STATE PAPERS. 



471 



made to as many mercantile per- 

 sons givinggood security,asshouId 

 apply for them: and the confidence 

 wliich this measure diffused, as 

 well as the increased means which 

 it afforded of obtaining bank notes 

 through thesale of the exchequer 

 bills, speedily relieved the distress 

 both of London and the country. 

 Without offering an opinion upon 

 the expediency of the particular 

 mode in which this operation was 

 effected, your committee think it 

 an important illustration of the 

 principle, that an enlarged accom- 

 modation is the true remedy for 

 that occasional failure of confi- 

 dence in the country districts, to 

 which our system of paper credit 

 is unavoidably exposed. 



Thecircumstances which occur- 

 red in the beginning of the year 

 1797, were very similar to those of 

 1793; an alarm of invasion, a run 

 upon the country banks for gold, 

 the failure of some of them, and a 

 run upon the Bank of England, 

 forming a crisis like that of 1793* 

 for which perhaps an effectual re- 

 medy might have been provided, if 

 the Bank of England had had cou- 

 rage to extend instead of restrict- 

 ing its accommodations and issues 

 of notes. Some few persons, it 

 appears from the report of the se- 

 cret committee of the lords, were 

 of this opinion at the time ; and 

 the late governor and deputy go- 

 vernor of the bank stated to your 

 committee, that they and many of 

 the directors, are nowsatisfied, from 

 the experience of the year 1797, 

 that the diminution of their notes 

 in that emergency increased the 

 public distress ; an opinion in the 

 > correctness of which your com- 

 mittee entirely concur. 



It appears to your committee, 

 that the experience of the Bank of 



England, inllieyearsl793and 1797, 

 contrasted with the facts which 

 have been stated in the present 

 report, suggests a distinction most 

 important to be kept in view, be- 

 tween that demand upon the bank 

 for gold for the supply of the do- 

 mestic channels of circulation, 

 sometimes a very greatand sudden 

 one, which is occasioned by a tem- 

 porary Failure of confidence, and 

 that drain upon the bank for gold 

 which grows out of an unfavour- 

 able state of the foreign exchanges. 

 The former, while the bank main- 

 tainsitshigh credit, seems likely to 

 be best relieved by a judicious in- 

 crease of accommodat on to the 

 country ; the latter, so long as the 

 bank does not pay in specie, ought 

 to suggest to the directors a ques- 

 tion, whether their issues may not 

 be alread)' too abundant. 



Your committee have much sa- 

 tisfaction in thinking, that the di- 

 rectors are perfectly aware that 

 they may err by a too scanty sup- 

 ply in a period of stagnant credit. 

 And your committee are clearly of 

 opinion, that although it ought to 

 be the general policy of the bank 

 directors to diminish their paptria 

 the event of the long continuance 

 of a high price of bullion, and a 

 very unfavourable exchange, j'et it 

 is essential tothe commercial inte- 

 rests of this country, and to the 

 general fulfilment of those mercan- 

 tile engagements which a free issue 

 of paper mayhave occasioned, that 

 the accustomed degree of accom- 

 modation to the merchants should 

 not be suddenly and materially re- 

 duced ; and that if any general and 

 serious difficulty or apprehension 

 on this subject should arise, it may, 

 in the judgment ofyour committee, 

 be counteracted without danger, 

 and with advantage to the public, 



