STATE PAPERS. 



467 



proportion of circulating medium 

 in a country to the wants of trade. 

 When the currency consists en- 

 tirely of the precious metals, or 

 of paper convertible at will into 

 the precious metals, the natural 

 process of commerce, by estab- 

 lishing exchanges among all the 

 different countries of the world, 

 adjusts, in every particular coun- 

 try, the proportion of circulating 

 medium to its actual occasions, 

 according to that supply of the 

 precious metals which the mines 

 furnish to the general market of 

 the world. The proportion which 

 is thus adjusted and maintained 

 by the natural operation of com- 

 merce, cannot be adjusted by 

 any human wisdom or skill. If 

 the natural system of currency 

 and circulation be abandoned, and 

 a discretionary issue of paper 

 money substituted in its stead, it 

 is vain to think that any rules can 

 be devised for the exact exercise 

 of such a discretion ; though some 

 cautions may be pointed out to 

 check and control its consequen- 

 ces, such as are indicated by the 

 effect of an excessive issue upon 

 exchanges and the price of gold. 

 The directors of the Bank of Eng- 

 land, in the judgment of your 

 committee, have exercised the 

 new and extraordinary discretion 

 reposed in them since 1797, with 

 an integrity, and a regard to the 

 public interest according to their 

 conceptions of it, and indeed a 

 degree of forbearance in turning 

 it less to the pro6t of the bank 

 than it would easily have admitted 

 of, that merit the continuance of 

 that confidence which the public 

 has so long and so justly felt in 

 the integrity with which its affairs 

 are directed, as well as in the un- 



shaken stability and ample funds of 

 that great establishment. That 

 their recent policy involves great 

 practical errors, which it is of the 

 utmost public importance to cor- 

 rect, your committee are fully 

 convinced ; but those errors are 

 less to be imputed to the bank di- 

 rectors, than to be stated as the 

 effect of a new system, of which, 

 however it originated, or was ren- 

 dered necessary as a temporary 

 expedient, it might have been well 

 it" parliament had sooner taken into 

 view all the consequences. When 

 your committee consider that this 

 discretionary power, of supplying 

 the kingdom with circulating me- 

 dium, has been exercised under an 

 opinion that the paper could not 

 be issued to excess, if advanced in 

 discounts to merchants in good 

 bills payable at stated periods, and 

 likewise under an opinion that 

 neither the price of bullion, nor 

 the course of exchanges need be 

 advertf d to, as aff"ording any indi- 

 cation with respect to the suffi- 

 ciency or excess of such paper, 

 your committee cannot hesitate to 

 say, that these opinions of the 

 bank must be regarded as in a 

 great measure the operative cause 

 of the continuance of the present 

 state of things. 



Yourcoramitteewill now proceed 

 tostate,from the information which 

 hasbeenlaidbeforethem, what ap- 

 pears to have been the progressive 

 increase, and to be the present 

 amount of the paper circulation of 

 this country, consisting primarilyof 

 the notes of the Bank of England 

 not at present convertibleinto spe- 

 cie; and, in a secondary manner, 

 of the notes of the country bankers 

 whichare convertible, at the option 

 of the holder, into Bank of Eng- 



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