nay, I seem to discover that the writer feels that my principles do not lead to that special condemnation of the Act of 1844 which he desires. Hence, as I shall presently show, he is compelled to glide into new principles of his own making; so that, after all, it is not my principles, but his own, which decree the mischievousness of the law which he hates. He ought, therefore, to have examined and refuted my leading principles, and this all the more because the whole of my doctrine of currency is founded on an analysis of metallic currency and on an acquisition of all my first principles from that source. That is the very skeleton and framework of my book; and a reviewer who gives an account of that book in an article specially directed to that end, and takes for his starting point that currency becomes a science only when it passes from metallic to representative currency,' ought to have pointed out this radical divergence of view, and refuted me in a quarter where a successful blow must have been completely fatal, and have overthrown me altogether.

This

he has not done; so that the article becomes, on the one side, a very partial and confused account of the view taken in my Lectures, and on the other, a fierce attack on the Act of 1844 on a foundation of doctrine of the reviewer's own construction, coupled with vehement wrath against me for not joining in the onslaught.

Before I proceed to notice the reviewer's principles, let me be allowed to refer to a statement which wears the appearance of having been made by me. It is a very important and critical one. In explaining my analysis of a banker's operations, the reviewer writes: But the banker no more deals in capital than does a grocer. No one can create capital. That which the banker accepts and trans

This

fers is not capital, but the title to capital.' This is an accurate account of what I say of the banker, but is wholly erroneous as to the grocer. The grocer does deal in capital, the banker does not. distinction is the very kernel of the explanation I have given of the banking trade. Tea, sugar, soap, starch, and the like, are indisput ably capital; bills, cheques, bank notes, dividend warrants, and all forms of paper currency, are not capital. A firm apprehension of this fact is absolutely essential to the understanding of the nature of currency, as I understand the science; so that, for me, the grocer cannot for a moment be put into the same class with the banker. Equally is the wonderful remark, No one can create capital,' not mine. What it means I am wholly unable to tell. If no one can create capital, and yet it is an existing thing, who made it? Nature? Then are manufactured goods not capital? The expression lies beyond my comprehension; nor can I even conjecture what it does in this place. Anyhow, the appearance of such a phrase in what may be reckoned as a statement of one of my doctrines, makes it necessary for me to caution the reader that a teacher of Political Economy cannot have had anything to do with such a remark.

I come now to a portion of the reviewer's own special science, his conception of the use and function of gold. It is eminently original. The merchant delights in the arri vals of gold, because they strengthen, he conceives, the reserves of bankers, and place, more than any other importations, disposable funds in their hands for lending, and thereby render discount easy and cheap. In the same faith, writers of City articles predict the ap proaching commercial weather by the inflow or the departure of the beloved metal. But the reviewer

has a creed of his own.

‘Indeed,' he remarks, what do we keep the gold for, if not to pay balances of debt with it? That is its specific function, beyond what is wanted by the jeweller and the gilder.

Hence we may go so far as to say that the primary, paramount commercial use of gold is to be sent abroad, and there discharge. the balances against us. It is the international metallic currency.' Does he really intend to assert that all use of gold as currency, all employment of the metal for all other purposes but those of the jeweller and gilder, has, for its specific function, the payment of foreign debts, of the balance of debt between two countries? It is obvious that he cannot be supposed capable of uttering such nonsense; the subsequent word 'commercial' plainly shows that he is speaking of the gold in the reserves of bankers and the shops of dealers in bullion; but then, why this bringing in of the jeweller and the gilder, who manifestly are meant to express here all use of gold distinct from that employed in currency, whether for foreign or domestic purposes? And why speak of a primary, paramount commercial use of gold in discharging foreign balances,' only a few lines after the very just remark, that only in case of war or revolution can any great fluctuation in gold happen,' in paying foreign creditors ? These statements are jumbled together in a manner little favourable to a clear understanding of the matter in hand. It would have been far simpler to have said, as in the Lectures, that all gold not needed for domestic purposes can be turned to use only by being exported in the purchase of foreign commodities; and then to have added, that in the normal condition of commerce, when trade is regular and steady, the balances which have to cross the sea in metal, in order to maintain

the equilibrium between seller and purchaser, are very trifling and unimportant. However, it is very satisfactory to find that the reviewer admits that nothing can be more delusive than to regard the movements of gold as necessarily of more importance to the money-market than the movements of iron or cotton. To rejoice when gold comes in and raise a wail when gold goes out (without knowing anything more about it than the simple fact), is an insanity.' This is a very full recognition of a great central truth which has acquired extreme importance in the present state of currency-literature; and it will be well if the reviewer's City friends take pains to saturate their minds with it.

We have reached now the true battle-field between the reviewer and me-the points on which 'he finds it impossible to admit that I rightly apply my own principles.' He grants that the lowering of the bankers' deposits is the specific cause- and not the exportation of gold-of high discount and of mercantile inconvenience.' He accepts the analysis of this fact, which I have published in the Lectures. 'This inconvenience,' he concedes, cannot be removed by law;' so far he agrees with me. But it can be exasperated by law; exasperated by law;' this I appear most unaccountably to forget, and practically to deny.'

6

These sentences usher in a passage characterised, to my feeling, by a singular outburst of passion, and as singular an absence of the spirit of true philosophical analysis. The sorrows, the agonies I should rather say, of the distressed merchant, overtaken by the violence of a commercial storm, are painted with great force and eloquence. We see him perishing in the waves, whilst a little bad or unchristian legislation' mercilessly abandons him to his fate. The larger portion of his floating capital has been lost,

he has debts to pay, and to what must he have recourse for salvation ? 'He must sell his fixed capital, and raise money by mortgage upon it.' Yet in such a time of distress' to bid him to sell is very like mockery, for where are the buyers? His only practical resource is to borrow; and to borrow has this inestimable advantage, that it can be done in an hour, whilst sales, with their surveys, their advertisings, and their preparations, may take weeks. In a mercantile crisis, an hour is like a week. A house is dishonoured which cannot pay on the day; and worst of all is the case of the banker. He owes to a large number of persons, every one of whom may ask him for current money-that is, notes or coin. He must mortgage to one who can furnish him with notes or coin. This is the cardinal point. The banker's shop is like a powder-mill: it may explode at a spark of distrust. How careful ought the legislator to be, then, not to aggravate perilous disaster!'

This is exceedingly touching and pathetic, but is it science? Is it one whit more science than would be a soul-harrowing description of the agonies of the cholera? Does it require such a stimulus to the humanity of capitalists to induce them to come to the rescue of distressed and perishing traders? Perhaps not, replies the reviewer, but it is necessary to place, side by side, the sufferings of a panic-struck city and the perverseness of an ill-directed and wicked legislation. Here is the sting. 'Our legislation has never tampered with Scotland, as Scotland has gone through all such times with wonderful safety.' 'It must not be made a crime to try to aid traders,' and this is what our wicked law of 1844 does! Nor must blind and ignorant Professors of Political Economy be suffered to palliate or condone such doings. They must have better eyes than mine which

They

refuse to see facts lying directly under their vision, and then they will not write as I write. will not then, like me, excite practical men to raise a new outcry about the hard-heartedness of Political Economists. They will not mock them, as I do, by bidding them to buy gold of the bullion merchant, nor bid the unfortunates to sell their consols at any loss what ever. The indignant eloquence of the reviewer swells, as he proceeds, into higher strains, and in tones of lofty scorn he inquires whether ‘the man who has lost so much of his floating capital that he cannot pay his debts, is to be forbidden by law from raising money on such property as ships, mines, quarries, railway and dock shares, and shares in other companies innumerable? Yet since 1844 the law of England does forbid it, wonderful to say, if the bank has not a certain quantity of GOLD. This it is which makes City men sigh after gold as a great panacea, and to them, he fears, my rebukes and taunts at their puerility will seem to be heartless jibes.'

I felt stunned at first by the fearful howlings of this moral storm: but now that I have somewhat recovered my senses, let me invite my readers to pass along with me into the region of calm and scientific discussion, and leave all this impassioned rhetoric behind them. As for me, I have no eyes, as I have been twice reminded by the reviewer; but it is very important that those who have some should keep them clear of the mists raised by excited feeling. The issue is a very plain and a very direct one. But be fore entering upon it, let me first express my wonder at this reference of the reviewer to Scotland. I at ignorant of the distinction he draws between the currency legislation which relates to England, and another and a different one which, he tells us, has been enacted for Scotland. The Bank of England

undoubtedly has certain privileges over other banks, but these relate merely to the metropolitan district; and I am wholly unaware of any difference as to currency, save the one pound notes of Scotland, between this country and Scotland. But, on the other hand, I do know that his statement, that Scotland has always escaped the financial disasters of England, is entirely unfounded. There are, indeed, some remarkable differences between Scotch and English bankers generally, which might be studied with advantage; but to say that Scotch banks know nothing of English calamities, is an assertion which the bankruptcy of the Western Bank of Scotland, and other similar calamities, are at hand to refute. Much more, the reviewer is apparently unconscious of the vast gulf which separates metropolitan from provin cial banking. Scotland is but a local field, whilst London is the money-market of the whole nation, and almost of the whole world. When Russia raises heavy loans, or America, as lately, throws millions of bonds on the market, or gigantic railways appeal to the resources of British capital, or vast domestic enterprises call for the aid of the whole people, not Glasgow, or Aberdeen, but London, and London alone, is the market in which these mighty transactions are carried out. It is perfectly idle to put a provincial locality on a level with the great centre of commerce and banking, the more especially as the connection, and now, to a certain extent, the dependence of all provincial banks on London is a fact of the most familiar notoriety.

This said, let us now examine the charge brought against the Act of 1844, and the wrath poured out upon me, not for having defended or ever having praised this Actneither of which things have I done -but because I have not cursed it as a monster of cruelty and igno

rance. The issue is, as I have said, plain and direct. I will not state it in the form of whether the law of 1844 forbids a debtor to raise money on the security of his property. This is mere rhetorical exaggeration, sensational language, begging the question at issue, and calculated to darken the investigation of the facts. We must thrust it aside; it has no right to appear in a purely scientific analysis. I will put the question rather in the form which raises the issue fairly. Does or does not the Bank Act of 1844 diminish the power of bankers to make loans and advances to traders in distress? Is the Bank of England, is the whole banking community, less able to give help in times of pressure since 1844, than it was before that period? Does that law prevent traders from acquiring mortgages on their property, which, but for that law, they would have obtained? That this is the true question, the reviewer himself, I conceive, will admit. Now, everything depends on the method adopted for eliciting the answer. The reviewer taxes me with having strangely made up my mind that all who have been ruined would have been ruined if the law had not been made; and then he retorts that it is impossible either to prove or disprove this. Assertion is cheap on both sides. As well may you discuss whether a ship caught in a gale would have sunk, if this or that.' To these marvellous statements I reply, that this is to deny the existence of all science in the matter. If proof and disproof are alike impossible, then currency is the one subject too high or too low for the human understanding; and 'the scandal' which he deplores is not a scandal, but the weakness of the human mind to probe so vast a mystery. Sovereigns and bank notes, what they are and what they do, are matters impenetrable to man's intellect. Such absurdities