£500 in gold even for an hour or commissions him to buy. The bro- porter finds it difficult to carry The truth is, the whole operations of this monetary metropolis would come to a standstill if the payments and exchanges of property had to be carried on in gold. A single dealer sometimes lends, or pays, or receives a million sterling or more in a single day; and dealings to the extent of several hundred thousand pounds are by no means exceptional occurrences on the part of single individuals. Probably not less than fifty millions of property are changing hands, in loan or purchase in banks, discount-houses, on 'Change, or in Capel Court every day. Fancy what it would be if men bad to carry about with them such a mass of gold. A stout We have styled the narrow but all-important precinct of which we write the City of Gold. Yet we have had to say that no gold is visible there. If gold be regarded as an equivalent expression for wealth and property, our title is correct, for the whole place abounds in wealth, and deals in it, Nevertheless it is the City of Gold even in the literal sense of the term, for its⚫ whole existence, all its operations, depend upon the presence of gold in one part of the locality-in the Bank of England. The gold, it is true, is invisible. The thousands who operate there never see it. It lies hid in the strongest chambers 1 An of the Bank, and no one sees it or and commercial classes, but, on the counts it but the party who makes other hand, it is very profitable to out the official return. But, visi- the banks and money-dealers. ble or invisible, its presence and increase in the rate is virtually a amount regulates the operations transfer of a portion of the profits of the Bank, and those operations of the former into the pockets of the regulate and affect all the other latter. Bankers like a high rate of operations of the precinct. The value of stocks and shares rises or falls, panic or prosperity occur, according as much or little of the yellow dross is reported to be in the occult chambers of Threadneedle Street. Hence it is that the paragraph in the City Article which is most closely studied is that which relates to the supply of gold. The two brief lines which tell how much gold was taken to the Bank or withdrawn from it, are in reality the vital point of each day's monetary news. If gold is being deposited largely in the Bank, the dealers are all elate, and business and enterprise go ahead; if much gold is being withdrawn from the Bank, every one becomes uneasy; enterprise stands still. How is this momentous effect produced? The practical answer is, that the movements of the precious metal regulate the Bank's rate of discount, and the rate of discount affects the whole industry of the country. If traders can borrow, or get their customary advances, on easy terms, say at 4 per cent, they have every inducement to extend their business and employ as many men as possible; but if they have to pay 8 or 10 per cent, their margin of profit is seriously diminished, if not altogether swept away. Hence every fluctuation in the Bank rate is watched with intense interest throughout the whole country, and most of all in this monetary metropolis. But in this precinct, as elsewhere, the community is divided into two classes which are very differently affected by the changes in the Bank rate. Trade and money, we have said, are the great powers which together set agoing the whole business of the precinct; traders and money-dealers constitute its population. A high rate of discount is disadvantageous for the trading discount, the trading classes do not. But both of them are alike interested in watching the movements of gold, as productive of the changes in the rate of discount or, in other words, in the value of money on loan. - But why, it may be asked, should a little more or less gold in the Bank of England produce such immense effects upon the trade and prosperity of the country? All the engagements which are contracted in this monetary metropolis, as well as throughout the country, although carried on solely by means of cheques and bills, are bound to be met, if required, by payment in the legal money of the country. This legal money is gold and Bank of England notes. Gold, in exceptional times, may not be easily procurable; but the other element of the legalised currency namely, bank-notes-may be manufactured in any quantity. It may be asked, then by the uninitiated reader, we mean-When gold, at these rare times, becomes scarce, cannot its temporary deficiency be compensated by an increase in the issue of notes-which in the eye of the law, as well as in the estimation of the public, are as valid a tender as gold? It must be remembered, however, that these notes are a legal tender only so long as the Bank is ready to give gold for them on demand. The first duty of the Bank is to take care that it is at all times in a position to do this. It must insure the convertibility of the note. It must always be ready to give gold for its notes whenever such payment of gold is demanded. It is necessary, then, to observe to what extent such a demand for gold payment is likely to arise, before we can decide as to the propriety of the measures which the Bank takes to meet such a contin with gold from the stock kept on hand by the Bank of England. Or it may be our own Government, which, by making loans to a foreign State, necessitates a corresponding export of the precious metals-or which, in times of war, has to export specie to provide supplies for its army abroad. Or finally, and as is most frequently the case, it is great capitalists, great money-dealers, who convert their money into gold or silver as best suits their purpose for the time, and who transfer it from country to another, wherever they can make the largest profits upon it. It is these agencies, and not any mistrust of the notes, which produce one gency. As gold becomes scarce, does the public lose faith in the notes, and rush to the Bank to have them converted into gold? By no means. Experience enables us to speak with perfect confidence upon this point. It is not a question of opinion, but a simple matter of fact. No such loss of confidence in the notes of the Bank has ever occurred, either in our own time, or in that of our fathers and grandfathers. The Bank of England note is a tender which no one ever mistrusts. People take the notes as readily when there is not a spare sovereign in the Bank, as when its coffers are overflowing with the precious metal. Even in times of the direst commercial crisis, of the the occasional heavy worst monetary panic, the public demands for gold upon the Bank ask only for notes. The notes serve of England. It is extremely rare their purpose as money quite as that such drains ever become so well as gold does, and they greatly great as to be a real and unavoidprefer them. The convertibility of able embarrassment for the Bank. the notes is never endangered, In times of war, indeed as, for and people would much rather example, during the long and gi have the notes than an equivalent gantic contest with France under sum in gold. This is a fact beyond dispute. As a medium of internal circulation as a means of settling accounts among ourselves - Bank of England notes are accepted everywhere and at all times as preferable to specie. Indeed, we may go further than this, and say that a cheque upon a good bank is preferable to either, although it is not a legal tender at all. Gold is quite unneeded by us in our monetary transactions with one another. And even if it were announced that the Bank could not give us gold for its notes for a twelvemonth to come, not one man in a hundred thousand would care. The public at large neither require the gold nor desire it. Who, then, are the parties whose action at times produces a drain of gold from the Bank? They may be classed under three heads. It may be the Bank of France, or any other great foreign bank, which buys up bills of exchange upon London, and sends them here to be cashed, in order to supply itself VOL. XCVL-NO. DLXXXVII. the First Napoleon - the Government may have to send its last sovereign abroad in order to sustain the military operations of itself and its allies. But, save in such extremely exceptional circumstances, which have occurred only once in our history, the drain of gold for export never assumes a magnitude such as really (that is to say, apart from the artificial restrictions of the present Bank Act) to imperil the position of the Bank. The export of three or four million sterling of specie usually produces such an effect upon the rate of exchange, as of itself to render any further exports of the kind unprofitable; hence the drain ceases. And moreover, as experience amply shows, in two or three months all the gold thus exported returns to us. These, then, are the causes which produce the occasional drains of gold from the Bank, and such are the limits by which these drains are circumscribed. But never-not in a single instance— is gold demanded from the Bank 2 c from any loss of faith in its notes. No one doubts the value of the Bank of England's notes, and the power of converting them into gold is never desired save as a means of procuring gold for export, by the parties and for the purposes which we have specified. This City of Gold is based upon gold, and the foundation is found to be pre-eminently unstable and perilous. The golden base perpetually oscillates to and fro, and each of its greater oscillations is felt like the shock of an earthquake. It rises and falls, expands and contracts, and sometimes seems to slip away from beneath the City altogether. Then goodly houses go down by the dozen-not because they are illbuilt not from any fault of the architect or occupants, but simply because the foundation upon which they all stand has given way. Of late years these oscillations have become more frequent and more serious; and every ten years or so, a convulsion takes place-not of nature, but by Act of Parliament - which spreads terror and disaster through the Golden City, and paralyses the whole country as effectually as if an earthquake had strewed with ruins the great seats of our national industry. The merchant and the manufacturer, the shopkeeper and the day-labourer, alike find their trade stopped, and their gains swept away. Suffering and want spread over the land, as if there were a great famine. There is a paralysis of trade, a dearth of employment; and the hard times are felt by the mill-worker and the bricklayer, not less than by the magnates of the trading and commercial world. Is there not something wrong here? Ought the presence or absence of a few millions of gold to make the vast difference between national prosperity on the one hand, and national disaster and widespread suffering on the other? How will posterity speak of us when it sees that we made the huge fabric of our national industry stand like an inverted pyramid, resting on a narrow apex formed of a chamberful of yellow dross? Will they not laugh at our folly, our barbarism? When the usual supply of gold is temporarily diminished, why should our usual credit-system be restricted in proportion, or totally suspended? Of what use is Credit but to take the place of payments in coin? Was it not for this purpose, and for this alone, that credit and papermoney were adopted? Why, then, not make use of our credit-system as a means of compensating the temporary absence of gold? Why not tide over the difficulty instead of aggravating it? and so avoid the tremendous sufferings which are ever-recurrent under our present system of monetary legislation. Suffering thousands and starving myriads signalise each great monetary crisis. Even during the last year, though the crisis of evil has been escaped, the usurious Bank rate of 9 or 10 per cent has swept away the profits of trade into the pockets of bankers and capitalists. Parliament inflicts misery upon the country out of an antiquated deference to some bits of yellow dross. Is this wisdom, is it humanity, is it civilisation? It is barbarism and folly, preached up by the moneyed interest, the high priests of Mammon, at the expense of the community. BLACKWOOD'S EDINBURGH MAGAZINE. No. DLXXXVIII. OCTOBER, 1864. VOL. XCVI. CORNELIUS O'DOWD UPON MEN AND WOMEN, AND OTHER THINGS FROM what I can gather from the newspapers, the Railway Boards in England are showing no very zealous desire to co-operate with the Board of Trade in the adoption of measures of security against ruffianly travellers. They would seem to imply that their whole concern is in the transit of the man or the trunk committed to their charge; that they are no more responsible for the morals than for the good manners of those they convey. They argue briefly thus: The individual is to us a mere parcel of merchandise, for whose transport to a certain place we alone contract. He may be a heaven-born conversationalist, or the most foul-tongued blackguard and blasphemer; we have no possible means of ascertaining to which category he belongs. There are no tests known to us by which he can be analysed; nor, if there were, is there in the rapid process of railway despatch the time to apply them. We do not, for instance, condi tion to carry gunpowder, explosive shells, detonating-bombs, or suchlike, by our passenger trains; but yet if any traveller fills his portmanteau with Congreve rockets instead of linsey-woolsey, we have no help for it. The carpet-bag you have just kicked back into its place under the opposite seat may be choke-full of the most inflammable and explosive ingredients, so that it was little short of a miracle that you, and all the others in your compartment, were not blown to the height of St. Paul's. Was it ever suggested, however, that all luggage should be carefully rifled and examined before a train started, and that astute and intelligent practical chemists should be engaged to determine the contents of any suspicious phial or mysterious - looking powder, carefully investigating so-called hairwashes and pretended shavingsoaps? I am afraid the practice would but ill conduce to that rapidity of transit for whose sake VOL. XCVI. 2 D |