ABSTRACT
My Dear Gibbs, Let me call your particular attention to a statement in the Economist of
July 14, at the end of long tables on rates of interest. It contains this – for me most memorable – sentence:
The entire thought and language of the last generation regarding what was called in most vague and misleading language, “the regulation of the currency, or the control of the circulation by the Bank of England” (meaning by currency and circulation, the amount of Bank of England notes in the hands of the public), has become obsolete.’ This is from the pen of Palgrave, no doubt. What will Grenfell say to it? I have had to say this in the Press for many years; and I have been called heretic, theorist, unpractical, unreal, and excommunicated; and lo! I am told everybody now is of my opinion. Not quite yet, Mr Palgrave, I should say; but it is fast being accomplished. Overstone and all the City erected and preached up the Bank Charter Act as the controller of the circulation, and thereby the creator of steady interest and trade, and the averter of panics. I had to cry, Bosh! and was put away as an unpractical fellow, who knew nothing about it. The talk about the Bank Act has been for the most part nonsense. From the very first, I wrote that it had done two things: it had given a safe Bank of England note, – and, secondly, decreed the ultimate extinction in England of private notes. It did nothing more. And now Palgrave testifies that ‘the uniform testimony of the actual facts over a long series of years has convinced everyone that the only control which the Bank of England can exert over credit, markets, and prices, is by changes in the rate of interest.
