and before 1797, they were acting with great judgment. At the close of the American war, they were subjected to heavy trials, and, though hampered by the Usury Laws and by the general ignorance of the time, they met and surmounted them. In 1793, they successfully grappled with a crisis which even now we should think formidable, and which was then unexampled. In 1795, they were so anxious for the maintenance of their reserve, that they absolutely limited their discounts. They passed this unexampled resolution '.rhat in future, whenever the bills sent in for discount shall on any day amount to a larger sum than it shall be resolved to discount on that day, a pro rata proportion of such bills in each parcel as are not otherwise objectionable will be returned to the person send- ing the same, without regard to the respectability of the party sending in the bills, or the solidity of the bills them- selves. And as they dealt with the mercantile public, so they dealt with the Chancellor of the Exchequer. Great as from tradition we fancy that the awe of Mr Pitt was, the Bank Directors of that day wrote to him in a very stiff and peremptory style, such as would be scarcely used by the present Directors, and such as certainly Mr Gladstone would be very much surprised to receive. But after the permission to issue paper unchecked by payment in gold on demand, all this care was at an end almost till the other day the Bank Directors mismanaged in 1826, in 1837, in 1847, and even 1857, not to mention other occasions, they produced and aggravated by their laxity and easinesss the most frightful evils. They were demoralised by the plea- sant right of issuing without limit.inconvertible paper; and it is only now that they are recovering the healthy tone, the wholesome rigour which they once had, and then lost. If the Bank of England had been a body fenced in by wise and stringent traditions,—if it had for years and con- sistently maintained an adequate reserve,—if it had, by its good management, mitigated, if not prevented, a srries of panics, we should be justified in trusting to her discretion, even though she did not wish to be so trusted. But it is rash to trust an unwilling body with an important task which it always mismanaged when it could, and which it now de- clares that, without Peel's Act, it could not manage. Unless we are quite satisfied that the Bank would maintain a good reserve without the Act of 1844, we had better keep the Act of 1844. On the whole, therefore, it appears that, with the ex- pansive clause which we suggest, the Aot of 1844 would attain the two principal aims of a currency law it would save bullion to prevent a panic, and would permit the Bank to use its credit in a panic. The other schemes we have examined have each their own inconveniences and difficult ties. They are too unknown, and there is no aggregate body of popular opinion in favour of any of them. As, therefore, our existing legislation can, by an easy and simple addition, be made sufficient for our most important objects, it is wiser to struggle for that amendment than to postpone all particular improvements till we have conclu- sively settled and set to rest all general theory. The English plan is in this case, as in others, .to mend that which we have, if it will bear mending and be useful when mended, and not to change easily in a complicated matter from one sort of legislation to its oppos te.Economiyt.

I THE COMING ELECTIONS. I

THE EFFECT OF NOVEL-READING…

THE DUKE OF NEWCASTLE.I

--LORD STANLEY BE OMNIBUS…

I THE GLaDSTONIC RADICALISM.

! JUNIUS AND NEWSPAPER WRITING.

OUR POLICY TOWARDS GREECE.