STATEPAPERS. 



461 



Mr. JVhitmore. — " I am so 

 much of the same opinion, that I 

 never think it necessary to advert 

 to the price of gold, or the state 

 of the cxcliange, on the days on 

 which \vc maice our advances." 



" Do you advert to these two 

 circumstances with a view to re- 

 gulate thegeneralamount of your 

 advances ? — I do not advert to it 

 with a view to our general advan- 

 ces, conceiving it not to bear upon 

 the question." 



And Mr. Harman, another bank 

 director, expressed his opinion in 

 these terms : " I must very mate- 

 rially alter my opinions, before I 

 can suppose that the exchanges 

 will be influenced by any modifi- 

 cations of our paper currency." 



The committee cannot refrain 

 from expressing it to be their opi- 

 nion, after a very deliberate consi- 

 deration of this part of the subject, 

 that it is a great practical error to 

 suppose that the exchanges with 

 foreign countries, and the price 

 of bullion, are not liable to be 

 affected by the amount of a paper 

 currency, which is issued without 

 the condition of payment in specie 

 at the will of the holder. That the 

 exchanges will be lowered, and 

 the price of bullion raised, by an 

 issue of such paper to excess, is 

 not only established as a principle 

 by the most eminent authorities 

 upon commerce and finance, but 

 its practical truth has been illus- 

 trated by the history of almost 

 every state in modern times which 

 has used a paper currency ; and 

 in all those countries, this princi- 

 ple has finally been resorted to by 

 their statesmen, as the best crite- 

 rion to judgeby, whether such cur- 

 rency was or was not excessive. 



In the instances which are most 

 familiar in the history of foreign 



countries, the excess of paper has 

 been usually accompanied by an- 

 other circumstance, which has no 

 place in our situation at present — 

 a want of confidence in the suffi- 

 ciency of those funds upon which 

 the paper had been issued. Where 

 these two circumstances, excess 

 and want of confidence, are con- 

 joined, they will co-operate and 

 produce their effect much more 

 rapidly than when it is the result 

 of the excess only of a paper of 

 perfectly good credit ; and in both 

 cases, an efl'ect of the same sort 

 will be produced upon the foreign 

 exchanges, and upon the price of 

 bullion. The most remarkable 

 examples of the former kind are 

 to be found in the history of the 

 paper currencies of the British 

 Colonies in North America, in 

 the early part of the last century, 

 and in that of the assignats of the 

 French Republic ; to which the 

 committee have been enabled to 

 add another, scarcely less remark- 

 able, from the money speculations 

 of the Austrian government in the 

 last campaign. The present state 

 of the currency of Portugal affords, 

 also, an instance of the same kind. 

 It was a necessary consequence 

 of the suspension of cash pay- 

 ments, to exempt the bank from 

 that drain of gold which, in form- 

 er times, was sure to result from 

 an unfavourable exchange and a 

 high price of bullion. And the 

 directors, released from all fears 

 of such a drain, and no longer 

 feeling any inconvenience from 

 such a state of things, have not 

 been pi'ompted to restore the ex- 

 changes and the price of gold to 

 their proper level by areductionof 

 their advances and issues. The di- 

 rectors, in former times, did not 

 perhaps perceive and acknowledge 



