Gold and silver together the proper standard - Recommended by Locke, Adam Smith, and Ricardo - One Bank of issue a capital mistake - Gold considered as dead stock - New legal tender proposed - Its advantages summed up - Conclusion.

My task is nearly completed. I have thus far sketched the history of the currency, and the progress of Banking in England, Scotland, and Ireland, during the last fifty years. I have given an account of the extraordinary fluctuations, the fatal panics, and destructive failures, by which during that period commerce has been deranged and industry depressed. I have described the different principles and systems of Banking in vogue, one after the other, and the effects produced by them. I have pointed out the comparative merits and defects of private and joint-stock Banking; and I may now, I trust, venture to draw some legitimate inferences from the past, and come to some positive conclusions with regard to the future.

One of my first remarks at the beginning of the volume was, that our currency difficulties did not set in until we had changed the state of things on which Adam Smith founded his doctrines; that state namely which gave the country a paper currency payable on demand in gold and silver. Now I propose to end as I began, and to submit that in that fact lies the root of the evil we have so long been ineffectually complaining of. My fixed opinion is, that we never shall improve our condition to any material extent, or in any permanent way, until we modify our standard, and again make both gold and silver a legal tender. With this it may be politic to couple another observation, and that without delay, lest some of my readers may fly away in terror, imagining that I am about to go the whole hog with Mr. Attwood. I mean however to do no such thing. I am not a man for extremes. The Attwood theory is an extreme - our actual system is an extreme - I am opposed to both.

The modification I propose would be strictly reasonable, because it is perfectly natural. We have received from nature a plentiful store of silver, but have refused to avail ourselves of her bounty. We have gone further, and made a positive law against the use of it in a large amount. We have declared that it shall not be legal to pay a debt of five pounds in silver, and we have made another law to the effect, that it shall be legal to pay, and compulsory on all creditors to receive payment of a debt of five pounds in a piece of paper, intrinsically not worth as many farthings; and in this we persist, although we know that payment in gold of the Bank notes we have thus made a legal tender, while we have excluded silver, is impossible; and that whenever a general attempt is made to get gold for them, our whole monetary system becomes deranged, and we are reduced to the verge of national Bankruptcy. Not even that one third of the sum of her total liabilities, which by her own rule of what is right, the Bank is bound to have in her vaults, has she been able for the last four years to accumulate. It cannot be denied that if the directors had been allowed to lay in the required amount in silver also1, the stock of that metal would have insured an easy fulfilment of the obligation. But we will not suffer this to be done: we prefer difficulty, danger, and extreme suffering to it, because certain political economists have declared the thing to be inconsistent and illogical, and we are so very reasoning and rational a people in all we think, say, and do, that we are prepared to run the gantlet of a monetary martyrdom, rather than incur the reproach of tolerating an incorrect principle.

1 In point of fact, the Bank of England, on more than one occasion, has only been able to save herself from stopping payments in gold, by the round about process of exporting and drawing against the silver which, at the moment of her greatest distress, was to be had in abundance in the home market.

I am quite aware of the force of the reasoning to which a proposal for two standards of value is exposed; but I know, on the other hand, that Locke, Adam Smith, and Ricardo, agreed in regarding gold and silver together fit and unexceptionable media of exchange. I see, moreover, that they manage these things better in France and other countries than we do here, and I am not above taking a lesson in improvement wherever I find it well taught. Abroad, extreme changes in the relative values of gold and silver are rectified by an agio. I do not see why the same power should not be reserved in this country also, and a premium be chargeable on gold at essential junctures. It would not, I apprehend, have to be often exercised, if a sounder and freer action in money matters was once set on foot. But if I were called upon to choose between an unlimited and unrestricted right upon the part of all men to pay their engagements either in silver or gold, as they might find most convenient; and a continuance of our present system, so changeable and oppressive, that nothing certain can be predicated of it, but that it is constantly sure to produce mischief of one sort or another, I would without hesitation prefer the double standard. And for this sufficient reason: no difference likely to occur in the market prices of gold and silver could occasion greater fluctuations in the value of property, than those produced by the expansions and contractions of the currency enforced upon the Bank of England by the vicious laws at present in force. On the contrary, experience has proved, that the variations in the price of silver are very slight. There is a return in the Commons' report of 1841, which shows that the price of silver ranged no more than from three-eighths to seven-eighths of a penny in all 1840; and there is another return, in the report of the preceding year, by which it appears that a corresponding steadiness of price has prevailed ever since 1828, with the single exception of three months in 1836, during which there was a decline from 5s. 0 1/4d. to 4s. 10 3/4d. per ounce. What is this compared with the variations in the circulation of the Bank of England, which at one time, in 1839, was about nineteen millions and a half, and at another period of the year following was down to sixteen millions seven hundred thousand? In short, England is the only country in the world, except Portugal, in which gold is the sole legal tender, and England is also the only country in the world in which monetary convulsions, heavy falls of prices, and extensive bankruptcies, are calamities which recur so frequently as to constitute periodical results from fixed producing causes.