08 



BULLION. 



Bullion, double burden of subsidies and corn-payments. In 



1 *~~* the still more serious difficulties of 1799 and 1800, 



this severe remedy was only partially applied ; a pro- 

 portion of our bullion and coin went abroad, but pa- 

 per supplying its place, the cure was not radical, and 

 our bank-notes remained at a depreciation. No im- 

 provement took place during succeeding years ; and 

 it was our misfortune to meet the accumulated de- 

 mands of 1808 with a deficiency in our coin, and a 

 degradation in our paper. The progress of the evil 

 was consequently rapid, bullion rising 15 per cent, 

 above its coinage value so early as the spring of 1809 

 (Lloyd's List,} and bank-notes falling currently to 

 a discount before the end of the year. All the ex- 

 pedients applicable to such a state of things, export 

 of goods, transmission of bullion, smuggling out of 

 coin, were put in practice by the keen and adven- 

 turous classes of society, who make it their business 

 to resort to such means. But their efforts were un- 

 availing ; the heavy demands from abroad, and a non- 

 convertible currency at home, baffled all ordinary 

 corrections. It may be worth while to consider, 

 what would have been the course of things, had a 

 similar revolution in the exchange occurred at a time 

 when the Bank was liable to pay in specie. Whe- 

 ther the sum of evil would have been greater or 

 smaller, its progress and character, there can be no 

 doubt, would have been altogether different. The 

 state of the exchange producing heavy demands on 

 the Bank, for guineas to be melted and exported, 

 that establishment would have forthwith had recourse 

 to the well-known remedy of contracting its issues. 

 The claims of government, howevtr urgent, must 

 have been resisted, and the accommodation of dis- 

 counts almost wholly withdrawn from trade. The 

 consequences would have been an unavoidable relax- 

 ation of our exertions in Spain, a general fall in the 

 value of commodities, an embarrassment almost 

 universal among our traders, leading, in innumerable 

 cases, to a temporary suspension of payments, and in 

 many to bankruptcy. All this would have taken 

 place so early as 1809 ; the deficient harvest of that 

 year would have aggravated our distress ; and a de- 

 falcation in the public revenue, similar in its cause to 

 that which has just occurred, but greater in extent, 

 would have been inevitable. Our exchange, however, 

 could hardly have fallen below 10 or 12 per cent.; and 

 the correcting powers of trade, if impeded by Bona- 

 parte, would have experienced no incumbrance from 

 the state of our own currency. Such would have 

 been our situation, had we encountered the whole of 

 our calamity in the outset, arid sought for no pallia- 

 tion in the substitution of paper for coin. But as 

 things have been ordered, the substitution of paper 

 has both retarded the approach of the evil, and con- 

 cealed from us its real character. The exchange had 

 been deranged during eighteen months, before the 

 mercantile embarrassments became serious'; the Bank, 

 instead of narrowing, consented to increase its issues ; 

 the foreign .expences of government underwent no 

 diminution ; nor has there been any general fall in 

 the value of commodities. On the other hand, the 

 exchange conJnuts, in this its fourth year of depres- 

 sion, eo low as 20 or 25 per cent. 5 the list of mer- 

 cantile failures appears to suffer no reduction; and 



the effect of any measure of relief that may be adopt- 

 ed by goverment must necessarily be remote. It is 

 difficult, therefore, to pronounce, whether the con- 

 tinued use of paper money has lessened or aggrava- 

 ted the pressure resulting from political and com- 

 mercial causes ; the stroke was less sudden, but the 

 wound is perhaps deeper. It is foreign to our plan 

 to enter into political calculations, but there is one 

 idea too important to be omitted : Had the Bank 

 been subject to cash payments, the ruinous conse- 

 quences of stopping the American trade must have 

 been so soon perceived, that our orders in council 

 would have speedily been recalled, or, more proba- 

 bly, would never have been issued. 



After this narrative of the progress of our paper 

 currency, it remains for us to direct our attention to 

 the measures proposed to remedy its depression. In 

 February 1810, a Committee of the House .of Com- 

 mons was moved for by Mr Horncr, to " enquire into 

 the cause of the high price of gold bullion, and to take 

 into consideration the state of the circulating medium 

 of exchanges." A committee was accordingly na- 

 med, without much interference, it has been said, on 

 the part of ministers, and was occupied during two 

 months in the examination of evidence. The per- 

 sons examined were chiefly bullion dealers, merchants, 

 bankers, and bank directors. The leading members 

 in the committee, next to Mr Horner, are under- 

 stood to have been Mr Huskisson and Mr Henry 

 Thornton. It is the custom, in parliamentary com- 

 mittees, after hearing evidence, to adopt certain re- 

 solutions explanatory of the sense of the committee, 

 and of the substance of the report about to be fra- 

 med. It was only in this stage of the business, we 

 understand, that Mr Perceval began to apprehend a 

 decision contrary to the views of the Bank and of 

 government. Coming personally to the committee, 

 which he had hitherto very little attended, and col- 

 lecting those of the members whose ideas were coin- 

 cident with his own, he endeavoured, it is said, to 

 negative the proposition, that bank-paper was un- 

 derstood to be depreciated, but in vain ; the majority 

 of the committee having made up their minds to an 

 opposite conclusion. The report accordingly went 

 on ; but so complicated was the labour, that, not- 

 withstanding the time already bestowed, arid the fa- 

 miliarity of the subject to the gentlemen whose 

 names we have mentioned, above a month was requi- 

 red for its completion. It begins with a statement of 

 the extraordinary rise of bullion in our market, and 

 of the endeavours of the committee to ascertain what 

 cause, in the opinion of mercantile men, had led to 

 this irregularity. To the notion entertained by se- 

 veral witnesses, that it was owing to a rise of gold 

 on the continent, the committee could by no means 

 subscribe. The sudden rise in our foreign exchange 

 formed the next topic of enquiry ; and here, as in 

 the other point, the committee differ from the opi- 

 nions of practical men, the majority of whom attri- 

 buted it to the foreign expences of government, and 

 to the excess of our imports in 1809 above our ex- 

 ports. Two merchants, however, if they did not go 

 so far as the committee, in declaring a depreciation. 

 of our bank-notes, were of opinion, that their non- 

 convertibility into cash, had been materially Justm- 



Bullion. 



