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..Q“ Do you adveit to the difference between the market and the mint price of gold ?"--H.“ I wish to have time to consider that question."? * If we pay attention to these answers, we cannot fail to per: ceive how vague and inconclusive they are. The first contains no reference to the question asked, and tells us merely what all the mercantile world knew before, that the Bank confines its loans to short-dated securities. So do all Banks ; were they to do otherwise, they would become mortgagees, and must soon cease to be Banks.-In the succeeding queries, this reluctant witness is obliged to yield a step each time: but so averse is he from making the desired admission, that, when the question is repeated, after an interyal of three days, he must still have time to consider it. How derogatory is this conduct to the respectability of the cause which it is meant to support ! On reading such an examination as this, and the of. fensive and ill advised speech made by a Barrister at a late meeting of Bank-proprietors, which has since been so sedulously circulated in the news-papers, what other opinion is the public likely to form than that the Directors have adopted a determination to resist, at all hazards, the resumption of cash-payments; and that the general benefit is secondary, in their minds, to the profit of their establishment? We would hope and believe better things of the Directors. Let us at tribute their improper method of defence rather to a deficient comprehension of their case, than to a deliberate intention of separating the interest of their corporation from that of the public.. Their first business should be to understand thoToughly their situation ; ascertaining how far the rise in the exchange and in bullion is to be ascribed to causes beyond their controul, and how far it may be owing to excess of paper. Next, in regard to their conduct since the suspension, while they maintain their title to general moderation in the exercise of the most seductive power with which a Bank was ever vested, (a title admitted by the Bullion-Committee,) let them not be ashamed to acknowlege the commission of partial errors. Were they actuated by such impressions as these, they might say to the Legislature,
« The suspension of cash-payments was no act of our's; it was the consequence of the wants of Government. Hitherto the Bank has profited greatly by it : but we have not been unmindful of the chance of an eventual deduction from these profits ; and though the rate of our dividends has been augmented, a reserve has been provided for any ultimate loss that may attend the resumption of the cash-payments. . Examine the course of our issues since 1797 ; yout will find that we have never forced a note into circulation, and that ibe great aug nentations of our notes took place after two seasons of
mercantile distress, viz. in 1799 and in the present year. The rise in the exchange and in bullion is owing, in a great degree, to political and commercial causes, over which we have no influence. Restore qur mercantile intercourse with the Continent to the state in which it existed three years ago, and we will resume our cash-payments. Any loss that might then attend the resumption would be clearly a , loss from over-issue, and this, if we cannot prevent, we will defray:
conducting this measure without diminution of our mercantile discounts, provided that you reduce our advances to Government.”
Such language as this would become the respectability of the Bank, and would go much farther towards procuring for them the confidence of the public than the sophistry of Sir John Sinclair or the declamation of Mr. Randle Jackson :- but it will be vain, we fear, to expect the adoption of such a course on the part of the Directors, as long as they remain under their présent impressions in regard to the rules of issuing paper. In former days, the necessity of paying cash on demand was so effectual a remembrancer as to indicate, without any circui. tous ratiocination, the due linit of their emissions :-now, the absence of this potent check has not been compensated by restraints of the same substantial character. The Directors have indeed been reminded of the grandeur and delicacy of their trust, and of their having been constituted by the Suspension Act the arbiters of the paper-circulation of the kingdom; a charge requiring a comprehensive knowlege of the actual state of the national commerce, as well as a profound acquaintance with the laws of productive industry. We are aware, from our intimacy with men of business, that, in regard to political economy, their minds are in general a tabula rasa ; and we therefore looked into the evidence with some degree of curiosity for the replies which the Bank-Directors would make to these magnificent distinctions. True to the character of matter-of-fact-men, they declare that their system embraces no wider range than the plain citizen-like rule of confining their discounts to good bills. Talk to them, ad libitum, of the increase of capital which is caused by rapid circulation, and of the danger of future depreciation by over-issue, they will only be puzzled by hard names, and their imagination will take no higher soar than to the sagacious notion of kecping out of harm's way by avoiding bad securities. This brief kind of logic is, we acknowlege, so perfectly natural to a mercantile corporation, that the public has no right to expect any thing else: but what shall we say of a Legislature, that permits the management of its circulating medium to go on for a dozen years together Frithout subjecting it to any definite regulations ?
The Committee have laboured hard (page 23.) to convince their banking antagonists that their grand discount-rule is not good for the country, and that they may fall into the evil of over-issue even on the best securities. The goodness of a bill is a sufficient sanction of a loan to the individual applicant, but not of a permanent addition to the stock of national paper. money: yet the notes very soon depart from the hands of the first borrower, and are blended with the general mass. What afterward becomes of them? Were they convertible into cash, the excess would soon cure itself : but, under the present system, they must remain circulating, without a chance of getting rid of them, except by the precarious and indirect course of a diminution in the future applications for discounts. — Now, experience tells us that applications for discount are not of a diminishing character ; nor is it likely that they should, while money can be borrowed by nieans of them at five per cent. in time of war. The Bank-Directors (and here, as mentioned in our last Number, has been their grand error,) have shewn no desire to embrace opportunities of contracting their issues. The result of all this is that, without the wholesome check of cash-payments, paper once issued is not readily returned on the issuers, and that every excess has a tendency to raise the price of commodities. · The other point, on which the Comunittee have chiefly displayed their argumentative powers, is a very unwelcome discussion to the Bank.-- It is nothing less than that bank-notes may be at a discount, however undoubted be the solidity of the Bank ; - that the thing is good, but that we have too much of it.- In support of this unpalatable doctrine, the Committee leite the case of the Scotch Banks half a century ago, whose stability was unquestionable, being founded on Janded property, but whose notes were, notwithstanding, at a discount of three or four per cent., from over-issue;- an evil which was not cured till these Banks contracted their local circulation. Another example of this mortifying truth was afforded in 1804 by the Bank of Ireland, whose case is very significantly pointed out by the Committee to the Directors of the Bank of England, as bearing a strong resemblance to their own. Nobody im. pugned the solidity of the Bank of Ireland; yet that country laboured, as England does now, under a heavy loss in her foreign exchanges.' The Directors of the Irish Bank alledged, like their brethren in London, that no over-issue could exist while their notes were advanced only on unexceptionable security; nor were Sir John Sinclairs wanting to argue that all the mischief was owing to an unusual demand for gold. The
mercantile witnesses, at that time examined, like the witnesses before the late Bullion-Committee, coincided in the opinion of the Directors ; with the remarkable exception of a Mr. Mansfield, whose knowlege of the evil effects of over-issue in Scot. land led him to form a more enlightened opinion. The result of the parliamentary investigation in 1804 was a very material reduction in the amount of the issues of the Bank of Ireland, and a consequent rise in their value.
We have now taken under consideration the principal remarks contained in three parts of the Report of the Bullion Committee. The fourth part relates to
The progressive Augmentation of Bank-notes since 1797. This subject having been already treated in our last number, we shall delay for the present any additional observations on this highly interesting document, and direct our attention to Sir John Sinclair's pamphlet; which will be found a very fit subject for farther comment.
Sir John presents us (page 12.) with a comparison of the financial and commercial resources of the country in the years 1796 and 1809, as a proof that our wealth is in a state of rapid increase. While the exports of the former were only thirty millions, those of the latter, he triumphantly remarks, amount to fifty millions : but he omits to include in his statement the fall in the value of money, or to solve the very material question whether fifty pounds will at present go farther in private or public expenditure than thirty would have done in 1796. Again, he informs us that the public revenue produced in the former year only twenty millions, and in the late ter nearly sixty : but his treacherous memory has here also betrayed him, and he forgets to say that the increase has been caused by new taxes. It is a favourite argument with those gentlemen who believe that our national wealth is augmenting, that, notwithstanding our new taxes, the old imposts remain as productive as ever; which is true in numerical amount, but by no means true in the extent of service which they are capable of defraying. If Sir John, and others who deal in tables, will make the requisite deduction for the depreciation of money, they will find no cause to boast of the .comparison between the years 1796 and 1809.
It is now time for us to take notice of a most singular cir. cumstance in the literary career of Sir John Sinclair ; - no other than that he, who is now so strenuous an advocate for the continuance of the Suspension-Act, was formerly one of its most ardent opponents ! His “ Letter to the Governor and Directors of the Bank of England, with additional remarks," published in 1797, contains these notable observations :
" It is extremely difficule to limit the quantity of paper to be issued, and to keep it within due bounds. The coinage of papermoney is too great a power to be intrusted either to individuals, or to those who govern a nation. The true plan therefore is that under which this nation has so long prospered, namely, that of having a dne proportion of coin and paper, the one couvertible into the other at a moment's nolice, according to the pleasure of the holder ;'and this leads me to state the plan of arranging measures for opening, without a moment's delay, the Bank of England, which, besides other advantages, will prevent our being inundated with paper. - Until that be done, neither public or private credit, nor agriculture, nor commerce, nor manufactures, nor the incoine of the nation, can go on prosperously. - It is only by restoring the credit of the Bank, that centre of universal commerce, by increasing its capital, and enabling it to confine its circulation within due bounds, - and above all, by separating for ever the Government and the Bank, so that the latter shall not be a mere political engine for the issuing and circulation of paper, under the controul and direction of the other, that we can ever expect to see this country restored to its former enviable situa. tii n. -The re-opening of the Bank of England, from the effect it. must have on the councils of the enemy, would be the harbinger of
In addition to this decisive testimony of Sir John's opinion in 1797, we may refer the readers of our Review to the extracts from the Baronet's History of the Revenue up to 1802, which they will find in our 49th Vol. p. 156. In that work, his account of the Bank is thus concluded :
« From this concise view of the various agreements with the Bank of England, it does not appear that they were ever altended with any material benefit to the public. The only sum which government ever reccived without becoming bound to pay either the in. térest ùsual at the time, after a short suspension, or to repay the principal, was the triding sum of 110,00ol. obtained of Mr. Grens ville. It is to be hoped when a bargain comes again to be con. cludel, instead of any advance in money, or any inadequate com. pensation of that nature, that one half of the clear annual profits of the Company will be insisted on.”
It is natural for a plain man to ask, whence has arisen this wonderful difference of opinion between the Sir John Sinclair of 1797 and the same personage of the present day? We believe that we have solved the problem ;-it proceeds from a singular affection on the part of the worthy Baronet for the interests of agriculture. However he may have varied in other things, he has been steady in this predilection, and has transferred his partiality from paper to coin and vice versa, according as either seemed most suited to the purpose of supplying the improvers of land with ample funds." In his History of the Revenue, he says, “ The more I reflect on the subject, the