A Letter to the Right Honourable Lord Viscount Melbourne, on the Causes of the Recent Derangement in the Money Market, and on Bank Reform

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Longman, Rees, Orme, Brown, & Green, 1837 - Banks and banking - 66 pages
 

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Page 55 - It receives and pays the greater part of the annuities which are due to the creditors of the public ; it circulates exchequer bills, and it advances to Government the annual amount of the land and malt taxes, which are frequently not paid up till some years thereafter.
Page 67 - DEAR SIR, It was the principal object of the paper of observations, which you did me the honour to append to your published letter to Lord Grenville, to illustrate the principle on which the deposits of the London bankers are formed, and the mode in which they act ; to show that they are susceptible of considerable increase, or diminution, without a corresponding enlargement or contraction of the basis on which they rest...
Page 44 - ... responsibility they have incurred by that earlier departure from principle, which has led to the mitigated panic of the present year. The only disturbances in the money market, which the directors of the Bank of England have any power to correct, are those which their own mismanagement of the currency creates. If they could be prevailed upon to attend with strictness to their essential duty, of regulating their issues by the course of the foreign exchanges, they would never be called upon to...
Page 30 - ... of bank notes withdrawn from circulation. As often as an adverse exchange abstracts any given amount of treasure from the bank, without a withdrawal to the same amount of Bank of England notes from circulation, so often do the directors of the Bank of England exhibit a practical proof of their incompetency to perform the important function of regulating our monetary system. To say that their rule is to keep their securities even, and to allow the exchanges to act upon their whole liabilities,...
Page 9 - It is evident, therefore, that transferring coin and bank paper from the desks of merchants and others, and placing them for safe custody as bank deposits, could have no effect whatever, either in contracting or in expanding the currency, even if the whole of the coin and bank paper so transferred were locked up in the coffers of the bank until withdrawn in payment of the checks of the depositors. But the whole of the coin and notes deposited with the banks would not be locked up until required in...
Page 29 - It is universally admitted, by persons acquainted with monetary science, that paper money should be so regulated as to keep the medium of exchange, of which it may form a part, in the same state, with respect to amount and to value, in which the medium of exchange would exist, were the circulating portion of it purely* metallic. Now, it is self-evident, that if the circulating currency were purely metallic, an adverse exchange, causing an exportation of the metals to...
Page 47 - ... regulate the currency upon sound principles, and to preserve the medium of exchange from any deeper fluctuations than those to which it would be occasionally liable were the circulation purely metallic. In 1825, the Bank of England narrowed its issues by upwards of 3,000,000 ; but the provincial banks, instead of being able to counteract the operation, by increasing their issues to a corresponding amount, were crushed and extinguished under the calamitous pressure which it occasioned. And,...
Page 9 - If the whole of the 10,000,0007. in coin and notes, deposited with the bankers, were locked up in their coffers until drawn out in payment of the checks of the depositors, this locking up of coin and notes would have no conceivable effect in depriving the depositors of the power of drawing checks, and of making payments or purchases to the amount of the 10,000,0007.
Page 66 - ... lordship's sanction and support ; and the general meeting of merchants and bankers, participating fully in the gratitude expressed by the committee, directed me, as their chairman, to communicate to your lordship the account of their proceedings, as the most respectful mode of acknowledging their obligation to your lordship. " I have the honour to be, my lord, " Your lordship's most obedient " and faithful humble servant, " J. SMITH. " To the Earl of Liverpool, &c. &c.
Page 47 - England is withdrawn ; and that the operations of the provincial banks do not counteract the efforts of the directors to regulate the currency upon sound principles, and to preserve the medium of exchange from any deeper fluctuations than those to which it would be occasionally liable were the circulation purely metallic. In 1825, the Bank of England narrowed its issues by upwards of 3,000,000; but the provincial banks, instead of being able to counteract the operation, by increasing their issues...

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