the experience of so short an interval as that which notes, for several years past, and the various opiis referred to by Mr. Harman and Stuckey. Great nions of those who were deemed by your committee uncertainty must prevail with respect to the amount most competent to form a judgment with respect of gold which may be required for the purpose of to the cases which have of late influenced the exinternal circulation; and the bank must be prepared, changes and the price of gold, will be ascertained not only for the possibility of a much larger demand by a reference to the evidence, for those purposes than will probably be made, but for the consequences of a drain upon their treasure, induced either by such a temporary depression of the exchanges as shall afford a profit on the exportation of the precious metals, or by a disposition to hoard them, arising from sudden panic and temporary want of confidence in paper currency. It must be considered also, that the stock of gold now in this country is very limited. The long continuance of the restriction has caused the exportation of nearly the whole of that which circulated previous ly, and the natural inducement to transmit the coin from this country, where it was not necessary, to other places, where it could be more profitably employed, has been, in a very trifling degree, counter-tensive remittances. acted by the legislative enactments which prohibit Other witnesses, admitting that the causes which such an application of it. have been adverted to had a tendency to depress Your committee have already observed, that for a considerable part of the years 1816 and 1817, the foreign exchanges were in favor of this country, and that since the month of July of the latter year they have been below par. Some of the witnesses ascribed the unfavorable change to the effect of the loans which had been made about that period by foreign powers,to the remittance of British capital, for the purpose of being invested in foreign securi ties and foreign commercial enterprize, and to the effect of a very large importation of corn in the course of the last year; and some of those witnesses are of opinion, that no measures could have been taken by the bank to control the effect of such ex It is possible, in the opinion of your committee, the exchanges, conceive that a contraction of the again to procure any quantity of gold which is like-issues of the bank sufficient to counterbalance the ly to be required for the purposes of currency; but the operation of these causes, might, and infallibly a corresponding amount of the capital of the coun- would, have taken place, had there been an obligatry must be withdrawn from productive employ- tion on the bank to pay its notes in specie on de ment, for the purpose of acquiring and retaining mand. the gold in circulation; and causes are at present in However the exchanges may have been thus af. operation, which are likely, by increasing the value fected, in the course of the last and the preceding of the precious metals, to increase, in a proportion-year, your committee see no reason to apprehend ate degree, the difficulty of obtaining, within a li- that the causes abovementioned, or any similar caumited period, an adequate supply for the use of ses, can continue to affect them in such a degree as this country. to preclude the bank of England, by a constant reference to the exchanges and the price of gold, and when necessary, by a cautious reduction of their paper currency, from gradually approximating its value to that of gold, and ultimately re-establishing and maintaining it at par. It appears that the governments of other countries in Europe are now occupied in substituting a metallic for a large portion of the paper currency, which the necessities of war conpelled them to establish; and that the supply of gold and silver imported into Europe of late years, has been diminished in consequence of the disturbed state of the Spanish colonies. These efforts on the part of other countries to restore to par, with the precious metals, the value of their respective currencies, would, by making the exchanges more unfavorable to this country, aggravate the evil of a long continued restriction, but they will certainly, by increasing the value of the precious metals, render increased exertion, on our part, necessary for procuring a sufficient supply. The ability of the bank, however, to resume and continue cash payments, depends less upon the actual amount of treasure it may be possible to accumulate, than upon the state of the foreign exchanges, previously and subsequently to their resumption, and to the degree of certainty there may be, that the market price of gold can be reduced to, and made to conform with the mint price. Your committee have had submitted to them a calculation of the amount of British capital now invested in foreign securities, and of the remittances, which may probably be required for further payments on account of foreign loans. The calculation is founded on the estimates of three commercial houses, extensively engaged in foreign loans, which estimates are stated to vary to an inconsiderable ex tent; and it is computed that the amount of British capital in foreign public securities, is about ten mil lions five hundred thousand pounds, seven millions of which are supposed to be in French stock. The estimate was furnished to the committee by Mr. Haldimand, who thinks there is a possibility of error, to the extent of one or two millions. He is of opi. nion, that little or nothing more will be sent from this country, on account of foreign loans, now, in course of payment. Mr. Holland, a partner in the house of Messrs. Baring, does not consider the whole amount of BriUnless such a reduction can be effected, and such tish capital invested in foreign, including American a conformity established, it will be in vain for the funds, to be ten millions, he speaks of capital perbank to expend their capital in the purchase of bul-manently invested, and does not take into the aclion. No accumulation of treasure, to whatever extent it can be carried, can render the bank competent to satisfy the demands, which will inevitably be made for gold, if the bank are under an obligation to issue it at the rate of 31. 178. 10d. per ounce, and if the parties, having a right to demand it, can continue to realize a profit of 5 or 6 per cent. upon its exportation. The documents in the appendix afford ample information, with respect to the state of foreign exchanges, and the price of gold, measured in bank count that which may have been employed in speculation in foreign funds, a great part of which, he observed, had been drawn back, with profit, to this country. He does not think that more than three millions of British property are permanently invested in French stock, and is of opinion, that if it ad vances in price, a considerable portion of that will be withdrawn; and that there is no probability that any considerable sum will be remitted from this country, in consequence of loans now contracted for abroad. Your committee are of opinion, that the future | pany a return to cash payments can be realized' effect upon the exchanges of remittances, on ac- they trust they shall not be considered to exceed the count of foreign loans, will be very limited: that powers committed to them by the heuse, by the preparations for the resumption of cash payments suggestion of such a plan, though it may involve a will tend to diminish that effect; and that subse- temporary departure from the laws which regulatquently to their resumption it will be subject to a ed our currency previously to the restriction." A plan of this nature has been under the consi constantly operating control. In corroboration of this opinion, the committee refer to the manner in deration of the committee; and before they explain which the exchanges of France and Holland, (coun- its details, or assign the grounds on hich they are tries having a metallic currency) have been affected disposed to recommend the several measures which form a part of it, they will present the general outby similar remittances. line to the house. The Dutch capitalists have embarked, to a very They propose, that after the 1st May, 1821, the considerable extent, in the foreign loans that have recently been made, and are supposed to have tak-bank shall be liable to deliver a quantity of gold, not en nearly three-fourths of those made by Russia; but less than 60 ounces, of standard fineness, to be first no sensible effect has been produced upon the ex- assayed and stamped at his majesty's mint, at the eschanges or currency of Holland. France, notwith-tablished mint-price of 31. 17s. 103d. per ounce, in standing the great extent of contributions to foreign exchange for such an amount of notes presented to powers, which have been defrayed by that country, them, as shall represent at that rate the value of the has maintained an ample metallic currency. It ap- gold demanded. That this liability of the bank, to deliver gold in pears in the evidence of Mr. Holland and Mr. Irving, that the price of gold has remained nearly station-exchange for their notes, shall continue for not less ary at Paris for the last four years; that in 1807, than two nor more than three years from the 1st of when there was in this country a variation in its May, 121, and that at the end of that period cash price, to the extent of seven per cent. there was payments shall be resumed. That, on a day to be fixed by parliament, not later none in Paris: and that between the 5th Oct. and 22d Dec. last, whilst the variations in exchanges than the 1st Feb. 1820, the bank shall be required between Paris and this country amounted to 4 per to deliver gold, of standard fineness, assayed and cent. the greatest variation between Paris and any stamped as beforementioned, in exchange for their country, which fiad a metallic currency, did not ex-notes, (an amount of not less than 60 ounces being demanded) at 47. 18. per ounce, that being nearly ceed per cent. Mr. Rothschild being examined, as to the effect the market price of standard gold in bars, on an of the contributions which France has paid to fo-average of the last three montlis. reign countries, upon her exchanges, replied, "perhaps from 1 to 14 per cent." That, on or before the 1st Oct. 1820, the bank shall pay their notes in gold of standard fineness, at the rate of 31. 19s. 6d.; and, on or before the 1st May, 1821, as beforementioned, at the ancient standard rate of 31. 178. 104d. When your committee consider the extent and value of the exportable produce of this country, they can have no doubt of its ability to command such a Your committee proceed to state the reasons portion of the precious metals as may be necessary for the purposes of internal currency, and to main-which induced them to recommend the adoption of tain them in circulation by the same means by which these suggestions. they are maintained in other countries, where, from By requiring the bank to pay, after the 1st of May, an imperfect, state of credit and confidence, and 1821, a given quantity of notes, in standard gold, at the absence of banking establishments, a much lar-the mint price, a security against fluctuation in the ger metallic currency is necessary than this coun- value of paper currency will be provided, of the try will require, in proportion to its foregn trade same nature with that which payments in specie and internal commercial dealings. afforded previously to the restriction act. If the Difficulties must be encountered during the pre-issues of the bank shall, at any time, exceed the parations for the resumption of payments in specie; amount to which they must be limited, in order to but those difficulties are, in the estimation of your maintain their value on a par with gold, the bank committee, outweighed by the important and per-will be subjected to an immediate demand for gold, manent benefit of restoring that standard by which, and will naturally have recourse, as before the repreviously to the year 1797, the value of commodi-striction, to the contraction of the issues of ther ties was measured, and which, though variable in a paper. certain degree, is much less exposed to fluctuation than any other that can be devised. ternal circulation; and whatever quantity it would be necessary to provide, with the view of replacing the small notes at present in circulation, may therefore be dispensed with. That portion of capital which must otherwise be applied to the purchase of an expensive and unproductive instrument of The chief recommendation of this plan, in the opinion of the committee, is, that it will enable the Your committee abstain from entering more at bank to pay their notes in gold at a much earlier pelarge into this important topic, from a considerationriod than they could pay them in the present gold that the legislature has, on various occasions ex-currency. There cannot, while this plan is acted pressly pronounced its opinion on the policy of re- on, be any demand for gold for the purposes of inestablishing the metallic standard of value; and that the duty which it has devolved on your committee is no other than that of considering at what period, and by what means, that great object can be best effected. They see nothing in the circumstances of this country, or of Europe, which can render it expedient to postpone preparations for the resump-commerce, will be less available for the employtion of cash payments; and by thus deferring, most ment of productive labor; or at any ratio, time will probably, to aggravate the difficulties which may be be afforded, during the operation of the plan, for inseparable from that measure. If, however, the the gradual abstraction of that capital, and for the committee can suggest to the house any plan by accumulation of such a stock of the precious metals which, in their opinion, the pressure of such difficul- as may enable the bank with perfect safety to supties may be greatly relieved, and, at the same time, ply a metallic currency. Altho' in the event of genethe most important advantages which would accom-Tral panic, and a want of confidence in the stability Between the present time and the beginning of the year 1820, the committee cannot anticipate an operation of any of those causes which affect the value of the precious metals, so extensive as to prevent the bank from counteracting the effect of them by such a reduction of their issues as may be made without producing public inconvenience. of paper credit, the bank would be exposed to the suspensions will take place; and to induce a gradual same demand to which they would be liable, were accommodation of commercial transactions, to a cash payments resumed, yet it is probable that the system of currency which, being long discontinued, drain caused by sudden and local alarms would be would not be suddenly resumed without restraint greatly diminished, if not altogether prevented. and embarrassment. They conceive that such seIn speaking of this plan, Mr. Baring observes, curity will be best provided, by requiring the bank under such a system, the whole amount of bullion to revert at an early period to that principle on that would be required, must be that amount which which, previously to the restriction act, their issues the bank would be under the necessity of keeping were regulated-a reference to the price of gold. for the purpose of balancing the variations that may They propose, therefore, that time having been alfrom time to time occur in the amount of currency,lowed for the repayment of a portion of the advanwhich at different periods the state of the country ces to government, the bank shall undertake at a may require, and farther, any amount which the given period to deliver gold in exchange for their public may be disposed to hoard. I should not notes in the manner already described. think that the amount so required by the bank could much exceed five or six millions, because I should not think that the contraction and expansion of currency at different periods could go much beyond that amount. Hoarding would go certainly to a less extent than under a system of coin, because there could be no small hoards, and persons would be less disposed to hoard larger sums when they had If the price of gold shall remain the same as it is not the means of issuing them as currency, if they at present, the demand from the bank, which will should be disposed to do so, otherwise than by scll-have to deliver it at that price, will necessarily be ing or carrying them to the bank. Under these very limited. If in the interval any causes shall afcircumstances, I should incline to think, that ten fect it, and produce a rise in its price, the bank must millions of bullion would be abundant for every in that case contract its paper, either positively, as purpose; but it is difficult to speak with accuracy of compared with its present amount, or relatively, te an untried plan." any increased demand which there may be for it; and With respect to the preservation of the standard thus by increasing its value as currency, proportionof value, Mr. Baring states, "that he is quite confi-ately diminish the inducement to demand gold. dent that the standard of the country, and of course the par value of the paper, would be preserved in much greater purity than under any system of coin." Mr. Holland delivered a paper to the committee in reference to the plan of bullion payments, in which he thus expresses his opinion: "I can venture to assert, as a practical man of business, that there will be little it any difficulty in carrying it into effect; that it will not unnecessarily cramp circulation; that it will not impede the ordinary measures, either of government or the mercantile community, but that, on the contrary, it will restore order and harmony to the system, and give to the country what all parties, who wish its welfare, desire,-a safe and efficient standard of value; variable, it is true, in a certain degeee, but less variable than any standard which any country has ever yet established. Your committee will now give their reasons for recommending the arrangement, which they have suggested, for regulating the mode in which gold shall be issued in exchange for bank notes, between February 1st, 1820, and May 1st, 1821. It may be objected that the adoption of this sug gestion appears to recognize a departure from the ancient standard of value: but it recognizes it no otherwise than as it at present practically exists: it recognizes it for a very limited period, and with no other view than to provide for the gradual return to that standard, the deviation from which it acknow. ledges. The committee trust that they have sufficiently explained the grounds on which they recommend that, with a view to the establishment of a metallic standard of value at the earliest period, the bank should be required to deliver standard gold in exchange for their notes. They do not express any preference for the system of bullion payments over that of payment in specie abstractedly; nor are they prepared to recommend them as a permanent substitute: but they consider them the best means of facilitating and insuring the resumption of payments in specie with the least public inconvenience. They are of opinion that when once the ancient standard of value The committee consider it necessary to fix a de-in this country, has been re-established, the great finite period at which the bank shall be under the impediments to a return to our former system will obligation of issuing gold at the mint price; and a be overcome; and it will be in the power of the standard be thus established to which the value of bank, or of individuals, by taking the advantage of the paper currency shall conform, and by which its a favorable state of exchange, to increase the sup issues shall be regulated. Parliament has, on more ply of the precious metals in this country, to any exthan one occssion since the peace, fixed a period for tent to which they are likely to be required. the return to payments in specie; and when it has Your committee are aware that it may be objectconsented to a futher suspension of them, has expres-ed to the plan of bullion payments which they have sed an opinion that their resumption was highly de- recommended-first, that by necessarily continuing sirable; and has assigned as the reason for continuing the notes below five pounds in circulation, it conthe restriction, the expediency of enabling the bank tinues the present inducements to the crime of forto make such preparations as to their discretion and gery; and secondly, that by requiring the presenta experience might appear most expedient, for ena- tion of a large amount of notes in demand for gold, bling them to resume payments in cash without pub-it gives to the possessor of notes to that amount an fic inconvenience. accommodation which the holder of a smaller quanThe committee, therefore, are desirous in recom-tity will not possess. On the first of these objecmending the further postponement of those pay-tions, your committee observe, that it is scarcely ments, to devise some additional sécurity that pre-possible to calculate on a resumption of specie payparations shall be made for their resumption; to pre-ments accompanied with the total exclusion of the vent an impression on the public mind that further small notes at a period much, if at all, earlier than that at which it may take place, if the recommenda- | land, whom they had an opportunity of personally tion of the committee be adopted. When the le-examining, that there is reason to believe that no gislature has, at former periods, contemplated the difficulty would exist, on the part of the bank of removal of the restriction, the necessity of continu- Ireland, in carrying into effect any regulations of ing the circulation of the small notes for some time the same nature with those which may be adopted subsequently has been foreseen, and is at present with respect to the bank of England. Your committee would here close their report, if provided for by law. It is true, that after the resumption of cash payments, the amount of small they did not think it necessary, shortly to advert to bank notes in circulation would probably be dimi- the circulation of country banks. The notes of all nished, but there seems no reason for concluding those establishments are exchangeable for the notes that the temptation to forgery, which must depend of the bank of England. As a part of the currency, on a consideration of risks and profit, would be di- therefore, they must be affected by any fluctuation minished in proportion to the decrease of those in value to which bank of England notes are now notes, provided they were not altogether excluded. liable; and, consequently, will be alike secured from The force of this objection will also be lessened pro- such fluctuation, by any arrangement which will portionately to the degree of success which may at- effectually place and maintain the latter upon a par tend the attempts that are at present making to de- with a metallic standard of value. Although, from vise means of rendering the imitation of bank notes this view of the subject, your committee are led to more difficult Your committee have been inform- the conclusion, that there can be nothing in the naed, that the plan recommended by the commission-ture of the circulation of country banks, which can ers appointed for inquiring into the mode of pre-form an obstacle to the gradual resumption of cash venting forgery of bank notes may be expected to payments, upon the plan which your committee have be in full operation in about three months, and they suggested, they have made it their endeavor to ashave received from two scientific members of that certain the probable amount of that circulation, at commission (Sir Joseph Banks and Dr. Wollaston) different periods; though they have to regret that the satisfactory assurance, that their confidence in they have not been able to obtain as precise and full the increased security which the new form of note information as might be desired. There are not sufficient data from which to ascerwill afford, as well by creating fresh obstacles to a successful imitation, and by giving a more obvious tain the exact amount of country bank notes at any facility to the public in detecting any attempt to one time in circulation. Your committee called for give currency to forged notes, has been confirmed accounts from the stamp office, of the number of by the progress of their enquiry and experiments promissory notes stamped in each successive quar since the date of their report, communicated to par-ter, from the year 1810; and as these accounts show the number of notes stamped in each of the classes liament. into which they are divided, according to their several denominations, if the nominal value of each is assumed, for the sake of calculation, to be the highest which such note could bear according to the stamp affixed, the total amount stamped in each. year would be as follows: With respect to the second objection, your committee remark, that the object of the plan which they recommend is, by securing a control over the quantity of the circulating medium, to regulate the value of the whole, and to maintain paper on a par with gold. While this object is effected, the holder of notes, to whatever amount, has a security for their value, which, without this plan, he would not possess, during the interval which must precede the resumption of cash payments. Should the house determine to act upon the recommendation of the committee, it will be expedient to continue the act which passed in the present session, restricting the further issue of gold coin from the bank. They propose no interference with the laws which regulate the mint, conceiving it desirable to retain, as a check upon any undue contraction of the issues of the bank, the power which individuals at present possess, of receiving coin from the mint in exchange for bullion, without loss or deduction, at the rate of 3£ 17s. 103d. per ounce. They recommend, not as an appendage to the plan which they have suggested, but as a politic measure under any system of currency, the total repeal of the laws which prohibit the melting or exportation of the coin of the realm. The committee conceive it to have been clearly demonstrated by long experience, that they are wholly ineffectual for the object for which they were designed; that they of fer temptations to perjury and fraud, and give those who violate the law an unfair advantage over those who respect it. 1814 1815 1816 1817 1818 £10,255,841 9,075,258 If these notes on an average circulate for three years, the highest aggregate amount to which they can have reached is £29,232,870. Your committee are led to conclude, from the information of Mr. Lloyd, that the whole amount of notes stamped, which still remain in such a state as to be circulated, can never have been at once in circulation. He says, "a banker may have 50,000 notes lying by him, his having paid the duty, and having the notes ready, by no means proves that they are in circulation. Sometimes there may be a very large amount locked up by him, at other times they may be almost all in circulation. In time of alarm, he takes care to have them as much at home as possible; in times of posperity and general confidence, he has no hesitation in issuing them on satisfactory security." Mr. Lloyd expressed an opinion, that the issue of paper by the country banks might be from forty to fifty millions; but your committee are rather led to infer, from the general tenor of the information be. fore them, that the amount of this branch of the paper circulation, throughout Great Britain, has never exceeded from 20 to 25,000,000. . Your committee have received an intimation from the directors of the bank of Ireland, that they shall be prepared to resume cash payments six months Whatever may have been the amount, it appears after their resumption by the bank of England. In making this communication, the directors contem. undoubtedly to have been liable to great fluctua plated a return to payments in specie; but the com- tions, as may indeed be inferred from the accounts nittee have the satisfaction of ting to the house, of the stamps before alluded to, but with more ceron the authority of the governor of the bank of Ire-tainty, from the account furnished by the three char tered banks of Scotland, representing the proportions which the quarterly averages bear to each other, of the respective circulation of each bank, at three corresponding periods; the scales by which the circulation of these banks is thus shown, estab. lish the degree of the proportionate variations in each respectively; but it is to be observed that those scales, being constructed upon different data, afford no means of comparing with one another the actual amount of their respective issues. British linen company Last qr. Third qr. 1813. 1,400 8,773 910 6,720 267 As a very large part of the currency of Scotland is furnished by those banks, it must be inferred from the preceding scales, that whatever was the amount at the close of 1813, not less than one-third had been withdrawn from circulation in 1816, since which period an equal amount has been re-issued. issues of the bank of England, the credit of which is fortunately unassailable by the influence of similar circumstances, must have a tendency, by dimi. nishing the amount of the paper currency, to raise the value of the whole. This, in the opinion of your committee, was one of the effects produced by the rapid contraction of our currency in 1816 and 1817; and to it may be as cribed, in part, the fall in the price of gold, and the favorable state of the foreign exchanges during that interval. Last qr. A fluctuation, corresponding with this in point of time, and at least, equal in degree, appears to have taken place in the paper issued by the country banks in England. The number of these establishments licensed in 1814 was 940; in 1817, was 752. Mr. Lloyd stated, that the circulation of the coun-ed on commercial credit, are questions of great diftry banks was at its highest in 1813 and 1814, but was considerably reduced in 1815, and the beginning of 1817; and being asked as to the amount outstanding at the latter period, when compared with the former, he answered, "I can hardly say; I should think it was reduced nearly one-half." Your committee were furnished, by Mr. Stuckey, with the following scale of the circulation of a con siderable country bank, for the last four years. March 10 12 16 ficulty, respecting which your committee could not, without further evidence and considerable delay, have enabled themselves to submit an opinion to the house. Your committee have foreborne from entering into any reasoning upon the effect produced upon the value of our currency, by variations in the nu merical amount of the notes issued by the bank of England. So many circumstances contribute to affect that value; such, for instance, as the varying state of commercial credit and confidence-the fluctuations in the amount of country bank paper-the different degrees of rapidity with which the same and further information on the same subject will be amount of currency circulate at different periodsfound in the evidence of Mr. John Smith, a mem- that your committee are of opinion, that no satisfacher of the house, Mr. Samuel Gurney, and Mr. Gil-tory conclusions can be drawn from a mere referchrist. 1816 1817 1818 Whatever may have been the diminution in the amount of the circulation of country banks in 1816 and 1817, it was not in any degree caused by a diminution of the issues of the bank of England. The circulation of country paper is liable to be affected by want of confidence, generally brought on by extensive failures in some of those establishments, and the result of which is, that other country banks, however solvent, participate more or less in the general discredit, and are obliged to restrict their issues, from a regard to their own security.--In the opinion of Mr. Tooke, “A like effect is sometimes produced, and in a much greater degree, from the discredit of their customers, to whom they are in the habit of advancing money; most of their customers being holders of articles which are likely to be affected by a general depression of price Although there may be reason to infer from the opinion of the witnesses most conversant with the management of country banks, and to whose evidence your committee beg leave to refer, that a reduction in the amount of the notes issued by the bank of England would speedily and necessarily be followed by a proportionate reduction of the country bank paper; still it must be very obvious, that, independently of that cause, the latter is liable to a sudden and highly inconvenient contraction, under such circumstances of distrust and difficulty as Do. 1818 occurred in 1816. The effects of this contraction, ufless obviated by a corresponding increase in the $540,906 37 643,443 97 759,743 33 722,232 74 711,880 69 Receipts of cash in the years 1814, 1815 Expenditures in the year $71,264 94 3,378,207 10 |