millions of francs. Of that gold, upwards of three fourths was in coin from this country; and this operation has continued during the present year, though the amount of the importations of this year has not been reported."

the bank took advantage of those circumstances, | France, in the sixteen months preceding the 31st and made a great addition to the amount of the pre- Dec. last, gold to the amount of 125 millions of cious metals in their possession. The purchases francs, (being equal to about five millions sterling;) made by the bank appear to have had no unfavora- and silver to the amount of a little more than three ble effect on the price of gold; and there is reason to believe, that it would have fallen to the mint price, had not the bank fixed the rate, at which they were willing to purchase, at 31. 18s 6d per oz. Mr. Goldsmid informed the committee, that "at that period there were no other buyers in the market, at Your committee are satisfied that the bank, in unthe price which was given by the bank: had there dertaking to pay their notes in cash, under the cirbeen, they would have been supplied on the same cumstances above mentioned, acted from the best terms, if they had wanted gold." Being asked, motives, and from a belief that the measure would whether, if the bank had not been purchasers at tend to facilitate the complete resumption of pay37. 18s 6d, he believes the price of gold would have ments in specie. Unfortunately it has had a contrafallen to the mint price, he answers, "I think it ry effect; the last of the three notices having been might after some time; but that is matter of opinion given at a period when the exchanges were unfavoonly." rable, when the price of gold had risen from 1.3 18s. In the year 1817 the bank had a much larger 6d. to 1.4 per ounce; and at a time when the bank had amount of cash and bullion in their coffers, than not (according to the evidence given by Mr. Harthey had been in possession of at any former period man) that control over their issues, which might since their establishment. From the commence-have enabled them to counteract the effect of the ment of the year 1818 the stock has been progres-unfavorable exchange, by a reduction of their pa sively diminished. The diminution has taken place per currency. in consequence of engagements into which the bank entered (in conformity with the power reserved to There was, in fact, in the half year between July them by the original restriction act,) in the months and December, 1817, a considerable increase in the of November, 1816, and April and September of the amount of notes issued by the bank. The average following year, to pay in the first and second in-amount outstanding in the four half years precedstance cash for all notes issued prior to the 1st Janu-ing, had not exceeded 1.26,771,914. In this half ary, 1812, and 1st January, 1816; and in the latter, to year it was increased to 1.29,210,035, having been pay cash for their notes of every denomination dat-in the previous half year, 1.27,339,768. It appears ed prior to the 1st Jan. 1817.

by the returns, that on the 5th of July, 1817, immethe amount outstanding was 1.25,800,000; on the 4th diately preceding the payments of the dividends, of October, being a few days before the payment of the dividends of that quarter, the amount was 1.28,900,000.

The issue of sovereigns between July and Dec 1817, amounted to 1.1,240,422, so that had the sovereigns remained in circulation, there would have been an increase to the circulating medium issued by the bank of England in the course of that half year, compared with the average amount outstanding in the four half years preceding, to the extent of 1.3,678,543.

The total quantity of gold coin issued from the bank, in consequence of the engagements thus entered into, and the continuance of the fractional payments, under five pounds, appears, by accounts before the house, to have amounted, between the 1st January, 1817, and the 1st January, 1819, to the sum of 1.1,596,256, in guineas and half guineas, and in sovereigns and half sovereigns to 1.4,459,725. Your committee have ascertained, that subsequently to the 1st January there has been a further demand on the bank for gold to the extent of about 1,700,000. The total sum, therefore, which has been issued by the bank since the commencement of the year 1817, has been about 1.6,756,000; and no doubt can Your committee cannot avoid expressing an opibe entertained that the coin thus drawn from the nion, that whatever might be the policy, and howbank was demanded, not for the purposes of inter-ever laudable the intentions of the bank, in engagnal circulation, but in order to realize a profit, either ing to make partial issues of coin in payment of. on its sale as bullion in this country, or on its exportation.

In July, 1817, the foreign exchanges became unfavorable, and have continued so since that period; a profit has been realized on the exportation of gold coin, and the bank has been subject to a constant demand for cash in payment of their notes.

The following extract from the evidence given by Mr. Alexander Baring shows the purposes to which a considerable portion of the gold, thus drawn from the coffers of the bank, has been applied:-"In France, it appears, by the report of the minister of finance, that there has been carried to the mint of

their notes, yet when the exchanges became unfavorable, and the price of gold rose above the mint price, the only mode by which they could have retained the coin in circulation, would have been a contraction of their issues; and unless the bank at that period possessed such a control over the amount of those issues, as would have enabled them to effect that object, your committee must consider it to have been inexpedient, in the then state of the exchanges, to undertake an extensive though partial issue of coin, which subjected the bank to considerable loss, and a great drain of treasure.

that the continued issue of coin from the bank, by Under these impressions, and from a conviction diminishing the amount of their treasure, would have the effect of postponing the period at which the termination of the restriction can take place, without producing, on the other hand, any advantage whatever to the country, while the exchanges and the price of gold are in their present state, your committee were induced to recommend to the house, in their first report, the immediate exactment of a law to suspend all payments in gold coin

by the bank, until your committee might be ena- lords of the treasury, and made payable at the bank, bied to present to the house their view of the whole subject which has been referred to their consideration.

The next important point to which the committee will call the attention of the house, is the amount of the issues of the bank of England, which are outstanding upon government securities: or, in other words, the amount of the debt due by the public to the bank of England,

The necessity of the repayment of a large portion of that debt has been so earnestly insisted on by the hank, and the nature and extent of the connexion between the government and the bank, involves'so many important considerations, that your committee deem it incumbent upon them to enter into some detail with respect to the origin and gradual increase of the advances made by the bank on behalf of the public, and the effect which they have, when carried to the amount at which they at present stand, of depriving the bank of that control over their issues of notes, the possession of which is deemed by them an essential preliminary to the resumption of cash payments.

In the appendix to the report will be found an account of the amount of advances made by the bank of England to the government, on exchequer bills and other securities, from the year 1792 to the latest period to which it can be made up.

but not charged on any branch of the revenue. The motives for passing this act are fully detailed in the evidence given by Mr. Bosanquet, then a director of the bank, to the committee of secresy, in the year 1797. He states, "that it had been the custom of the bank, time out of mind, to advance, for the amount of such treasury bills of exchange as were directed for payment to the bank, until the amount was about 20 or 7.30,000, when the treasury usually sent orders for the amount of such advance, to be set off from the respective accounts to which the bills properly belonged. In the American war they had been permitted to run to a larger amount, but he believed they never exceeded 1.150,000. Doubts occurred to him, when governor, whether the penalties of the act of William and Mary did not extend to this transaction; and for the purpose of removing them, the act of 1793 was introduced and passed." It appears to have been originally proposed, that the bank should be empowered to advance, to a limited amount of 1.50,000 or 1.100,000; but the act passed without any limitation; its operation being of course confined to advances upon treasury bills of exchange, on which species of security, no advances appear to have been made since the restriction.

By an act which passed very shortly after the first restriction act, the bank were prohibited from makThe first item of this account, entitled, "an ad- ing any loan or advance on account of the public vance out of sums issued for the payment of divi- service, during the continuance of the restriction; dends" now amounting to the sum of 1.1,098,820, but at the commencement of the following session ought not, in the opinion of your committee, to be it was enacted, "that the bank may make an advance considered as any portion of the debt due by the on the credit of duties on malt, and on the land tax, government to the bank. It arises from money ori-imposed in that session, and any other advance ginally lodged by government at the bank for payment of dividends to public creditors, which not having been claimed, has been withdrawn from the bank, and applied to the public service, under the provisions of acts of the legislature, passed in the years 1791, 1898, and 1816. It is not therefore an advance from the funds of the bank, but it is the property of the public creditors, which has been made available for public purposes, until demanded by them.

It will be seen from the account, that a great proportion of the advances of the bank are at present made under the two heads of "exchequer bills issued," and "exchequer bills purchased;" and before the committee point out the distinction between those heads of the account, they will shortly advert to the laws which have been passed since the in-1 stitution of the bank for the regulation of their advances to government.

On the original establishment of the bank, by the 5th and 6th William and Mary, a penalty is imposed upon the directors, if they purchase, on account of the corporation, any crown lands, or if they advance to his majesty any sum of money by way of loan or anticipation on any branch of the public revenue, other than on such funds only on which a credit of loan is or shall be granted by parliament. Such credits have ever since been granted, from time to time, and advances made upon them. The amount annually, from the year 1777 to the year 1792, extracted from the documents published in the report of the committee of secrecy of 1797, will be found in the appendix,

In the year 1793 an act was passed, protecting the governor and company of the bank of England from any penalty, on account of their having advanced, or advancing in future, any sums of money in payment of bills of exchange accepted by the

which may be authorised by any other acts which may be passed during the continuance of the restriction."

In almost all the acts authorising the issue of ex. chequer bills passed subsequently, a special clause has been introduced, empowering the bank to ad vance the whole ar a portion of the amount speci> fied in the act. They never advance any sum be yond the amount to which they are limited in the several acts, nor have the bills purchased by them, together, exceeded that amount.

The bills described as "issued," are those which

pass directly to the bank from the exchequer, under for instance, the bills issued upon the credit of anspecial contracts or agreements entered into; as, nual duties, and upon the advance of 1.3,000,000 as a loan to the public, in consideration of the renewal ofthe charter,

The bills "purchased," are those which are taken by the bank, (usually on an application from the treasury) when an issue of exchequer bills takes place, and when they cannot be sold to the public at a premium. The bank never credit any premi um, nor deduct any discount, upon the bills thus taken; nor do they resell such bills to the public.

An account in the appendix shows the total amount of exchequer bills authorised to be issued by parliament in every year since the year 1792, and the amount which the bank was authorised to take of each description of bills.

The amount of the advances of the bank to government, (deducting the sum issued from the unclaimed dividends) on the 26th Feb. and 2d August of each year since the year 1814, and of the bank notes issued during the corresponding half years, appears from the accounts presented to your com, mittce to have been as follows:

BANK NOTES.

1814. Jan. to June

July to December

July to December

July to December

July to December

July to December

1815. Jan. to June

1816. Jan. to June

1817. Jan. to June

1818. Jan. to June.

ADVANCES.

Feb. 26, 1814

Aug. 2,

-

Aug. 2,

Feb. 26, 1816

Aug. 2,

Feb. 26, 1815

The amount of the advances of the bank to go vernment was, on the 29th April last, 4.19,438,900; the sum of 7.1,098,820 being deducted from the account furnished by the bank, as the amount of advances on sums issued for the payment of dividends. It will be seen by references to a communication made by the court of directors of the bank, to the committee, as well as from the whole tenor of the evidence of the directors who were examined personally before them, that they consider the repayment of a large proportion of those advances essentially necessary, preparatory to the resumption of cash payments. As the notes which are issued by the bank, upon the discount of mercantile bills, re. vert to them at the expiration of the period which From the year 1790 to the year 1797, when the those bills have to run, and which never exceeds restriction act passed, the amount of advance made sixty-five days, it is clear that that portion of their by the bank to government, and of the notes out-issues can be extended or limited at their discrestanding on the 25th February in each year, was-tion; whilst over the notes which are issued in con

27,002,000

27,060,900

21,930,000

ADVANCES.

7,908,968 9,603,978 9,839,338 9,066,698 8,786,514 11,114,230 11,718,730

sequence of advances to government, they have not practically the same control. o whatever extent these advances may be reduced, the bank will gain a corresponding control over the amount of their circulating paper, and will be enabled to supply the diminution of notes thus created by an increase of their issues, either upon the discount of mercantile bills, or by the purchase of bullion, or if necessary, to make a reduction in the total amount of notes outstanding, equal to the whole or any part of the repayment.

1795 1796 The amount, therefore, of advances to the government does not appear to have borne, for some time previously to the restriction act, a much less proportion to the total amount of notes outstanding, than The only mode, during the suspension of cash the advances since 1814 have borne to the notes is-payments, by which the bank can effect reduction sued in corresponding periods.

of their issues, supposing no part of the advances It will be seen, that a material reduction of the made by them to the government to be repaid, is debt to the bank took place between the month of by limiting that accommodation to trade, which August, 1815, and the month of February, 1816, it they have long been in the habit of granting, by having been reduced in the latter period to the sum the discount of mercantile bills of undoubted solidiof 4.18,988,300, deducting the advances from un-ty, arising out of real commercial transactions, and claimed dividends.

This debt was again increased between February, 1816, and August following.

falling due within short and fixed periods.

Although the amount of the advances made by the bank on public securities is accurately stated in the In that interval, war taxes to a very considerable account in the appendix, and although the commit amount were remitted; a large addition, authorised tee strongly advise the repayment of the portion of by several acts of parliament, was made to the un-them required by the bank, yet they think it necesfunded debt, and to the advances of which the go-sary to observe, that in determining the actual vernment were indebted to the bank. The amount amount of the debt due to the bank on account of of those advances was again reduced from 1.37,060- these advances, an allowance ought to be made in 000 to 1.21,930,000 between the 2d of August, 1818, favor of the public, to the extent of the balances of and the 11th Feb. 1819. public money deposited at the bank.

It was proposed, in May, 1818, to repay to the The attention of parliament appears to have been bank a sum from eight to nine millions, by gradual first called to the extent and operation of those bainstalments of one million a month, from the month lances, in the report of the committee on public exof May; the bank having then considered that re-penditure, presented in the year 1807; from which payment sufficient (according to the evidence of it appears that the aggregate amount of the public the governor) "to enable them to make the expe- money deposited at the bank, was then calculated riment of the resumption of cash payments." to be 7.11,104,919; and a sum equal to 5 per cent.

To meet these charges and the services of the interest, on the average balances in question, was year, and also to effect a further reduction of the un-considered, by that committee, not far from the funded debt, provision was made, by a loan of three amount of the profits derived by the bank from this millions in money, and a gradual funding of exche-source. quer bills to the amount of about 27 millions, with power to the subscribers of making money pay ments, instead of bringing in exchequer bills; and it was understood that the bank should retain one half of the monies paid in, to the extent of the monthly payments abovementioned.

The average amount of public balances held by the bank appears to have been about eleven mil, lions, from the year 1807 to the year 1816; and in consideration of the advantage resulting to the bank from the psssession of them, the sum of three millions was advanced by the bank to government,

without interest, in 1808, which advance was continued, under the authority of acts passed by the legislature, to April, 1818.-Since the year 1816, the public balances held by the bank have been diminished, and their average amount in the year 1818, did not exceed the sum of seven millions. Their amount has been still further reduced by the operation of an act which has passed in the present session, which makes the growing produce of the consolidated fund available to a limited extent, for the public service; and in a certain degree within those limits lessens the benefit previously derived by the bank from its accumulation from the first to the last day of each quarter.

It appears, however, to the committee, that whatever may be, either now or hereafter, the amount of the public balances held by the bank, that amount ought always to be kept in view, and allowance made for it when the advances from the bank to the government are under consideration; for it is clear, that if a final settlement of this account were to take place, the public money deposited with the bank must be set off against the advances made by them to the government upon exchequer bills, and other securities bearing interest.

tent to which that authority may be in future exer cised.

II. Your committee proceed to the next head of their inquiry-the expediency of reverting to cash payments, at the period fixed by law for their resumption.

£29,210,035

27,954,518 26,487,859

It will be seen, by a reference to the papers in the appendix, that the bank, without departing from the principles upon which their issues on the discount of mercantile bills have long been regulated, have made a very considerable reduction in the amount of notes outstanding, compared with their amount at the commencement of the year 1818; From July to December, 1817, the average amount was From January to June, 1818 From July to December do. The average amount for the 3 months to the end of March, 1819 Should the legislature determine on the restoration of cash payments on the fifth of July next, the directors of the bank would naturally feel themselves compelled to postpone the consideration of all other interests to the security of the establishment over which they preside, and would make a further and very sudden reduction of that portion of their currency which they have immediately within their control.

25,794,460

In confirmation of this view of the subject, the committee beg leave to refer to the evidence of Mr. Haldimand, now one of the bank directors. He states, "that it is his opinion, that a sum of from 8 Much important testimony will be found in the to 10 millions should be repaid to the bank by go-minutes of evidence, with respect to the effect to vernment, supposing the public balances to remain be apprehended from a very rapid diminution of without any considerable decrease in amount." And the present amount of currency upon the trading being asked, "Does the aggregate amount of such and agricultural interests of the empire, of which balances operate as a diminution of the total advan-evidence your committee deem it incumbent on ces made by the bank to the public?" he answers, them to extract a portion, sufficient to give the "Yes, it does." house a just idea of the opinions prevailing upon For the reasons alleged, it appears to your com.this subject amongst the persons whom they exmittee, that although the amount of the advances of amined. the bank upon government securities is accurately Mr. Alexander Baring being requested to state stated in the appendix, yet in determining the effect in what manner an attempt to effect the restoring which these advances have of diminishing the con- of cash payments within the period of a year would trol of the bank over their issues, a deduction must operate upon the commerce and internal concerns be made corresponding in amount to the average of the empire, replied, "The resumption of cash sum held for any given period by the bank as a de- payments can only be effected by drawing bullion posite of public money, since that deposite, by les-into the country, or by a reduction of the issues of sening the amount of notes in circulation, restores to the bank, in proportion to its extent, the power of acceding to the applications made to them for the discount of the mercantile bills.

the bank. I cannot think that the bank could pay in specie, with any expectation of continuing in that state, until there was a considerable portion of specie already in the circulation of the country. I apYour committee trust they shall not be considered prehend that by no process, even if the effects of to have entered into unnecessary details in having any sudden reduction of “issues were totally disrethus given a full exposition of the relations between garded, could the sum necessary for the purpose the government and the bank. It will be seen by be brought into the country, within the period menreference to the evidence, that the amount of their tioned. I am further of opinion, that the operation advances to the public is urged by the bank as one of reduction necessary for the purpose I have menof the main impediments to the early resumption tioned must always be accompanied with some reof cash payments; and that in order to make prepa-straint and inconvenience to every branch of indus, rations for their resumption, the bank require a re-try in the country; and that if it were forced, with a payment to the extent of ten millions. The com- rapidity at all approaching to what would be remittee was anxious therefore that the amount and quired for the payment in the course of a twelve operation of these advances, and the degree to month, the injury would be intolerable; the reducwhich their effect is counteracted by the balances tion of paper would produce all those effects which of public money held by the bank, should be clearly arise from the reduction in the amount of money in understood; and this appeared to them the more any country; an effect which I think is well describnecessary, as the committee feel it their duty to ed in Mr. Hume's “Essay on Money." The conseclose this branch of their enquiry, with an earnest quences of a contraction or expansion of the amount recommendation to the house, to make immediate of money in a country seem more felt during the provision for the gradual repayment to the bank of progress of such contraction and expansion, than that portion of the debt, which the bank requires from any positive amount of money at any one given to be repaid, and to establish some permanent pro-period. It is not, in my opinion, of great importvisions, limiting and defining the authority of the ance what amount of money may exist in any counbank to make advances to the government, and to try; but that the question, of whether it is on the purchase government securities; and bringing un-increase or decrease, is one of great importance to der the constant inspection of parliament the ex-every branch of its industry,”

Mr. Haldimand stated, "that he conceived it to be [amount of gold in the country, previous to the necessary, that the bank of England, in order to be restriction, had been estimated by the late lord Mr. Rose stated it enabled to resume the payment of its notes in spe- Liverpool at thirty millions.

cie, should reduce their present amount to the ex- higher; but, perhaps, if we were to take it at tent of three or four millions forcibly." He ex-twenty millions, that might be about the amount plained, "that by the term forcibly he meant a re-which was in circulation previous to the restriction duction, not arising from three or four millions less act." He adds, that he thinks he is warranted in being demanded, but from three or four millions saying, that if twenty millions, besides what remainbeing demanded and refused by the bank to the ed in the bank, was necessary for the scale of expublic and government. He considered this for-penditure before the restriction act, it is taking it ced reduction of the issues of the bank of England moderately to contend that as much would be neto be necessary, in order to restore the rest of cessary now. the paper in circulation to its ancient value in Mr. Alexander Baring observed, "that it is diffigold, and the exchanges to par." Being asked, if, cult, indeed impossible, to form any accurate estiin order to produce the effect which he anticipated mate; but his impression is, that with a new and per from a forcible reduction of the issues of the bank, fect coin, such as the sovereign, which, in his opi it would be necessary that the reduction should be nion, would exclude the 17 and 21 notes, whether sudden?" he replied, “in my opinion every possible they are by law excluded or not, the amount of such disadvantage and inconvenience to the public would gold coin could not be much less than from 40 to 45 arise from a sudden reduction; I should certainly millions, He does not mean that the whole amount recommend its being gradual. would be required before cash payments could be Mr. Gladstone, a member of the house, and a mer-resumed; but he thinks that they could not be safechant, principally engaged in trade with the East ly undertaken with much less than half of that and West Indies, and occasionally in general trade, amount actually in the country, which its circulation gave an opinion, "that the influence which the re- would ultimately absorb; and that the half could be duction of the bank issues produces, is of a seconda-accumulated, without great pressure upon the ry nature; that, in other times, the alteration of two or country, in less than four or five years from the three millions in their issues would not have been present time." at all felt; but that in the present state of the trade of the country, after a year of much overtrading, and a great accumulation of foreign goods in the country, and of British goods for British account in foreign markets, whatever tends to narrow the means of circulation, acts in a much greater degree now than it would in other times."

The data on which any reasoning, with respect to the amount of any metallic currency that will be required subsequently to the removal of the restriction, are so imperfect, that your committee abstain from offering any decisive opinion upon the subject; but they think that Mr. Baring has overrated that amount. With respect also to the disAfter a full consideration of the evidence, and of position of the public, to require gold coin as curthe several matters to which it is material to ad- rency in preference to notes under five pounds, a vert, in considering the expediency of resuming conclusion may be drawn, from the testimony of payments in cash on the 5th of July next, the amount other witnesses, differing from that which Mr. Barof the advances of the bank to government, the ing has formed. It has been observed, in a former quantity of bullion in their coffers, the probable part of the report, that when the bank undertook effect of a rapid and considerable reduction of their to pay their notes in cash in the year 1817, no preissues, in whatever manner or with whatever view ference for coin was shown, until the foreign exsuch reduction might take place, your committee changes caused a demand for the purpose of expor are decidedly of opinion, that it is expedient to tation. Mr. Harman states in his evidence, "that, at continue the restriction beyond the 5th of July next. that period, he was induced to flatter himself that III. Your committee have now presented to the the doors of the bank would be opened-that (if he house their view of the two important points which might use the expression) the public would hardly they proposed, (according to the order of refer- know whether the bank was open or shut-that it ence) to make the first subjects of their investiga-was in a moment of tranquility; that people seemed tion-the state of the bank of England, and the ex-indifferent about gold-that instead of coming to pediency of resuming cash payments on the 5th of the bank for gold, they brought their gold to the July next. They now proceed to offer their ob- bank;-that remained, till the financial operations servations with respect to the period at which it in France began, and as soon as they were talked of, the tide turned." may be advisable to terminate the restriction.

They will, in the first instance, advert to the supply of gold which may now be required in order to meet the probable demands upon the bank on the resumption of payments in specie.

It is difficult to form any accurate estimate of the amount of gold in circulation previously to the year 1787; and conjectures, with respect to that which will hereafter be required, must necessarily be more vague and unsatisfactory.

Mr. Stuckey, a gentleman very extensively connected with banks in the county of Somerset, gave evidence to the following effect: "In the latter end of the year 1816 and the beginning of 1817, we had a circulation of coin for some months; it cost us at that period nearly one hundred pounds to transmit the surplus quantity of coin to London, of which four-fifths in value, at least, consisted of gold. We could not get rid of it in the country, our customers In the communication made to the committee by preferring our notes, In the spring of 1817, I bro't the court of directors of the bank on the 25th March, with me to town near 1000 guineas from one of our it is observed, "that the amount of specie in circu-banks; on taking them to our London banker, be lation before the war was variously estimated, even by persons best qualified, from their situation, to obtain information." It seems, however, to have been agreed that it was about thirty millions; but whatever the amount, the whole has beeen exported.

Mr. Harman states in his evidence, that the

requested as a favor, I would not leave them there. They had lately sent so many to the bank of England that they did not like to trouble them any more; besides, the bank only took those which were of full weight."

Notwithstanding this evidence,it must be admitted that no satisfactory conclusion can be drawn from