722 



BRITAIN. 



too much. When those advocates assert, that the 

 indefinite extension of paper circulation is a real 

 blessing, they go to prove that you cannot give too 

 much food to adventurous speculation ; that you 

 may with justice reduce to beggary every person of 

 a fixed income in the kingdom. They would, in 

 short, justify the assignats of France, or the swind- 

 ling system once proposed by John Law. These 

 assertions, which we have now quoted, are more re- 

 spectable. They are, to a certain extent, true, but 

 what is true in them proves too little. It may, and 

 ought to be admitted, that an unfavourable balance 

 of trade and payment, independently of paper issues, 

 have contributed to aggravate the high price of 

 bullion ; but they do not prove, that the restriction 

 of the bank payments has not also had its full share 

 in the generation of the same evil, and has actually 

 occasioned more than any other assignable cause, the 

 unfavourable exchange with foreign countries. Their 

 arguments do not invalidate the justice of the recom- 

 mendation offered by the bullion committee, that the 

 bank should resume their payments in cash. It ap- 

 pears also, from the report of the committee, that 

 iince the check on paper issues has been removed, 

 the bank have not only doubled the number of their 

 own notes, but have given rise to a country paper 

 circulation, still more extensive. Before the restric- 

 tion bill, the bank, we believe, never discounted bills 

 to any banker ; and while they adhered to this rule, 

 no banker could trade upon artificial capital. Since 

 the passing of the act, many of the London bankers 

 have opened discount accounts with the Bank. This 

 has contributed to increase the number of country 

 banks. Since 1797, the number of country banks 

 kas increased from 230 to 721. The immense profits 

 which the bank directors make by these discounts, 

 prevents them from being scrupulous about the real 

 solidity of the traders to whom they extend their dis- 

 count. The public, in the mean time, is not more 

 protected from the over-issue of those 721 country 

 banks, than against the over- issues of the Bank itself. 

 The Bank of England is the fountain head from 

 which the country banks are supplied, and when the 

 country banks are called upon to change their notes 

 for cash, they give out Bank of England notes. 



The cause of the depreciation of paper has been 

 strenuously disputed. That its abundance causes 

 great depreciation, and that such depreciation must 

 increase with the increasing issues, until the bank 

 shall pay in gold, has been distinctly proved. We 

 do not deny that the state of our commerce may 

 have contributed aho, though in a lesser degree, to 

 augment the scarcity of bullion. The existence of 

 depredation is not, however, disputable, whatever be 

 the cause. 



Mr Bosanquet himself, has, in his second edition, 

 jivcn up completely the question of depreciation, in 

 reference to our legal tender ; and without any 

 allusion to it as a temporary occurrence, he pro- 

 poses an entirely new standard of value, from a com- 

 parison with which he infers that our currency is 

 not depreciated. He proposes that the interest of 

 L. 33 : 6 : 8 in the three per cent, stocks, should be 

 the standard measure of the value of our currency. 



This is in effect saying, that a one pound note of the Briain. 

 Bank of England is to be the standard by which we " 

 are to judge of the depreciation of that same one * 

 pound note. To this bold and alarming doctrine, it 

 is to be trusted the public will never submit. If the 

 bank directors, forsaking the metallic standard of 

 value, should continue to act on the principle that a 

 pound note can never be depreciated while it continues 

 to be the interest of L 33 : 6 : 8 in the three per 

 cent, stocks, there is no excess nor depreciation of pa- 

 per, no rise in the price of provisions, no extent of 

 mischief from which the public can be secure. The 

 forgers of coins, wild are whipt or sent to Botany 

 Bay, for what in the cant phrase is called diminishing 

 the scarcity of half crowns, would be harmless, com- 

 pared to the diminishes" of the scarcity of paper, 

 who should carry this principle into full practice. 



The committee conclude their report, by suggest- 

 ing, that the restriction on cash payments cannot safely 

 be removed at an earlier period than two years. Ad- 

 verting to the circumstance, that as the law stands at 

 present, the bank would be compelled to pay in cash 

 at the end of six months after the ratification of 

 peace ; but the committee are of opinion, that if 

 peace were to be immediately ratified, it would be 

 hazardous and impracticable immediately to enforce 

 the standing law. Two years they think ought to 

 be given in the event of peace, but not more, though 

 the war should continue so long. Those who have 

 exhorted most strongly to the repeal of the restric- 

 tion bill, have not denied, that, exclusive of the cla- 

 mours which would arise from those who are selfish- 

 ly interested in the profits of the bank, the return to 

 a better system must be made with caution. The 

 remedy of the evil is acknowledged to require caution 

 by those who most strongly advise it. Mr Blake 

 himself expresses a doubt, whether the legislature 

 may not be under the necessity of receiving, rather 

 than proposing conditions. Such an influence have 

 the directors acquired, not merely over the finances 

 of individuals, but of government itself, that at one 

 time they extorted a promise from the prime minister 

 (Mr Pitt), that no future loan or advances to the em- 

 peror should be resolved on, without previous com- 

 munication with them. On this occasion they con- 

 trouled the minister in the most important of political 

 operations, to protect themselves from an embarrass- 

 ment brought on by themselves, by their imprudent 

 advances to government. Among the remedies pro- 

 posed, by those who have written on the subject, it 

 has been suggested, to oblige the directors every suc- 

 cessive half year, to diminish the average quantity of 

 their notes in circulation by half a million, and to 

 continue this diminution till the market price of bul- 

 lion be restored to its mint price ; then the resump- 

 tion of cash payments might take place without the 

 dangers apprehended from a sudden diminution of the 

 currency. Another plan has been advised, viz. to 

 begin the remedy by obliging the bank to pay a 

 small percentage upon its notes, at the option of the 

 holder, and increasing this percentage gradually. 



The expediency of establishing a new chartered Man of a 

 bank has been also suggested, with much appearance 

 of propriety. The power of the bank, to be respon- 



it. 



