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Les diagrammes suivants illustrent la mAthode. 1 2 3 1 2 3 4 5 6 Hi; % -■• THE OUTLINE OF A PLAN FOR BRINGING THE SCOTCH AND ENGLISH CURRENCY TO THE SAME STANDARD BULLION VALUE, *!■ AND PRODUCING A STERLING COUNTRY BANK NOTE, OF EXCHANGEABLE VALUE, CONVERTIBLE IN EVERY PLACE TO GOLD COIN. VERY HUMBIiY ADDRESSED TO THOSE IN AUTHORITY, TO THE SCOTCH AND ENGLISH COUNTRY BANKERS, AND TO THE PUBLIC. BY RICHARD MOORE, ESQ. THE SECOND EDITION, WITH ADDITIONS. ^^'1 LONDON: PRINTED FOR J. RIDGWAY, PICCADILLY. .-. Ppiee One iShilHng. ..**■ -^^HisH iio) ii-'-*y<-i .' M\ ■ -m LONDON: PRINTED BY CHARLES WOOD, Poppln's Oonrt, Ftaet Street. _::it i I ADVERTISEMENT. Page 2 5 8 15 Liue 10. u. 1. 22. ERRATA. For settling, read selling. Omit the word was. For running, read coming. After the tmrd possess, read the foUomng note: — See the account of the double capital, in Dr. A. Smith's Wealth of Nations. 18, Note. Add the word comxiry, before circulation. 22 10. After the word notes, .-flad the following note .—WJiiclai would produce also, with comparatively little expense, the same double capital as with the Bank of England. the improvement to the Plan in Article the Ninth. i I ' i$»::'- vm LONDON: PRINTED BY CHARLES WOOD, Vopfia't Ooart, Fleet Street. I ■"(. ADVERTISEMENT. Circumstances not interesting to the Public, have made it necessary for the Writer to pubHsh a second edition of his Pamphlet through another channel. Those parts only of the last Edition, which seemed most ne- cessary for the purposes of utility, are now repubUshed ; the new matter being the Let- ters on the subject of the Currency, and the improvement to the Plan in Article the Ninth. vn^ ^ e ij 5 t S h s p I' tl fl fl ti THE OUTLINE OF A PLAN, &c. &c. CHAPTER I. THE CURRENCY BILL OP THE RIGHT HON. MR. PEEL. The Act of I8I9 took place with somewhat very like unanimity out of doors as in doors ; and quite enough, not only to exonerate the supporters of the measure from all intentional wronii:, hut fully to show that it was patriotism alone that originated the measure; and we have all felt refreshed in con- sequence, hy seeing his Majesty's face again (God bless him !) upon a piece of gold : but there was still one warning voice* held out against the precipitancy of the measure ; but gold was the only j)ass word that could be attended to ; we have got the bullion, but the curreijcy, that was necessary to float the goodly fabric of the state, has departed from us ; and the writer need not depict the situa- tion the country is left in without it. * That of Sir Robert Peel, Bart. S THE CURUeNCY The evidence the writer has to notice in favour of the bill not being the cause of the reduction of the currency is, that it has taken phice from " the country bankers asking too high an interest for their money*,'* and so having kept their customers away, until the amount of currency uncalled for and unen)])loyed amounted to 1 6,000,000/. / and this reason is deduced, as given in evidence, from there having been no want of bills for discounting, or settling in exchange, since 181,9, and therefore there is no other way of accounting for this want of currency, but from the stagnation of demands on home securities. This is the amount of all the positive evidence the writer has seen to the above effect, and he can only meet it by negative or cir- cumstantial evidence. Whilst bullion coin was the currency for any note under five pounds, Dr. Adam Smith tells us, that in order for a country banker to keep 80,000/. of notes in circulation, it would require 20,000/. of bullion coin. Now, when the one pound note be- came the legal tender, that part of the bullion coin, that represented pounds, was no longer necessary, the banker could only want silver sufficient, as change for his one pound notes, 5000/. of silver only, instead of 20,000/. of bullion coin. Any person therefore, during the paper regime, could safely set up a bank of circulation, to the amount of 80,000/. with the capital of only * Account in Mr. Joplin's pamphlet on Currency. HILL OF I8I9. $ 5000/.* in silver bullion, paying interest to his London hanker and agent, for all his country bank notes that came there for payment, until they were redeemed by London bills, or other securities the country bank notes were issued for, and that would turn to sterling money ; and the excess of those securities, al)ove the advances made by the London agent, and the interest on them, made the country banker's profit or the contrary; and many such banks, no doubt, were set up. The well-being of the country called for more currency; the increased population, the increased national debt, its greater and increasing capital of al) descriptions, all our institutions, every thing required more currency for its support. And who can pretend to say, that less currency was necessary upon the peace taking place than during the war? If the war channels were drying up, the peace sources for occupancy were opening. The Bill of 18 19 did no such thing, in words, as pretend to interfere with the (juantity of cur- rency; it only said, pay in gold coin: and what have l)een the facts of the country bankers' conduct upon that bill passing? Why, that finding themselves reduced to carry on a business of 80,000/. circula- tion with only 5000/. bullion capital, where 20,000/. bullion coin would now be necessary, they, the country bankers, acting as one body, swayed by their own interest, and the moral conduct their new * In fact much less, but the writer has chosen to build his argument on the largest sum. B 2 t I. 4 THE CURRENCY situation pointed out as necessary, reduced their business to meet their capital, three-fifths, exactly in the proportion Dr. Adam Smith "^ points out, determined to be satisfied with a circulation of 20,000/. as they could no longer support one of 80,000/.— 11,000,000/. instead of 27,000,000/. of currency 'f. The Bill of 1797 was worthy of its author Mr. Pitt ; for it was prospective, and embraced all the demands for more currency that afterwards took place, and no dilemma occurred from the want of currency during the whole of those arduous times, from the passing of that act to the peace. It in effect gave the country ba\ikers, among other rea- sons for the change, this — we may have occasion before the war concludes for four times the amount of our present currency, and, therefore, by making paper, instead of gold, the legal tender, we enable you, if necessary, to issue 320,000/. with the same capital that you now employ to circulate only 80,000/. of paper currency. The effect of the Bill of I8I9 bas been, that after issuing this amount of currency, or so greatly in- creasing it, under the guarantee of the Act of 1797* that no larger a capital than 20,000/. in bullion coin would be necessary to circulate this increase of currency ; to be told now, that the country banker must add three times the amount, or 6o,000/. more bullion coin to his capital, to perform the * See his Wealth of Nations, article Banks. t See Mr. Joplin's Tables of Currency, 1818, 1819, and 1822. BILL OF 18 19. 5f same operation. The conseqiieiice has been, that the currency the state of necessity requires has heen withdrawn, as the capital could not be so added to by individuals. The gross amount of the capital required is the banker's affair; it signifies nothing to the public, so long as they command sterling currency, sufficient to keep the industry of the country in motion. Withdraw the currency, and in exactly the propor- tion you do so, you have idleness, and riots, and disasters of every description. The Act of I8I9 was was not prospective in preventing such occurrences; for it did not provide against the evil of reduction. This is the first negative or circumstantial evi- dence the writer has to produce, of the indirect effect the Bill of I8I9 has had, to reduce the quantity of country bank currency ; and it can only be met by an addition to the bill, pointing out to the country banker how he is to get gold coin for his own notes, and increase his capital, so as to allow of his former amount of circulation; or, better still, by repealing the Act of I8I9 altogether, pre- vious to all other alteration and improvement. The next evidence to the same effect is, the re- duction of the currency before the bankruptcies. The Committee of the Lower House on the Scotch banks, in the last session, eloquently set forth the utility of the Scotch system of banking, as *' admi- rably calculated, in their opinion, to excite and cherish a useful spirit of enterprize:" and they give this as a reason for not lightly " incurring the 6 THE CURRENCY risk of endangering it for any caase whatever." Tbey, the members of that committee, therefore, having so given in evidence, tha^ the existing ()aaa- tity of currency was necessary the excitement of their present enterprise in trade in Scotland, can- not tarn round and say, it ma long as they could from other re- sources — and first began to disclose and; feel their dangerous situation in 1825. The increased im- ports and exports, as appeared upon the books of the Custom House that spring, and other, oflficial documents, that would have been hailed as so many proofs of our growing prosperity,, a«d was,, * Manufacturers probably with their finished but unsold goods, and merchants with their imported warea, not immediately disposed of. 1» BILL OF 18 19. f perhaps, no greater increase of trade, than might have been expected if the currency had not been rednced, was now called over-trading and over- speculation ; and the insolvent bankers and traders unjustly pointed at, and held up as examples of ati improvidence, that did not belong to them. This is the second piece of negative and circumstantial evidence produced to show, that the Bill of 181 9 had indirectly tended to reduce the country bank ctirrency in England. Most happy it was that that bill did not include Scotland as well as England. They might not ill I8I9 have seen the necessity for petitioning against the measure, any more than the English ; but they did see it in I826; and that beautiful system of local banking — beautiful, because so useful, for the encouragement of morality and order among the lower and middling classes of Scotch society, as so forcibly set forth by the Committees of both Houses of Parliament — and the effects of that bill, would have been just as disastrous in Scotland as it hais been here. The next evidence of this description is the Scotch petitions against the measure being extended to Scotland ; and for what reason ? For fear the same disasters should take place in Scotland in consequence, that had ensued upon that bill pass- ing in England. They petitioned, that their whole moral system of economy should not be destroyed^ and ruin and desolation succeed. The Scotch bankers saw the depositors of the 8 THE CURRENCY BILL OF I8I9. 21,000,000/.* alarmed, and running for their money all at once, and with three-fifths of their currency of necessity reduced, to fulfil their engagements with. The people themselves fortunately saw an-l understood their situation ; they petitioned ; and not a single signature hut bears witness to the in- dividuaPs opinion, that the Bill of ISI9 was the cause of the reduction of the 1 6,000,000/. of cur- rency in this country. Those petitions contain the evidence of three millions of people, that the Bill of I8I9 had indirectly tended to reduce the quan- tity of currency in England. This is the third piece of negative and circumstantial evidence the writer has to hring forward. The difference between the two Bills of 1797 ^^^ I8I9 is, thai with the first, the interest of the two par- ties concerned, the Bank of England and the country bankers, were the same, and the public obtained the currency required. In the last, their interests were opposed, and the country lost the benefit of 16,000,000/. t of currency, the well-being of the state has ill dispensed with. )'i ■■}. * The amount of deposits as given in Evidence before the Scotch Committees of last Session : see the Reports of those Committees. t The fractional excess above 16,000,000/. is purposely omitted. !> ;; j SJ yt 'f-»>.f .; ■}..i ' 'i ..!> '>(>■ 'f '■ Letter to the Editor of the Courier, 1st, llth of r '; , January, IS^^J. . i dirv Sir; ■ Without being a general politician, or meaning to contend, that a great degree of inaport- ance does not attach to the speculations in, and consequent on, the bad management of the joint stock companies, any more than your correspon- dent, " A Looker-on," in the Courier of the 26th of December — hut having taken up the opinion, that our recent and present distresses have all arisen from the state of the currency, produced by the very unexpected, as unintended, but violent effect of the Act of I8I9, in reducing the quantity of it ; my attention has been arrested by the declarations in that gentleman's letter. ; .>v " It is ridiculous to talk of the state of the cur- rency as the origin of the evil, or in any way con- nected with the evil ;" " further than that the cur- rency is the organ, through which the application of our resources operates." That " organ" of currency must, however, at all times, be more or less, according to the amount of the resources wanted to be made available through it; there must be some certain proportion, call them by what names we please, between the two things currency and capital, or wealth, or re- sources. 1 w 10 LETTERS ON THE SUBJECT The important errors committed in passing the act of 18 19, as appears to the writer, were, First, m not attending to the fact, th. of thd currency, at all times, heyond the memory of man, having been as much an article of merchandize as wine, silk, or any other commodity, and the dispensers of it, the bankers, neither more nor less than currency merchants ; and. Secondly, that, in prematurely changing the value of the cmrrency from paper to gold, by the Act of I8I9, it was wholly lost sight of, whether, by so doing, the currency would or wmild not bte decreased below the quantity, absolutely necessary a6> tl»e " organ'* enabling us to make use of our resotirces, and neutralize a large portion of our great capital, or wealth, or resources, from the in- creased expense required, to fill the merchant's coffers with gold currency, in the place of paper currency. Accordingly, we have the glaring fact, taken from oflicial information, that the country bank cur- rency, by 1822, was reduced 1 6,000,000/. in quan- tity. The whole amount of the currency, London and country, in' I8I9, had been 64,000,000/. *, and equally divided between them. If, therefore, at a period when we had no such caWnities as we have since experienced, before I8I9, 54,000,000/. of CMrrewc^ were necessary, as * The writer purposely omits the fractional excess. OF THK CURRENCY. Ill the " organ" to make use of our resources, the re- ductiou of these 1 6,000,000/. of currency must have neutralized the utility of its correspondent quan- tity of our resources, or tvealth, or capital. In the same way^ the resources, or capital, or wealth, of the 300,000,000/. ^, your correspondent so properly laments the loss of, must hear some proportion to the " organ" of currency, thait would otherwise have continued in the market, 33 its support. And, perhaps, for practical solution, we shall not he incorrect in taking a data, to find out the amount of the proportions, of currency wasted to make capital useful, and the contrary, what happens with that part of our resources^ that is mortgaged as a national debt. And it may be sufficient for this purpose to call the debt 800,000,000/., and the interest paid on it 28,000,000/., which, as the dividends are paid quarterly — 7>000,000/. o^ currency, pvohahly, must be the necessary " organ," for making available 800,000,000/. of capital; and following up the calculation, by a common rule of three question, or by induction, the loss of l6,OOQ,000/. of currency must have been attended by the neu- tralization of more than 1,800,000,000/. of capital. But the disappearance or reduction of the * •' A Looker-on," had attributed our distresses in his letter, this is an answer, to the failures' of the late joint stock com- panies, and supposed the national loss, by their bad managfe- ment, might amount to 300,000,000/. 13 LETT£R<« ON TH£ SUBJECT "organ" of currency, upon the supposed or real loss of the above 300,- jO,OOC/. of capital, to have supported our trade, employed labour, to have upheld our existing prosperity, or improved it for the future, would have been only 2,625,000/. ; and these results appear to show sufficiently, that the magnitude of the evil has arisen from the effect of the Act of I8I9, prematurely changing the value of the currency from paper to gold. And for these reasons. Sir, I beg leave to differ from your correspondent, "A Looker-on," in think- ing it " ridiculous to talk of the state of the cur- rency as the origin of the evil, or in any way connected with the evil" of our present distresses; or in thinking that those calamities could have all proceeded from the loss of 300,000,000/. only, by the disasters in the affairs of the joint stock com- panies. - r. .,. ,. But I am very glad to learn, that the inquiry into the improper transactions that may have taken place, in the concerns of those companies, is in such able hands ; and I heartily hope that every disgraceful transaction regarding them may be properly exposed. ' ,, j; , , I remain, &c.. Dated from P. C. H. (Hampton Court Palace.) (Signed) M. R. (Richard Moore.) OF THE CURRENCY. 13 Letter to the Editor of the Courier, January 22, I827. But for the despondency exhibited in the letter of your correspondent, " A Looker-on/* of January 14th, and equally with him a wish to do justice to the zeal of our governors, and the measures thought of to relieve our distresses^ in the last session of parliament^ the writer would not have attempted to occupy any further portion of your valuable paper. As what he was able to show would have been the effect on the amount of the currency, in his letter of January 1st, 11th; if the loss from the bad management of the joint stock companies had really amounted to 300,000,000/., as your cor- respondent seemed to suppose ; he must consider, as an answer, and exposition also, of the decrease to be expected in the currency, from the new matter brought forward, in his letter of Ja- nuary 14th, in the foreign loans, the mining com- panies, the iron railways, &c. &c., as causes of oav national distresses ; if made out to be lost ; and each no doubt deserving its censure. Under these circumstances, the writer will take leave to notice the remedies " A Looker-on" speaks of; and, first, the provision for shortening the period of leave for issuing the smaller paper currency, from 1833 to 1829; he could not but observe of it, that the public feeling went with 14 LETTERS ON THE SUBJECT the House of Commons in the cheers, with which the S|)eech was received that introdnccd the mea- sure*. But after wei£;:hi«g the physical impossi- hility of producing gold currency in quantity suf- ficient to make use of our wealth with the same facility, at the same expense, as [)aper currency, without assistance t> and shown in the writer's letter of Januaiy 1st, 11th, the consequent neutraliza- tion, upon the reduction of the 1 6,000,000/. of country bank currency, of so large a portion of oirr resources as is there mentioned, throwing large masses of our population out of employment, and reducing the landed rental of the country, in case of any future necessity to renew the proper- ly tax, from 60,000,000/. to perhaps 40,000,000/., and largely affecting the home market for our manufacturers, among other evils, it cannot be supposed, that an earlier com])letion of the en- actments, in the statute of I8I9, could be a cure for the evils it has itself produced. '" The first effect of that act alone has been men- tioned, which was of necessity immediate, though prospective only, as to time;);, in the statute, from the Bank of England being able to resume bullion payments instantly, and doing so without inconveni- ence to themselves. And from the moral feeling of perhaps more than eight hundred, sol vent,honourable !J(' * The reports from the Scotch Committees had not then ap- peared. t And its certain reduction upon the Act of 1819 passing. ''''X But not as to other consequences. - or THE CURR£NCy. Id jn- men, out of less than nine hundr/ed conntry bankers, that they ought to do what they could, in follow- ing the cxaiople of paying in gold, and at all events to he pre|3Hred to fnl(il their own engagements, hy reducing theif iss^ues ; and hence the revulsion and stoppage to our usual prosperous course of trade, and the want of employment for our manu- facturers and labourers: there has however, be&n a reliction, and some increase of the currency, and other ameliorations of it since; hut these circum- stances cannot prevent the crisis and the crash that must again take place, if this measure remains in for.ce in 1829, so much the more to be dreaded then as no reaction after that period could follow. The second remedy is the provision for esta- blishing joint stock country banking companies, which are certainly calculated to do good ; but the writer doubts their ever multiplying sufficiently to become of national import, unless Parliament will grant to them and the local country banks, the same advantage, of a double capital to trade with, that the Bank of England possesses —^ from the example and fact we have, of eight per cent, being the outside profits, the best managed company of currency merchants in Eurppe are able to make for their proprietors, with all the advantage of the double capital to trade with. , ^ ,. ,. ; ^ i, It cannot be expected therefore, that either the individual or joint stock country bankers, after paying their expenses out of the profits only of one capital, the other party has the profits from 16 LETTERS ON THfi SUBJECT two capitals to do the same with, that even so much interest could be made, by either of the two first, as their money remaining invested in public securities, without any risk of trade, would produce to them ; and undr this view of the case, uiid under the present system, after some struggle* to the contrary perhaps, both the joint stock country companies and the individual local country bankers, so necessary to the agricultural interest, mast all disappear. ' ^* The third reme.ly nf the last session was the branch banks from t!ie l^nnk of £ngland ; than which (short of repealing the act of I8I9, under existing cireauistances, as a temporary measure, and in commercial towns) nothing better could be devised ; and in the one or two manufacturing dis- tricts where they have been established, trade has immediately revived, and more of the manufac- turers have been put into employment, bringing conviction, had it now been wanted, that the re- duced issues, consequent upon the Act of I8I9, hak been the sole cause of our distress. * '^*^'*»-' '^'** But mixed up with the individual and joint stock country banks, possessing the advantage of the same double capital as the other, by gradation, and as shown by example and experience, in the case of the Bunk of EiT:land, providing for the variations th'.'i:. ii':;\e and circumstances retjuire — no doubt a perfect and sufficient currency for the whole coun^ try might be obtained. The writer does not believe there ever was such S&i' OF THK (DUKENrV. ir be IS a a tiling', so coiiiinoi)ly asserted, as *' an inundation of paper currency" latterly, any more than of bul- lion currency tbrnierlyj or that the one more than the other could ever appear as currency, or remain in the market, without capital tor its support ; and it is ot the bauble goldj that is exclusively neces- sary as urrency, though we may entertain a pre- judice ait 1 preference in its favour. He thinks \ ry li^-htly of the mystical language, that the subieci of political Economy is usually dressed up ii ; airl he -y.r Dated from P. C. H. (Hampton Court Palace.) I'. .*■ ^,'^■.1i')■ ..\fs<'iY>' * ITie repeal of the Currency Act of 1819, that has d«ne all the mischief, without permanently keeping more gold in the circulation than was to be found there before this statute took effect. . -i; It II ...•{ 'K r '.t i. I Ml «f ' I . 'i^ « ■f i " i\ '1 > I I t CHAPTEK IL i«? OUTLINE OF THE PLAN. ARTICLE I. That a ininiiiium security shall in future be re- quired, by legislative enactment, from every person who is or means to be a country banker, say for 5000/., without which no individual, or plurality of persons, shall be qualified to carry on the busi- ness of banking out of London. Explanation. ' All persons must agree, that in a trade which so vitally affects the Public, no one ought to be per- mitted to exercise it without securitv. ARTICLE II. But that the choice of giving any further security beyond this 5000/., and tlie extent of this further security, be wholly left to the individual or firm the banking establishment belongs to. Explanation. It can never be necessary, and therefore not politic, to legislate, if it should be the subject's own interest to do what is wished of him. c 2 30 OUTLINE OF THE PLAN. ARTICLE III. That for tliis purpose, some new office should be added to the establishment at the Mint, where all country bankers shouhl be required to aj)pear, with such obligatory or additional security, at their own choice, and with their titles to the same, which should be immediately submitted to the legal crown officers, for their apy)roval. Exp Ian at ion. The Mint has been named only as first occurring, and as connecting itself with the subject, and be- cause some new assistance must be wanting if these ideas should be put in execution ; and the titles to the property offered in security, necessarily should be valid. The annuity Government pay to the Bank of England, for the management of the public con- cerns, must be considered as including the manage- ment of the London and Lancashire currency*, as a part of the public business ; in the same way some expense could not be avoided, in the proj}er management of the country bank circulation ; but what would the expense of any establishment here supposed necessary be, compared to the falling oflf of the revenue latterly experienced -J*. * The Currency is nearly equally divided between the ]jondon and Lancashire circulation, consisting of Bank of England notes and bullion coin, and the rest of the kingdom, where the cur- rency consists of country bank notes, and soaie small portion of bullion coin only. i More than two millions a year. OUTLINE OF THE PLAN. 21 ARTICLE IV. That notice should be ^iven to the parties con- cerned, so soon as this opinion shouhi be received, and if favonrahle, the capital of the property so offered as security, whether real or personal, should be held in trust by the Court of Chancery for the Public, and the title deeds remain in possession of the Crown, hut for the following purposes also. ARTICLE V. And, first, if personal property, or so much of the security given as was personal property, in trust, that the same person or persons, who came forward with such personal security, should con- tinue in the receipt of all the annuities, whether public or private, belonging to such personal ca- pital ; and to do all such personal acts relating to the same, and to the extent of the same legal pri- vileges, short only of disposing of any part of such personal property, as he or they possessed before such security was given. ARTICLE VI. And, secondly, if the security was in real pro- perty, or so much of it as was in real property, in trust, that the same person or persons who came forward with such security should remain in the management and possession of the same, receive the rents, grant new leases, cut down timber, and do all such acts as were for his or their own emo- 123 OUTLINE OF THE PLAN. Inment, and to the extent of the same legal privi- leges, short only of disposing of any part of the capital of the same, as he or they possessed before such security was given. ARTICLE vn. And that upon the security so offered being accepted, the parties concerned should be entitled to receive at his Majesty's Mint, after ])aying the proper stamp duty, the privilege of issuing sterling country bank notes, to be made as good and legal tender by act of parliament, according to the amount, as the bullion coin and the Bank of England note now is, and to the amount of the minimum security of 6000/., or to the amount and full extent of any greater security the party or parties should have come forward with, and which should have been so approved of, on the part of the Crown. ' ' Explanation. •.'n^Uiii The Bank of England, from 1694, the date of their first charter, when they put into the hands of Government 1,200,000/. as their security, receiving an annuity for the same downwards, to the present time, have always exercised the privilege of issuing notes to any extent ; and this connection so "first formed, and kept up since by more loans and puTchases of government securities, has stamped that golden value upon their currency, it now possesses, so entirely to the advantage of the realm, as to the amount of half its currency. 1 he coun- try banks circulate the other half, and it is trnly OUTLIME OK THE PLAN. 4» of as much importance, that their part of the cur- rency should he of sterling vahie, as that the part issued by the Bank of Enuland should be such. And of two servants of eqnal merit, they have each the same title to the same immunities ; the country hanker to receive the privilege and ad- vantage of a sterling note, to the extent of the security he gives, as the Bank of England to the security it gives. It is true, that time has made the notes of the latter all golden ; and the sooner the connection here first solicited, between the country bankers and the government, is formed, and the longer it is kept up) the earlier will the oonntry bank currency be matured, to the same perfection as the other half of the circulation. M»n.^i r The making such sterling country bank notes a legal tender, would make them at once available in every payment, in the public annuities as others, and of golden value. That if the supply of gold in the market, for coining falls off, as in 1797> the country would at least command a sterling country bank paper currency, and without risk of the dilemma we are now so severely suffering from, whenever a peace, perhaps, and the bullion appears in the market again; for the sterling country bank note then, like the Bank of England note now, would ex- change for gold. The larger the security the coun- try banker is able to give, the better for himself, and the better for the public : the interest of the two parties go together. , • . S4 OUTLINE OF TKE PLAN. hriiUy({ '" ^ ' 1 ARTICLE VIII. ;i .. And tkac tlie conntry l)ankers should have the choice, of dividing the capital amounts oF their re- spective securities, so given, into notesoFten pounds, five pounds, or one pound, at their pleasure ; and that they should not he prevented, hut have full liherty to issue their private promissory notes also, and in addition to the sterling notes, to any amount, and of any denomination, from one pound inclu- sive, and upwards, at their own will and pleasure, and as at present. •^ ' Explanation. ' • ' f* '^"'^^ It seems necessary not to limit the banker in his issue of private promissory notes, any more than the Bank of England was limited in 1694, or is now, to be certain of a sufficient supply of currency, and unnecessary to control the division of the large notes, and impolitic to interfere too much with the one pound promissory notes, in the first instance ; the appearance of the gold coin must sooner or later put them out of countenance*. ' / But as one of the greatest advantages of these ideas is to assimilate the Scotch and English cir- culation to a bullion golden currency, and our in- formation tells us, that two-thirds of the Scotch cur- • n'>7t''t S* * Mr. Burke has said, where paper appears, gold is sure to disappear, and the writer does not mean to oppose such autho - rity : but it occasioned the idea of periodical supplies of gold coin, and which, it is to be hoped, together with the general diffusion here proposed, would correct the inconvenience. OUTLINE OF THE PLAN. 25 (I I ■3 rency,out of 3,300,000/.*, are in notes of one pound; though the Scotch bankers would no doubt avail themselves of the boon, by giving: all the security in their power, neither they, or the English country bankers, might immediately be able to give sfu- rity to such an extent, as to make one ponnd notes at once unnecessary everywhere, though at length they might become superfluous. * * ,)Tv(i'i "II! . ■ '. ■ ;■• -■ ARTICLE IX. • ."•»■.) .i i»'M? And which notes should, among other formalities, have engraved upon them, sterling for ten pounds, or as the case may be ; and the words, 8ecu<^ rity to this amount being in the hands of Govern- ment ; and their private promissory notes, should have engraved upon them, in addition to their other designation, of one, Bve, or ten pounds, as the case may be, the amount of the capital given in security, and for which they issue sterling notes, thus: — the capital given in security to Government by this firm is 5000/., 20,000/., 6o,000/., as the case may be. ...» And that each banking firm should have the same notice, of the amount of such security given, put up in the most conspicuous manner and place they pay their notes in. And in like manner, that the amounts of the issues of private notes each firm means to provide for their circulating, in the following three years -^j be also designated on the * The whole amount of the currency in Scotland. — See the Reports from the Scotch Committees of last Sessions. t Three years is named, as the usual time a note is worn out in. 26 OUTLINE OF TH£ PLAN. note, and put up in every banking room of busi- ness; cbe same being to be declureil at tbe Mint, by eacb firm, before tlie bullion coin, or sterling notes, according to tbe security given, sbould be paid to tbem. And tbe same amount to be printed also upon the private notes. , t And that it sbould be obligatory upon every Hrm to pay tbat pro|)ortion of bullion coin, or sterling notes, tbey had received from the iMint, compared with the fourth part of tb«i issues of private notes, so declared to be proviocd for, in part payment of their private notes, when presented for that pur- pose at the firm they issued from. (. .stM ; > 'cj? And which private notes should no longer be permitted to be made payable in London, or else- where than at the local firm they issued from, or the sterling notes either. , But that nevertheless, if the banker's business re- quired a larger issue of private notes, than he had foreseen, when he made his declaration at the Mint, he should equally be at liberty to make it ; or to increase the amount of his securities, with the same advantages as before, whenever he felt willing, and was found able to do so. The last declaration and amount of security given, always governing the proportion of bullion coin, or sterling notes, to be due, in part payment of the private notes. And that after so paying any private note, the firm should not be legally obliged to pay any of the private notes then issued, as j)art payment of OUTLINE OF THE PLAN. 27 the one presented, nntil after one week, or one fortnight, if the firm chose to avail themselves of snch privilege. But notwithstanding, in case of hjinkrnptcy, the holder of any private note should eijUally have his claim to be paid the whole amount of it, out of the hankru|)t's estate the same as before. The Bank of England notes always to be consi* dered the same as sterling notes. f ' Explanation. One fourth of the issues provided for is taken as the data of comparison ; being the largest amount of bullion or sterling capital, given in ex- ample by Dr. Adam Smith, as necessary to support any quantity of private cnn"«Dcy a firm may have occasion to circulate. • And the bankers could hardly object to the pay- ment of that proportion of bullion coin, or sterling notes, which they should themselves have received from the Mint, in paying their own private notes. So far as concerned the bullion coin, or sterling notes, their interest might be to name the largest amount of issues they contemplated ; but that would be balanced again, by their credit and interest con- sisting in their giving the largest convenient secu- rity to themselves, in proportion to their own issues, and the conduct of the majority of their brother bankers. i ■. That excitement an':l/f The security given to xlO The amount of issues government by this Lincoln, Jan. I, provided fur by this firm is oflO.OOO. 1827. firm is ofSO.OOO. The last amount of security given, and issues declared, being always to be perspicuously placed in the banking room of business, the hol^.i' of the note would ac once see in what other proportion, if any, the change he required was to be given to him, than the note designated. ? 7^ JO 0V.1/J>|1 OF THE ri.AN. The stt^rliliR nofe in»glit be made out thus : — Sterliiig by Act ot Lincoln, Jan. 1, Security hif\n^ in the I'arliament fur 1 8*2 7 • liiUiicls uf ^overn- „ Ricliiird Gold, ^^^ Master of the Mint. / 'promise to pay to Mr. A, or bearer, Ten Pounds on demand. . ; < RICHARD TURNER. Security being in the xlO Sterling by Act of Par hands of government. liament for cf* 10. Richard Silver, Officer of the Mint. ARTICLE X. .; ' But with this reserve and election, as to the sterling notes, at the time of their issuing, always excepted and reserved, that the Crown should have the direction, whether the whole of the amount of the capital of the security given, or what portion of it, should or should not be divided into one pound notes, or if any should ; and the election also »f retaining the notes, if the Treasury thought fit, after the bankers had put their signature to them, but giving to the parties concerned, so mmiy goWen sovereigns or silver coin, one or both mixed, for the whole or any part of them, as the sterling notes were a legal tender for. Explanation. This article shows how, in the first instance, the sterling note is to be exchanged for bullion coin. OUTLINE OF THE FLAN. dl aiiri how the gold And silver coin is to he circulated, and the country circulation to be kept supplied with it, cciUHlly with the London and tlie Lanca- shire districts. li ARTICLE XI. That for this purpose, whenever thought neces- sary* the Treasury should give their draft upon the Bank of England for so many golden sove- reigns, or gold and silver coin of the realm, as the respective amounts of security given, and notes re- turned required, to the Mint; who, on its part^ after paying the bulli« o the parties entitled to it, should pay the s' " ; j. )tes so retained into the Bank of England, .^ »,i>e account of the Trea- sury. ■' ■ , .. , s ' '' -' Explanation. This points out the mode the Mint are to get the gold coin, to be given to the country hanker, and supplying its place and value at the Bank of Eng- lund, by pAying the steHing notes the bullion coin has exchanged for, to the account of the Treasury, #ho have Advanced the gold coin. ARTICLE XII. And that it should be obligatory on the part of the Mint, before three of the highest officers on duty that day, any hanker should bring his old note or notes, to be exchanged for new notes, or bul- lion coin, and before such banker, and previous to 32 OUTLINE Ok IHK FLAN. such new notes, or bullion coin, being given to such banker, to cancel the old notes. ' Explanation. It must be allowed absolutely necessary to com- ply with the provisions in the above article. ARTICLE XIII. And likewise obligatory upon the Mint to re- quire the signature of the banker, together with the signature of three officers of the Mint, to the return to be made of the transaction to the Treasury; which return to be published for the information of the public in the following Gazette. U .• .Jii ■-,.•...-. . . • , , , , ARTICLE XIV. . • ' ■ " And further, that it should be obligatory upon the Mint, by the last day of the expiration of the term of three years, to be prepared with the orders from the Treasury, and the new notes, or bullion coin, that may belong to each respective banking firm, that no unnecessary delay might take place, on the part of the Government, in exchanging the old notes for the new ones, or paying the bullion coin for them, at the option of the Treasury. - , > ARTICLE XV. And so often as any outstanding single old note should be exchanged, and the new note paid for in bullion coin at the Mint, such new note should immediately be paid into the Bank of England, to OUTLINE OF THE PLAN. 33 the account of the Treasury, and the old note de- stroyed as before ; and a return should be made to the Treasury of the transaction, and notice of the same, together with the number and amount of the note, published in the following Gazette. ARTICLE XVI. And as to, for, and concerning llie capital, real or personal property, so reuiuining in trust for the public in the Court of Chancery, as it is possible for so great an advantage, although not greater than the Bank of England has always enjoyed, as is here held out to io«(i^ the public, should be declared forfeited to the Crown J and the party or parties be declared out- OUTLINE OF rriE VLAN. 36 laws and infamouSj and for ever afterwards in- capacitated from exercising any trade or calling in any of His Majesty's dominions. ■I ■! '»' 1. . ARTICLE XIX. And whenever any banker or bankers, having the advantage of being permitted to issue sterling notes, should become a bankrupt or bankrupts, notice of issuing the commission of bankruptcy should be immediately given to the Mint, which should, with the Court of Chancery, be authorirzed and required to proceed and sell all such real and persond property and estate, so held in trust from the firm the bankrupt or bankrupts belonged to, for the public, before a master in Chancery, if real property or private annuities ; if public annuities by the King's broker, under the order of the Court of Chancery and the Mint : the proceeds in both cases to be paid to the Mint, and immediately paid by the Mint into the Bank of England, to the account of the Treasury ; but who should re- place the same at the Mint, so often as the notes of such bankrupt firm were there presented for payment ; and the proper notices of the same to be pablished in the Gazette. ; I ARTICLE XX. ''t And where the proceeds of such sale, after paying all expenses, exceeded the amount of the sterling notes outstanding, and advanced to the bankrupt or bankrupts by the Mint, the excess should be 36 OUTLINE or THE PLA.V. paid to the bankrupt's assignees, for the benefit of the rest of his creditors ; but when, on the con- trary, tlie sale, after paying all expenses attending the same, fell short of what the bankrupt's estate was so held in security for, his Majesty should be entitled, as in all other cases, to receive the diflfer- ence out of the other portions of the bankrupt's estate; and it should not be competent to the bankrupt's assignees, to make any dividend to the other creditors, before such debt to the Crown had been satisfied. ■hi' J UM-'' '■-■ y And besides the usual notice of the bankruptcy, being published in the Gazette, a notice from the Mint should be published also, of the number of outstanding sterling notes, issued on account of such bankrupt firm, and the numbers and amount of each ; and that the notes were payable at the Mint, as well as at all other places, excepting only the bankrupt's late firm ; the notes so paid at the Mint to be destroyed as before, and the re- turns made to the Treasury, and the notices pub- lished in the Gazette as heretofore. . . i ' \ 1 1 ARTICLE XXI. ARTICLE XXII. And the Lords of the Treasury, and the ofiicers . of the Mint, should be required to take notice and make provision accordingly. * I * > * ;i!: '' • I . >> , ■ I • I CONCLUSION. 1 ■ i I J) .,|l, )!* ■. 1 ■ ' •< - I ■ ( • • ■ ' * . ■' ■ I : ■ ■ ,■ H I ' . . ■. If !l The whole of the plan is submitted to the Public, as suggestions only, and for the better considera- tion of others ; but it may illustrate the subject to state, that the fourth of 27,000,000/., the amount of the country bank currency in I8I9, being 6,750,000/.; and taking the number of country bankers at nine hundred, 5,000/. security from each iirm only, amounts to so much as 4,500,000/., that the interest the country bankers would have, in giv- ing more security, under this system, and the public to accept of it, cannot leave much doubt, but that security to the largest extent, and so as completely to make the country bank note as valuable as the London one, would be obtained at a very early period. Though it might be right to proceed, in the first instance, by gradation, in the steps to the object desired. Which it appears might thus be obtained, through the medium of a double capital, at a moderate expense, as with the Bank of England ; the success of which has been shown by the ex- perience of more than a century ; and, " loving antiquity," the extending the old English fashion to the sterling notes, of having that part of the currency stamped at the Minty as well as the bullion coin. 38 CONCLUSION. It seems quite in vain to go about and about, for reasons of the deficiency in the currency, stating that the country bankers* issues had not been applied for, how correct soever it may be ; when it is to be shown, over and over again, th'^t if the application had been made^ or was made, the country bankers bad it not in their power to grant the supply wanted, as before passing the Currency Act of 18 19. '^ - • • "• |"«h a And as every person who reflects must be aware, that the disappearance of 1 6,000,000/. of currency, out of 54,000,000/. from the market, must alter the relative value of every other com- modity, brought there; disappointing and inter- fering with the fair profits of trade and industry, and by so much, a large proportional part, pre- venting the employment of tL .. population of the country. "I if ■- I • 1 , • » i')'--' '. THE END. I • >* i f\ J.. J. :. J nj/j All'i' i' •? . ■ Mr' ,, ■<.,• » i LONDON: PRINTED BY CHARLES WOOD, Poppin'n Court, Fleet Stnet.