Hester had heard her husband tell how hard the Mint was worked during the panic, three years before. Demands for gold came in from the country so fast, that, though all the presses were at work, night and day, they could scarcely turn out coin enough to keep up the credit of the Bank: and the stock of bullion in the coffers got terribly low. At least, so it was suspected by the people at the Mint. How much of this outcry for gold did Mr. Craig think would be superseded by the customers of country banks being referred to the Bank of England for metal money, instead of having it of their own bankers?
“As much,” replied Mr. Craig, “as the Bank may choose. It can proportion its issues to country bankers as it likes. But, in case of the adoption of this plan, it will be necessary that branch banks should be established by the Bank of England in all populous districts, so that the people may have every facility for converting their notes. Much less business would be done, much less confidence would exist, if there were delays and difficulties of any kind in converting notes which are convertible at all.”
“It is, then, only to prevent drains on the Bank of England coffers, and their consequences, that you would make its notes a legal tender for country paper? It seems to me odd,—likely to make confusion,—to have the same money,—the identical notes, legal tender in one sense and not in another.”
“If any other method of obviating such a drain can be found which involves less inconvenience, let it be so; but this peril of a drain is so fearful that it would be worth trying a few experiments to be rid of it. If means could also be devised for permanently rendering paper the precise representative of gold, Bank of England notes might become a uniformly legal tender.”
Hester supposed that to alter the value of the standard would be the worst measure of all; as its very name conveyed that it ought to be unchangeable. That which is used to measure the values of all other things cannot have its own value changed without making confusion among all the rest. Mr. Craig replied that the necessity of changing the value of a standard was the great objection, as they had just agreed, to the use of a double standard, one or other part of which must be changed from time to time to make them perfectly equal. He went on,
“The most fatal blow that the government of a commercial nation can inflict upon the people is to alter the standard;—whether by changing the denominations of money, or by mixing more alloy with the precious metal of the coins, or by issuing them, not less pure, but smaller. Of these three ways, the first is the most barefaced, and therefore the least mischievous in deceiving those who are injured; but the consequences of all in raising prices, in vitiating contracts, in introducing injustice into every unfinished act of exchange, and confusion into every new one, and consequently in overthrowing commercial credit, are alike fatal in all times, and under all circumstances.”
“And yet many governments have tried the experiment, after watching the effects upon their neighbours.”
“Yes. Each hopes to avoid the retribution which has overtaken the others: but, if they were wise, they would see why such retribution was inevitable. They would see that the temporary saving of their gold would soon be dearly paid for by the increased prices of whatever the government has to buy; and that if they would meet this evil by an increase of taxation, their design must be baffled by the impoverishment of the people. They would prepare themselves to behold in every corner of the land, profligate debtors exulting in their advantage over their frugal and[and] laborious creditors, the aged servants of society stripped of the proceeds of their hoarded labour, the young brought up to witness the violable quality of public faith, and distrust of the government and of each other striking deep root into the heart of every class.”
“Our government will, surely, never try such an experiment?”
“We are now, you know, suffering under the effects of such an one. When the Restriction Act passed, nobody said anything about this measure being, in fact, an alteration of the standard; but as inconvertible bank-notes are practically a legal tender, and as their value depends on the price of bullion and on the extent to which they are issued, these circumstances keep the standard, in fact, in a state of perpetual variation, instead of its being preserved invariable by law, as it pretends to be.”