clined. The restriction was prolong ed in 1814 only to the 25th of March 1815; and in 1815 only to the 5th of July 1816; but the extraordinary high price of gold, and the extreme depression of the exchanges, which, from whatever causes, prevailed during great part of these periods, combined with the large advances to Government which the exigencies of the public service required, to prevent any material progress being made towards a restoration of the treasure of the Bank to its former

amount.

Notwithstanding these discourageing circumstances, the Bank more than doubled its treasure during the last eight months of 1815; and the fall in the price of gold, and the favourable turn of the exchanges, enabled the Directors to raise it, by January 1817, to more than quadruple what it had been in the begining of 1815. At this period the Directors felt so confident of being able to comply with the injunctions of Parliament, even before the period at which the restriction was to expire, that they issued a notice for the payment in cash of all the L. 1 and L. 2 notes bearing date prior to January 1816. Finding little or no demand for cash in consequence of this notice, and their treasure having continued during the course of the year to increase to an amount far exceeding what it had ever reached, and, with few exceptions, bearing a larger proportion to the extent of their issues than it had ever borne before, the Directors issued a second notice in September 1817, for the payment in cash of all notes bearing date before the 1st of January in that year. This measure has been stated to the Committee to have been undertaken in the hope, that if it proved successful, that is, if the gold so tendered were not de

manded, or if when demanded it remained in the country, the complete resumption of cash payments would take place gradually, and as it were insensibly, even prior to the period then fixed by Parliament, viz. the 5th of July 1818.

In the month of April 1817, the effect of the great foreign loans made in that year began to be considerably felt. Between April and October 1817, the exchanges took an unfavourable turn, and the price of gold, which had, from July 1816 to March 1817, fluctuated between L.3:18:6 and L. 3:19:6, rose, between April and December 1817, from L. 3:18: 6 to L. 4:0:6; since which date it does not appear by the quoted prices to have been ever again reduced below L. 4. The new gold coinage also began to be issued in July 1817. The treasure of the Bank was raised to its highest amount in the month of October 1817. There appears to have been no considerable demand for gold previously to the month of October. The first issue of sovereigns in large quantities was in that month. There was a diminution in the demand for them in the three succeeding months; but in the month of Feb. 1818, the issue of gold increased till August in the same year; and the demand during this period is stated to have arisen decidedly for the purpose of exportation. It appears from the evidence of Mr Harman, that during the whole of the year 1817, the Bank did not think it necessary to make any reduction of its issues, either in consequence of the effect of the foreign loans upon the exchanges, or of its payments in gold, made in conformity to the notices above referred to. In fact, the average issue of Bank-notes in 1817 exceeded by L. 1,700,000 that of 1816; the average issue of

the last six months of 1817 exceeded the average issue of the first six months of that year by L. 1,870,000; and this increase, combined with the revival of Country Banks from their previous depression, probably raised the circulating medium of the kingdom in the last six months of 1817 considerably beyond the amount at which it had stood in the preceding year.

A great reduction has been made in the issue of notes of the Bank of England since the commencement of the year 1818; they had been, on the average of six months from July to December. 1817, at L.29,210,000; on the average of six months from January to July 1818, at L.27,954,000; from July to December 1818, they were reduced to L.26,487,000, and have since been further reduced to about L.25,000,000, and during the last three months of 1818, the issues of Country Banks are stated by persons much conversant with the subject, to have certainly not increased, and probably to have declined; but the price of gold and the state of the exchanges have continued to be such as to have drawn from the Bank, in addition to the gold demanded previously to March 1818, amounting at L. 2,022,000, a further sum of L.4,787,000, making in the whole an issue of L.6,809,000, in consequence chiefly of the liability with which the directors had, under different circumstances, voluntarily charged thenselves to pay the fractional parts of dividends and a certain proportion of their notes in cash. Their treasure was by these drains very considerably reduced; and they were still liable, in consequence of the same measures, to an additional demand for cash to the amount of several millions.

This unfavourable state of the exchanges and of the price of gold is

attributed to different causes by different persons examined before the Committee. By some to an excess in the circulating medium of the country; by others to the effect of the late regulations of the Mint respecting the new silver coinage, by which the proportions between the relative value of gold and silver are stated to have been so varied as to have occasioned the exportation of gold; by others it is attributed to the continued operation of foreign loans, to the temptation held out by a high rate of interest to the investment of British capital in foreign funds and foreign speculations, and to the large purchases of corn from abroad; a great proportion of which is paid for in advance, and must, therefore, in their opinion, have had a material effect upon the balance of payments, and of course upon the exchanges, during the year 1818.

It is under these circumstances that Parliament is called upon to deliberate, whether it will be most for the public interest to adhere to the decision it had taken in May 1818; or to allow a further delay for the preparations necessary to carry this important measure into execution, in order, as far as possible, to secure its ultimate accomplishment, and at the same time afford the means of taking such precautions as may diminish the pressure of whatever public inconvenience may be felt or apprehended.

Much difference of opinion upon almost all the questions, whether of theory or of practice, to which the attention of the Committee has been drawn, will be found in the evidence. Upon one point only there is nearly an unanimous opinion, grounded indeed by different persons upon different lines of argument, but concurring in the same result, viz. that it would not be safe and practicable

for the Bank to resume cash payments on the 5th July 1819; and as the Committee see sufficient reason to agree thus far with the practical result of these opinions, viz. that, in the state of things which now exists, there is a necessity for some further postponement, they need only refer to the evidence, in which the different reasons which lead to this conclusion are fully stated.

It can hardly be necessary for the Committee to remark, that this opinion does not rest upon any ground which can intimate the slightest doubt as to the credit or solidity of the Bank; that body possesses at the present moment the means of discharg-ing, out of the treasure actually in its coffers, every demand which could have been made upon it for payment in cash, in consequence of the notices referred to; and the only object of the measure which, at the recommendation of the Committees of both Houses, has been already adopted by Parliament, during the course of the present session, was to prevent the continuance of a drain of the existing treasure, and thereby to facilitate such operations as the Committee might feel it to be their duty to recommend, in preparation to a final removal of the restriction.

Of the ultimate sufficiency of the Bank, no doubt has been or can be entertained; but as Parliament thought proper, at the period when it imposed the first restriction upon the Bank, to direct an inquiry into the actual state of its affairs; and as a similar injunction is contained in the order by which this Committee is appointed, they have thought it their duty to lay before the House the statement in the appendix; by which it appears that, exclusive of the debt from Government, at three per cent., of L. 11,686,800, and of the advance to Government, at three

per cent., of L. 3,000,000, making together L. 14,686,800, the balance in favour of the Bank, on a comparison of its debts and credits (including in the former the Government balances in the hands of the Bank) is L.5,231,190.

The next subject to which the attention of the Committee has been directed was the consideration of what time might now safely be fixed for the ultimate restoration of the currency of the country to the ancient metallic standard of value, and what were the measures, if any, which it might be expedient to adopt, in order both to facilitate and to ensure the complete attainment of this great object.

Unless the market price of gold shall be, at the time so fixed, and shall continue to be afterwards, so near the Mint price as not to afford a profit upon the exportation of that metal, it has been abundantly proved by past experience, that no law can prevent such exportation, and the consequent demand upon the Bank. The main question therefore is, by what means, and within what time, the reduction of the price of gold to the Mint price, or, which is nearly equivalent, such a favourable state of the exchanges as will prevent a profit on exportation, may best be attained.

It is strongly contended by some of the witnesses, and is admitted by most, that a considerable and (as was expressed by one of them) forcible reduction of the issues of the Bank, accompanied by what some consider as a necessary, and others as a probable, consequence, a diminution in the issues of Country Bank paper, would produce a favourable turn in the exchanges and a reduction in the price of gold. But many of those who are most deeply impressed with the necessity of the earliest possible

Under the ancient system, if an unusual demand were made upon the Bank for cash, when the exchanges were above par, and the price of gold below the Mint price, as such a demand could only be occasioned by some sudden panic, or by a failure in commercial credit, and could not under such circumstances arise from the profit to be derived from the exportation of gold, there might be occasions in which the Bank might think, that with a view to its own interest, so closely connected with that of the commerce and manufactures of the country, the best mode of checking such a demand might be, to make a more liberal issue of its notes, and thereby to revive that credit, the want of which had produced the embarrassment; but if an unusual demand took place, at a time when, from the state of the exchanges and of the price of gold, it evidently arose from the profit to be made by the exportation of that metal, the Bank always found itself under the necessity of contracting its issues for its own security. In the latter case, therefore, whether the Directors did or did not adopt the principle, that the increase or diminution of the paper currency has a decisive influence upon the exchanges, they necessarily acted in the same manner as if they had fully adopted it.

There is a difference, however, not to be disregarded, in the impression likely to be produced upon the public mind, by any pressure arising from the measures to be taken by Parliament for ensuring the restoration of a metallic standard, as distinguished from those pressures which might be occasionally experienced under the former system. These would be felt to be the necessary result of the precautions which, under particular circumstances, might be taken by the Bank for its own security; and if any

temporary inconvenience were produced by them, they would manifestly have for their object to avert an evil universally acknowledged to be still greater, viz. the stoppage of payment by the Bank; whereas any pressure which might now be experienced by too rapid a progress towards the resumption of cash payments might be thought to be an evil voluntarily and unnecessarily incurred, from an impatience to attain an object, respecting which there was no difference of opinion, and therefore less readiness to make any considerable sacrifice for its speedy attainment.

It has also been stated to the Committee, that there exists at this present moment a considerable degree of embarrassment in commercial transactions, which is attributed by some of the witnesses to the overtrading which has taken place, encouraged, in the opinion of one witness, by the increase of the circulating medium in 1817; and is attribu. ted by others to the subsequent diminution of that medium. Very different opinions have also been stated respecting the probable duration of this embarrassment; but as all agree respecting its actual existence, a more than ordinary degree of caution is required in the adoption of any legislative measures which may, even by a temporary operation, in any degree aggravate or prolong it.

These considerations have united to incline the Committee in the proposal which they will submit in the conclusion of their Report, rather to extend the time at which the ultimate resumption of cash payments should be required to take place beyond the period at which, according to the best opinion they can form, there would be a probability of its easy accomplishment under ordinary cir cumstances, than to hazard the ulti