496 
price of bullion raised, by an issue of such 
paper to excess, is not only established as 
a principle by the most eminent autho- 
Titles upon commerce and finance, but 
its practical treth has been illustrated by 
the history of aliiost every state in ‘mo- 
«dern times which has used a paper cur- 
rency; and in all those countries, this 
principle has finally been resorted to by 
their statesmen, as the best criterion to 
judge by, whether such currency was or 
was not excessive. 
In the instances which are most fami- 
har in the history of foreign countries, the 
excess of paper has been usually accom- 
panied by another circumstance, which 
has no place’in our situation at present— 
a want of confidence in the sufficiency 
ef those funds upon which the paper had 
been issued. Where these two circum- 
stances, excess and want of confidence, 
are conjoined, they will co-operate and 
produce their effect much more rapidly 
than when it is the result of the excess 
only of a paper of perfectly good credit; 
aod in both cases, an effect of the sume 
sort will be produced upon the foreign 
exchanges, and upon the price of bullion. 
The most remarkable examples of the 
former kind are to be found in the his- 
tory of the paper currencies of*the Bri- 
tish Colonies in North America, in the 
early part of the last century, and in that 
of the assignats of the French Republic; 
to which the committee have been eua- 
bled to add another, scarcely less re- 
markable, from the money speculations 
ef the Austrian government in the last 
campaign. The present state of the car- 
rency of Portugal affords, also, an in- 
stance of the same kind. 
Tt was a necessary consequence of the 
suspenston of cash payments, to exempt 
_ the bank from that drain of gold which, 
in former times, was sure to result from 
an unfavourable exchange and a high 
price of bullion. And the directors, re- 
leased from all fears of such a drain, and 
no longer feeling any incunvenience from 
such a state of things, have not been 
prompted to restore the exchanges and 
the price of gold to their proper level by 
a reduction of their advances and! issues. 
The directors, in former tinits, did’ not 
perhaps perceive and acknowledge the 
principle more distimétly<than those of 
the present day, but théyfelt the incon- 
venience, and eet hincitie ia ae which 
practically established a check and limi# 
tation to the issue of paper: “In the pres 
sent times, the inconvenienee is'not felt ; 
and the check, accordingly) ‘is no longer 
SO hat ig 
Report of the Select Committee, - 
‘Hapse 
Fan. 14 
in'force. But your committee beg leave 
to report itto the House as their most 
clear opinion, that so long as the suspen- 
sion of cash payments is permitted to 
subsist; the price of gold bullion and the 
general course of exchange with foreign | 
countries, taken for any considerable pe- 
riod of time, form the best general crite- 
rion from which any inference can be 
drawn as to the sufiiciency or excess of pax 
per currency in circulation; and that the 
bank of England cannot safely regulate 
the amount of its issues, without having 
reference to the criteriow presented by 
these two circumstances. And upon a 
review of ail the facts and reasonings 
which have already been stated, ,your 
committee are further of opinion, that, 
although the commercial state of this 
country, and the political state of the 
continent, may haye had some influence 
on the high price of goid bullion and the 
unfavourable course of exchange with 
foreign countries, this price, and this de- 
preciation, are also to be aseribed to the 
want of a permanent check, and a sufii- 
cient limitation of the paper currengy in 
this country. oe 
In connexion with the general subject 
of this part of their report, the policy of 
the bank of England respecting the 
amount of their circulation, your com- 
mittee have now to call the attention of 
the House to another topic, which was 
brought under their notice in the course 
of their enquiry, and which, in their judys 
ment, demands the most serious consi- 
deration. The bank directors, as well 
as some of the merchants who have been 
examined, shewed a great anxiety to 
state to your committee a doctrine, of the 
truth of which they professed themselves 
to be most thoroughly convinced, that 
there can be no possible excess in the 
issue of Bank of England paper, so long . 
as the advancesin which it 1s issued are 
made upon the principles which at pre- 
sent guide the conduct of the «directors ; 
that is, so Jong as tbe discouftidfaner- 
cantile bills is confined to p Pune 
doubted solidity, arising ou = 
mercial transactions, ‘ab 
short and fixed perio. 
counts shonld-belqna 
growing out of 
tions, and fallmequ 
period, aré’s6@ 
principles. | > Buvth: 
restrained: fier 
ibene 
d and short 
ell-established, 
Ne the bank is. 
, in specie, there 
t to the assue gf their. 
in fixed by such rules.of 
discount, “and that during the puapeHaie™, 
a q f : * re) 
feet 
