716 
confidence in the country districts, to 
which eur system of paper credit is 
unavoidably exposed. 
The circumstances which occurred 
m the beginning of the year 1797, 
were very similar to those of 1793; 
an alarm of mvasion, a run upon the 
country banks for gold, the failure 
of some of them, and a run upon 
the Bank of Eneland, forn:ing a cri- 
sis like that of 1793, for which per- 
haps an effectual remedy might have 
been provided, if the bank of England 
had had courage to extend instead ef 
restricting ifs accommodations and 
issues OF notes. Some few persons, 
it appears from the report of the se- 
eret committee of the Lords, were of 
this opinion at the time; and the late 
governor and deputy governor of the 
bank stated to yotir committee, that 
they and many of the directors, are 
now satisfied, from the experience of 
the year 1797, that the diminution ef 
their notes in that emergency tncreas- 
ed the pubiic distress; an Opinion in: 
the correctness of which your com- 
mittee entirely concur. 
ft appears to your committee, that 
the experience of the bank of Eng- 
land, in the years 1793 and 1797, con- 
trasted with the facts which have 
been stated in the present report, sug- 
gests a distinction most important to 
be kept in view, between that de- 
mand upon the bank for gold for the 
supply of the domestic channels of 
circulation, sometimes a very great 
and sudden one, which is occasioned 
by atemporary failure of confidence, 
and that drain upon the bavk for 
gold which grows out of an unfavour- 
able state of the foreign exchanges. 
The former, while the bank maintains” 
its high credit, seenis likely to be best 
relieved by a judicious increase of ac- 
eommodation to the country; the lat- 
ter, so long asthe bank does not pay 
in specie, ought to suggest to the di- 
rectors a question, whether their is- 
sues may not be already too abun. 
dant. 
Your committee have much sa. 
isfaction in thinking, that the direc- 
tors are perfectly aware that they 
may err by a too scanty supply 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 dimi- 
nish their paper in the event of the 
long continuance of a high price of 
Report of the Select Committee. 
bullion and a yery unfavourable ex. 
change, yet it is essential to the com~. 
mercial interests of this country, and. 
to the general fulfilment of those 
mercantile. engagements which a free 
issue of paper may have occasioned, 
that the accustomed degree of accom- 
modation to the merchants should not 
be suddenly and materially reduced 5 
and that if any general and serious 
difficulty or apprebension on this sxb- 
ject should arise, it may. in the judg- 
ment of your committee, be coun. 
teracted without danger, and with ad- 
vantage to the public, by a liberality 
in the issue of bank of England pa- 
per, proportioned to the urgency of 
the particular occasion. Under such 
cirea wastances, it belongs to the bank 
to take likewise into their own con- 
sideration, how far it may be practi- 
cable, consistently with a due regard 
to the immediate interesis of the pub. 
lic service, rather to reduee theirpa- 
per by afgradnal reduction of their 
advances to government, {han by too 
suddenly abridging the discounts te 
the merchants, - 
2. Before your committee proceed 
to detail what they have collected with 
respect to the amount of country 
bank paper, they must observe, that 
so long as the cash payments of the 
bank are suspended, the whole paper 
of the country bankers is a superstruc- 
ture raised upon the foundation of the 
paper of the. bank of England. The 
same check, whichthe convertibility 
into specie, under a better system 
provides against the excess of any part 
of the paper circulation, is, during the 
present system, provided against an cx- 
cess of country bank paper, by its con- 
yerlibility into bank of England paper. 
Ifan excess of paper be issued in a 
country district, while the-London ecir- 
culation does not exceed its due pro- 
portion, there will be a lecal rise of 
prices in that country district, but pri- 
ces in London will remain as before. 
Those who have the country paper in - 
their hands will prefer buying in Lon- 
don where things are cheaper, and will 
theretore return that cotniry paper 
open the baker who issued it, and will 
demand from him bank o E gland notes 
or bills upon Londomg and thus, the 
excess of cotmntry paper being conti- 
nually returned upon the. issuers for 
bank of England paper, the quantity 
of the latter necessarily and effectually 
\insits the quantity ef the former. ‘I his 
