BULLION. 





mental in presenting t re establishment of the rate of 

 .<. The committee, in arguing that a coni- 

 !>k- part of tin- mrqu:ility of the exchange miibt 

 be owing to a fall in our paper currency, enter into 

 a very instructive explanation of the distinction be- 

 i) real and noniinitl exchange ; but they are less 

 successful in an attempt to calculate the relative 

 amount of our exports and imports for the year 

 1809. 



Tin- third subject of investigation, the inquiry in- 

 to the rules of the bank in respect to their issues, 

 gave rise to some anxious answers. The bank di- 

 rectors appear to have become by this time suspicious 

 of the intentions of the committee, and fought hard 

 to ward off (I'.ridt'iu'c, p. 79 and 89.) some of their 

 probing questions. The point on which they were 

 chiefly at variance, was, whether the amount of their 

 issues ought or ought not to be regulated by a refe- 

 rence to the price of bullion, and the condition of 

 the foreign exchange. The committee contend for 

 the affirmative, while the bank assert, that the validi- 

 ty of the bills presented to them for discount, should 

 form almost the only subject of consideration. The 

 bank also oppose the idea, that the irregular state of 

 the exchange is owing, in any degree,, to a degrada- 

 tion of their paper ; an allegation which leads the 

 committee into a series of arguments to shew that de- 

 preciation has been known to exist in cases where the 

 currency was, like that of the Bank of England, of 

 undoubted character as to ultimate solvency. The ear- 

 ly part of the history of the bank of England itself, the 

 case of the Scotch banks in 1763, and the more recent 

 example of the bank of [reland in 1809, are all ad- 

 duced in support of this position. The committee 

 then conclude this part of the Report, with a mix- 

 ture of praise and censure on the bank directors. 

 Their conduct, in not attending to the price of bul- 

 lion and state of exchange, is said to involve ' great 

 practical errors ;" while their moderation in " limit- 

 ing the amount of their issues, is declared to entitle 

 them to a continuance of the confidence so long re- 

 posed in them by the public." The fourth and last 

 division of the Bullion Report, regards the progres- 

 sive increase of our paper currency. After exhibit- 

 ing a list of the annual quantity of bank of England 

 notes in circulation since 1798, and commenting on 

 the bank advances to government, as well as to the 

 mercantile body for discounts, the committee are led 

 into an enquiry into the circulation of country banks. 

 Here, from the scantiness of materials, the greatest 

 caution was necessary ; and from the want of it the 

 committee have fallen into very serious mistakes. 

 They sum up the Report by declaring the existence 

 of an excess in our paper currency ; by ascribing this 

 excess to the absence of the salutary check of cash 

 payments ; by lamenting the evils attendant on de- 

 preciated currency ; by dissuading the adoption of 

 any indirect schemes to limit our paper circulation ; 

 and by recommending an act of parliament to resume 

 cash payments within the space of two years. 



Having thus communicated the substance of the 

 Report, we shall venture to make some observations 

 -with regard to its accuracy. Without joining in the 



JH,;, ul.,r exclamation, that it is the production of. 

 theorists, we are of opinion, that the most comet 

 part of it is the exposition of the principle* of money 

 and exchange ; ana that, in several other puiutt, it i 

 defective, from an unacquaintance, on the pan of the 

 frame? s, with the practice of mercantile buMnest. 

 They have fallen into the current error of imagining, 

 that the obligation of cash payments once withdrawn, 

 it was in the power of the bank to increase, almost 

 ad libitum, the extent of their circulation. They ap- 

 pear very inadequately impressed with the povtv 

 tlu- public to limit the circulation of bank notes by 

 withholding applications for discount ; a power very 

 happily illustrated by Mr Bosanquet, one of the 

 most ingenious defenders of the bank, f Had the 

 committee been sufficiently aware of this, they would 

 have paused before asserting (Itcport, page 24.) that 

 " the suspension of .-ash payments had had the effect 

 of committing into the hands of the directors of the 

 bank of England, to be exercised by their tole discre- 

 tion, the important charge of supplying the country 

 with that quantity of circulating medium which n 

 exactly proportioned to the wants and occasions of 

 the public." Perhaps, also, they would have qualified 

 their encomium on the directors, for their " forbear* 

 ance in turning their power less to the profit of the 

 bank than it would easily have admitted of." Our 

 next animadversions on the writers of the Bullion 

 Report, regards their inattention to the striking 

 points in the history of our paper currency since the 

 beginning of the war of 1793. No notice is taken 

 of the pecuniary embarrassments of 1795 and 1799; 

 nor is any attempt made to ascertain the causes of 

 the remarkable increase of bank notes subsequently 

 to the latter year. These were not topics of mere 

 curiosity ; they bore, as we have endeavoured to 

 shew, a direct resemblance to the unfortunate cir- 

 cumstances of the year 1808. The chain of reason- 

 ing supplied by a knowledge of antecedent difficulties, 

 would have led the writers of the Report, by an easy 

 course, to an estimate of the share which our ex pea- 

 ces in the peninsula, and our importations of corn, 

 have had in our recent difficulties. Perhaps, also, it 

 might have conducted them to a discovery of the evil 

 of a new kind, which we had brought on ourselves, 

 by stopping the American continental trade. To 

 have enumerated, and made allowances for the opera- 

 tion of those powerful causes, would have carried 

 conviction to the minds of the mercantile commu: 

 and have disarmed their opponents of their most effi- 

 cient weapons. Enough would still have remained 

 to substantiate the charge of depreciation, and to jus* 

 tify the argument, that nad our paper been converti- 

 ble into cash, the disorder in the exchange would have 

 been neither so great nor so permanent. But as the 

 Report stands, no notice is taken of the increase of 

 our foreign expenditure in 1808; no reference is made 

 to the deficient harvest of 18O9; and the American 

 trade, though alluded to in the evidence of their fa- 

 vourite witnesses, (Append**, p. 78, ISO, 131.) is 

 allowed to pass unnoticed by the committee. Ao 

 acknowledgment, indeed, is made (Rrport % p. 16.) 

 of the influence of political and commercial 



r Bosnnijuet's Practical Ctwwtfiwu, page 47. 



