Young Lord Stranleigh: A Novel

by Robert Barr

“Very well, the object which the Act sought to attain is one I have advocated for ten years past, but the way of accomplishing it is another instance of the conceited folly of a democracy meddling in a science that demands years of training and minds of a certain caliber. A democracy thinks that the right way to do a thing is the method adopted in bringing down the walls of Jericho. They beat drums and blow trumpets, and march round and round. Now, the exasperating feature of this case is that the Chancellor of the Exchequer knew at the time the folly of his own action, although, of course, he did not perceive the tremendous disaster it was going to bring upon not only his own country, but practically all the solvent nations of the world. He should have withstood the pressure of his unreasonable and ignorant followers. He should have arranged an interview with the managers of the Bank of England; should have told them that a bill of this kind was inevitable if they did not themselves put their house in order. He should have arranged with them quietly, without any beating of tom-toms, and blowing of horns, for the bank slowly to accumulate the needed reserve. Then he should have got up in his place in Parliament, and announced that the Bank of England already held the amount in gold which all thoughtful financiers believed to be necessary if we are to get rid of this eternally fluctuating bank rate.

“Of course, the Bank of England itself is also to blame; it being for all practical purposes a branch of the Government. It should have requested an interview, and come to some understanding before the bill passed into law. I expected that the lords would throw it out, and perhaps they thought the same. However, it passed both houses, received royal assent, and then the mischief was done. These very clever Wall Street men at once saw the possibilities of the situation, as they do with all amateur legislation. The bank remained silent and solemn; has given no word to this day, and then, at too late an hour, showed its distress by raising its bank rate again and again and again, hoping that would prove a magnet to attract gold, whereas it was merely hoisting a signal of distress, and acquainting the whole world with the fact it is drifting on a lee shore.”

“Do you mean to say, Corbitt, that there’s a chance of the Bank of England stopping payment?”

“No, I do not go so far as that. Here we come to the comic element of the tragedy, which shows the loose folly with which these Parliamentary bills are drawn. There is no penalty attached to the Act; it merely orders the bank to provide such a reserve by such a date. But if the bank doesn’t do it, there can be neither a fine inflicted, nor can the governor be put into prison for contumely. If I were governor of the Bank of England, I would snap my fingers at Parliament, at the Act, and at the gold-cornering syndicate. I should say that as soon as was convenient to me I would accumulate this reserve of a hundred million, but that such action was impossible in the time given, therefore I should make no attempt to comply with the Act at the present moment.”

“What would be the result of such a statement on the part of the governor?”

“I don’t know. It would probably have a quieting result; or it might further accentuate the panic. Of course, when the governor began to perceive that it was going to be difficult to get the gold, he should have approached Parliament while it was in session, and got a relief bill, postponing the date, say for another year, but, as I have, said, he stood on his dignity; the Government stands on its dignity, and between the two of them they bring unnecessary ruin and disaster upon the country.”

“Isn’t it possible the bank will get the seventy extra millions by the first of January?”

“I see no possibility of it, unless they are prepared to pay two hundred millions for the accommodation to the Wall Street syndicate.”

“Has the Wall Street syndicate got the gold? That is, the actual coin?”

“Yes, and showing its confidence, the money is actually in vaults here in London, so the syndicate seems to have no fear that our Government will commandeer the gold as Kruger did before the Transvaal War began. I understand that the syndicate has notified the Bank of England that the price of this metal will rise two hundred thousand pounds each day until the bank accepts their proposals.”