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Leader (1850-1860), 12th December 1857, Edition 1 of 2, Page 1186, Untitled Article

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      Untitled Article

      FREE TRADE IN GOLD . What is the meaning of the Mint price of gold ? Why is that price fixed and unchangeable ? "Why is there any restriction at all upon the flow of the precious metals ? "Why is not the principle of commercial liberty extended to them as well as to eyerything else P ¥ hy not Tbee Tkadb in Gold ? These are questions in the mouths of a large

      miinoer of thoughtful and intelligent persons at this moment of monetary exeitement , and to these questions we propose to furnish our readers with-what we hope will be found a satisfactory reply . The Bank of England is compelled by Peix's Act to purchase any amount of gold that may be offered to it—there is no option ;

      —and not only so , but whether gold be plentiful or scarce , one price is to he given for it , —under no conceivable circumstance can moie or less be offered or received ;—and that price is 31 . 17 s . 9 d . per oz . To complete the bondage of the Bank—to render its apparent thraldom more oppressive—it must sell gold to any one who desires to Tmy ; it dare not refuse , be its vaults ever so empty , be money ever so scarce , be the rate of discount ever

      so high ; it must sell , however much against its inclination ; though mercantile houses be falling , though Scotch banks be run upon , and Ireland be claiming additional specie , the Bank cannot refuse to part with its precious store to any buyer , he he native or foreigner , and it muBt sell atone , and only one , priceviz ., 3 J . X 7 s . 10 £ d . per oz . We repeat it , the Bank is in this » respect powerless ; it cannot refuse any comer ; its vaults may be filled to repletion or starved to exhaustion , without ltB being able to Bay no to any buyer at 32 . 17 b . 10 ^ ., or to any seller at 3 / . 17 s . 9 d .

      "Was this an error on the part of Sir Robert Peel ? "Was this positive enactment of the Bill of 1844 an . oversight of our celebrated free-trade Minister ? Is not this compulsion to sell and this compulsion to buy —in both cases at compulsory prices—utterly inconsistent with freedom of trade P "Why should we be hindered from buying our gold cheap , and Belling it dear , now that restrictianfi are swept a \ ray , an < l our markets declared to he free to all the vrorld ?

      The answer to these inquiries is clear and positive . This arrangement was neither an error nor an oversight—it is not inconsistent "with free trade—it does not prevent Great

      Britain , buying gold when it is cheap and selling it when it is dear—it leaves this branch of commerce as free as every

      otherthere is no more protection nor restriction on the price of gold than there is on . the price of grain . Let us examine this matter a little more closely , and inquire first what is meant by the Mint price of 37 . 17 s . 10 * d . — -how this odd sum comes to be the perpetual price of an ounce of gold . This question being satisfactorily answered , we shall have prepared the

      way for the solution of the apparent paradox , that a Mint price , fixed by Act of Parliament , is consistent with a market price varying with the requirements of trade . Probably we shall put the matter in the clearest light by a very simple illustration . An Australian merchant arrives in England , bringing ¦ with him , say 480 ounces of gold—which he takes to the Mint to be coined . In

      due time he receives back this identical gold converted into 1869 sovereigns , wherewith he proceeds to make the various purchases or investments he intended to effect ; The 4 S 0 ounces were converted into 18 ( 59 sovereigns because the Mint price is SI . 17 s . lG ^ d . per oz ., and any one who will take the trouble to multiply the said price by the number of ounces ( 480 ) will find that the Authorities have delivered

      to our newly-arrived friend the precise amount of money he is entitled to receive . In other words , the Mint price of gold means nothing more than this—that every ounce is to be converted by the Mint into money of the amount of 31 . 17 s . 10 ^ d . It is not , strictly speaking , a price at all ; it is the measure of gold in coined gold . It says 480 ounces shall make 1869 sovereigns —the gold in both quantities shall be identical—but the ounce must be measured into coin at a certain rate for each ounce , just as a piece of cotton must

      be measured into yards at a certain rate—36 inches to the yard- The 31 . 17 s . 10 ^ d . is the measure ( in coin ) of an ounce of gold , precisely as the 86 inches is the measure in length of a yard of cotton . All bargains are really for so many ounces of gold of a fineness agreed upon ; if you coin an ounce into four sovereigns ( instead of into 31 . 17 s . 10 ^ d . ) , the price of all articles will rise in proportion , that is , nearly three per cent . If Government were to decree that a yard Bhould consist henceforth of 40 inches instead of 36

      inches , the price would immediately rise ; and what was obtainable at 9 d . per old yard , would be at once raised to lOd . per yard of 40 inches . But if , instead of taking the 480 ounces to the Mint , the owner had taken it to the Bank , he would have received only 18 G 67 . in

      exchange for it ( i .

      pass into the Bank cellars , and are pledged for the payment of bank-notes . 3 STo use whatever can be made by the Bank of any of the gold ; it must remain idle and unemployed until notes are presented to be exchanged for it . The bank-notes given for the gold arc nothing more nor less than receipts of the Bank for so much gold deposited for safe custody ; and it is by no means impossible that the very identical bullion , might be redelivered in . exchange for the notes issued against its deposit .

      In this , it is evident there is no violation of free trade ; the compulsory purchase of gold by the Bank is simply that it must receive any bullion for safe keeping at the owner's

      desire , issuing notes as the representatives of the said bullion . The compulsory sale of gold is nothing more than this— -that wIipti gold is nothing more than this— -that when

      these vouchers fox bullion ( bank-notes ) are presented at the issue department , they must be exchanged for the gold-of which they are the sign , token , and receipt . The small difference between the prices 3 Z . 17 s . 9 d . and 81 . 17 s . lOid . is the remuneration to the

      Bank for its trouble in the matter . Let us look for one moment at the effect of the remedy proposed "b y some of our numerous currency doctors when money is scarce . They say , raise the mint price to 4 d . or even more per ounce , if necessary , rather than part with our bullion—that is , give our aforesaid Australian friend for his bank-notes

      ( or receipts for 480 ounces )—give him gold at the rate of 4 Z . per oz ., or only 467 ounces , for the bank-notes he received in . exchange for his 480 ounces . Bob him by a legislative enactment of 501 . of his hard-earned gold which he was simple enough to deposit afc the Bank . "You gave him certain vouchers for 480 ounces ; tell him when he claims the gold he left with you that he can only have

      467 ounces , and if he complain , the explanation is simple : there is a pressure for money in consequence of undue speculation—the loss must fall somewhere—and the speculators say it shall not fall upon them in the shape of high interest and difficulty in obtaining discounts . Formerly the powerful robbed the weak'by force ; in these days of commerce the subtle would defraud the simple by

      cunning . But gold does really rise and fall in value just the same as any other article . The measure of its rising and falling is not gold itself , but other commodities . "Whenever prices ot ' articles .. fall , as they have lately fallen , what is it but that more goods can be had i ' or the same money ? what is it except that gold is scarce and in increased demand ? or why will a merchant let you have a ton of sugar now for the same amount of gold that he would have demanded for 18 cwt . a short time since .

      But another simple illustration "will show that the price of gold does rise and fall iu the market , though it is fixed at the Mint , and with this we must close our remarks . A banker in Paris is assumed to require ' bullion for exchange operations . He remits to his agents here certain bills on London , which are discounted , and the proceeds sent to him in gold . The bills are exchanged for bullion . If the rate of interest 1 ) 0 10

      per cent , ( gold being scarce , i . e . dear ) , and the bills have three months to run , the discount on every 1000 Z . will be 251 . A bill for 1000 Z . is therefore exchanged for 075 ? . in gold . But if ( gold being abundant , i . e . cheap ) , the rate of interest be only 3 per cent ., the discount will be 71 . 10 s . only ; the bill will be sold , therefore , for 992 Z . 10 s . in gold , or for 17 / - 10 s . moro than in the iirst instance . When the rate of interest is high ,

      gold is dear , for only 975 / . can be got in exchange for the same article that letches 992 / . 10 a . when interest is at 3 per oeut . A high rate of discount , then , denotes the scarcity ( in other words the dearness ) of gold ; a low rate of interest , of course , the reverse . Glasgow would have us remedy a scarcity of bullion by reusing the Mint price to U . ( that is , robthe holder of bank-notes ) in order that we might keep down the rate of discount—that is , restore the principles of protection by compelling the Bank to buy bills of exchange at considerably above their value iu the world ' s market .

      Untitled Article

      TRANSMISSION OF AN ARMY TO INDIA . Ejluly in July last it was declared necessary to send fifty thousand troops to India . The empire was iu peril . Thousands of persona

      Untitled Article

      NOTICES TO COJEtJtESPONDENTS . rbe presence of political and literary matter compels us to omit our ' Portfolio * this week .

      Untitled Article

      Several communications unavoidably stand over . To notice can . be taken ot anonymous correspondence . "Whatever is intended for insertion must be authenticated by tlie name and address of the writer ; not necessarily for publication , but as a guarantee of his good faith . IVfl cannot undertake to return rejected communications .

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      StiJilit Maim

      Untitled Article

      ' . ¦ ' . '' - — : # ' V ¦ ' ¦• \ ¦ ¦ : . ¦ ¦ ' ¦ , [ "here is nothing so revoLutionary , because there is nothing so unnatural and convulsive , as the strain to keep things fixed when all the -world is by thevery law of its creationin eternal progress . —Dm , . Areold .

      Untitled Article

      SATURDAY , DECEMBER 12 , 1857 .

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      Untitled Article

      1186 Tfl ^ LEADER , [ ffo . ^ Og ^ EfiEMBEtt 13 , 1857 .

      Untitled Article

      J . F . ( Stookport ) . — Articles exported from the Turkish dominions pay an ad valorem , export duty of 8 per cent , and . an ad valorem duty of 9 per cent , under the name of ' internal duty . ' Imports into the Ottoman Empire are subject to a duty of 8 per cent , cui valorem , but , by stipulation with the Turkish . Government , the ad valorem duty has in several instances been converted into a fixed duty . We cannot possibly find room even for aii abridgment of a tithe of the letters we receive daily on the Monetary Question . "We should have to issue a special paper currency for tlie lucubrations of the Inconvertibles .

  • Citation
    • Leader (1850-1860), Dec. 12, 1857, page 1186, in the Nineteenth-Century Serials Edition (2008; 2018) ncse.ac.uk/periodicals/l/issues/vm2-ncseproduct2221/page/10/