Misery produced by a Commercial Crisis. The amount of human suffering produced by what is called a commercial crisis, is something which probably no human mind will ever be able fully to conceive. In a country possessing no organized credit system the march of an invading army may waste and desolate the region through which it passes, but in the great multitude of homes the ordinary peaceful movement of life is undisturbed. The misery produced by a despotic government is more general, but even in that case tyranny usually falls into a procedure sufficiently habitual to enable the mass of men to know what they have to expect. But a commercial crisis, during its continuance, subjects vast numbers to an anxiety so keen as to be comparable to nothing but the agony of the rack itself. And the unhappiness which it produces is by no means confined to those who are tortured with doubt as to their power of meeting great commercial engagements. The calamity is diffusive. From every suffering centre the agony shoots through innumerable nerves into all the neighbouring regions of the social body. Multitudes, who hardly know what a speculation is, find the ground on which they stand suddenly drawn from beneath them, and the bread of their children snatched out of their hands by the convulsive workings of the mechanism which speculation has disordered. Dangers of a high Commercial Organization. Yet, whatever effect a particular act of unwise legislation, or the misconduct of a particular institution, may be supposed to have in aggravating disorders of this kind, it is certain that they do in substance spring from the whole moral state of the nation; that is to say, from the passions which are suffered to sway the great body of the intelligent middle class, acting upon a highly-refined and elaborate organization of credit. It holds good universally that, in proportion as bodies are highly organized, they have likewise the capacity of acute suffering. The two things go together and cannot be separated. Of the varied orders of the brute creation, there is not one which has any true experience of the sad inheritance of man, "Of ghastly spasm, or racking torture, qualms Of heart-sick agony, all feverous kinds, Nor amongst men themselves are the most intense agonies known except to the gifted few, who are endowed beyond others with the lofty privilege of looking before and after; and who are so often ready to cry out with the prophet, "Behold and see if there be any sorrow like unto my sorrow!" This liability, then, to the paroxysms of commercial disorder belongs to England in virtue of an economical organization surpassing in delicacy and complexity anything of which the world ever before had experience. The ties which connect man with man and class with class are minute and multifarious beyond example; and that which France, knowing the thing more in desire than in experience, calls solidarité, or universal interlacement and community of interests, is the great fact which in England makes it impossible to have any virulent local disorder in society without universal suffering. No Cure but a Moral One. The pretension, however, that the industrial derangements to which England is liable may be cured either by legislation or by any changes in our social mechanism, must be condemned in the same sentence with the nostrum of the quack. The source of the disorder lies in the highest, that is, in the moral, nature of man, which, if it is not raised and ennobled in proportion to the advances which he makes in wealth and intelligence, H must continually produce new and more fearful varieties of disorganization. The effective remedy, therefore, can be only a moral one. It must be something which shall touch the deepest sources of moral life in the nation, which shall make high thoughts and generous aims more common, and shall subordinate the all-engrossing passion for wealth to the nobler inspirations of the soul. Whether there be such remedy, and how it can come into action, must remain for after consideration. Here it must suffice to mark the fact that the fearful social evils, of which the delineation has been attempted, may possibly be checked, but are not to be averted, by any ingenuity of legislation. Rule for the Management of the Bank. With respect to the power of the Bank of England, it will appear from what has been said that, without any action on its part, the whole tendency of our monetary system and industrial habits is to generate periodical fits of speculation, each of which is more demoralizing, and, therefore, more destructive of the nation's highest welfare, than its predecessor. The Bank can do nothing positively to prevent these calamities; but it has the power to aggravate them, and it is for the public interest that such power should not be exercised. My conviction therefore is, that the Bank of England should be obliged, either by law or an equivalent understanding, to observe two rules, which would avert much evil. 1. The Bank should not purchase Government or other securities, beyond the amount which it holds at present1. 2. It should return to, and in no case go below, its old minimum rate of discount, namely, four per cent. The recurrence to a minimum rate of discount, it need scarcely be said, would be no bar whatever to an advancement of the rate, whenever the market rate showed a tendency to An exception, of course, should be made for the case of deficiency bills upon an accidental failure of the revenue; but with a proper balance in the exchequer, such bills would scarcely ever be required. rise. Under no circumstances should the Bank rate be lower than the market rate. Here, then, I come into practical conflict with one of the reigning principles of political economy-that of universal competition,—and contend that its application to the Bank of England is an error fraught with mischief, and founded upon a totally mistaken view of the working of our monetary system. The proof is contained in the reasonings of the foregoing pages. The Bank is the general depository of the disposable money capital which cannot find employment. That capital is not the property of the Bank, but of various private parties who leave it in the hands of the Bank, while they are straining every nerve to find for it some profitable investment. When the Bank, therefore, attempts, on its own account, to find a use for such capital, it only presses in to heighten and make more disastrous a competition from which the whole nation suffers. The Bank not a Private Concern. In this view the Bank is not regarded as if it stood in the position of a private trader; it is impossible to look at it in any such light. With its immense capital, its boundless credit, operating to any extent that has yet been tried, exactly like capital, and its influence over the whole banking and commercial class, the Bank of England is an institution as public and national as the monarchy. To me it even appears one of the many happy accidents for which England has to be thankful in her social condition. If such an institution did not now exist, it could not be created. But having grown up, and spread its roots far and wide into the soil, it would furnish, under such rules as I have suggested, a stay and centre for our whole monetary system, incomparably more secure than could be attained under any other arrangement. It need scarcely be added, that no such injustice is here contemplated as that of enforcing those rules, at the ex pense of the Bank Proprietors. If the view taken of the evils arising from the competition of the Bank with the discount brokers, or from the extension which it gives through the brokers to the general mass of discounts, be correct, it will not be thought strange to say, that the State would cheaply purchase the forbearance of the Bank by paying the ordinary dividends on its shares five times over. There could, however, be no difficulty in an equitable arrangement which would leave the proprietors of Bank stock in as good a position as they are at present. After this extended survey of our monetary system, we are landed in the conclusion, that without any stimulus on the part of the Bank of England, and without any influence provocative of speculation coming to us from without, there does exist in our social constitution a deep-rooted tendency to produce a periodical recurrence of commercial convulsions. A new and immensely powerful influence, however, is about to be brought to bear upon us, in consequence of the gold discoveries of California and Australia, which already threaten a revolution, much more momentous than that which took place in the sixteenth century. It remains, therefore, to inquire in what way we are likely to be affected by the NEW GOld. Note on the Proposal to fix a Minimum Rate of Discount for the Bank of England. The adoption, or rather recurrence, to a minimum rate of discount by the Bank of England has been urged by the present writer on former occasions, and especially in a letter to the editor of the Economist about two years ago. Some editorial criticisms which were made upon that letter appeared to call for a reply, which, however, the question being then thought of no pressing interest, was not inserted. I think it well to add here some extracts from an imperfect copy of that unpublished reply, and, although they are marked by a sharpness of censure characteristic of anonymous writing, of which my present judgment disapproves, I have not thought it right to soften the language then used :— "First, let me disclaim having ever contended that the Bank should establish a |