894 Jones—Relation of Economic Grises to Legislation. 
The authority of first importance connected with the currency 
school is Lord Overstone. 1 His assumptions were drawn from 
practical experience in banking, and show the influence of gen¬ 
eralization which, though incorrect for even the restriction 
period, was applied to conditions fundamentally different. 2 
We have seen that Peel was instrumental in bringing about 
resumption in accordance with the recommendation of the Bull¬ 
ion Report. In 1844 he introduced legislation providing such 
additional regulations for securing parallel fluctuations between 
the amount of paper money and the in and out flow of bullion 
as were advocated by the currency school. It would seem that a 
change had taken place in his own mind; but he expressly em¬ 
phasized that he considered the act of 1844 as but a completion of 
the work begun by the resumption of 1819, and he attempted to 
harmonize the two in the following way. Under a system of 
strict convertability Mr. Peel held that it was possible for a 
gradual diminution to take place in the purchasing power of 
notes as compared with that of coin. An exportation of gold 
may reduce by insensible degrees the amount of coin in circula¬ 
tion; and its place may be taken by added issues of notes. In 
the speech introducing his bill, he explains: “The difference 
may not be immediately perceived; nay, the first effect of undue 
issue, by increasing prices, may be to encourage further issues; 
and as each issuer, when there is unlimited competition, feels 
the inutility of individual efforts of contraction, the evil pro¬ 
ceeds until the disparity between gold and paper becomes mani¬ 
fest, confidence in the paper is shaken, and it becomes necessary 
to restore its value by sudden and violent reductions in its 
amount, spreading ruin among the issuers of paper, and derang¬ 
ing the whole monetary transactions of the country. ” 3 So 
1 Other adherents to the “currency theory” were Norman, Colonel 
Torrens, McCulloch, Morris & Prescott, bank governors in 1848, also the 
governors in 1857-1858, etc. 
2 “Lord Overstone weiss seine gewissen Lehrsatzeundprajudicirenden 
Schlagworte und “Schlagsatze” mit seltener Fertigkeit eines geschulten 
Dialectikers zu gebrauchen und legt dabei mitunter eine souveraine Ge- 
ringschatzung ihm entgegengehaltene Thatsachen und Erfahrungen an 
den Tag, wie man sie bei den geschmahten Theoretikern nicht haufig 
findet.” Wagner, “Geld u. Credittheorie,” p. 9. 
3 Speech, p. 27. Tooke, IV, p. 187; Cf. Tooke, V, pp. 507-512. 
