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upon that paper money will then be kept within their legitimate bounds."

With reference to the system now in operation we have from the same authority," that the amount of paper should be represented by an amount of securities which never varies, and an amount of specie which is left to fluctuate with the fluctuation of the amount of notes out."

Mr J. H. Palmer, bank director, the first and most important witness on the part of the bank, says, q. 1142, "The reduction of the circulation, so far as may be dependent on the bank, being subsequently solely affected by the foreign exchanges, or by internal extra demand;" and afterwards, q. 1143, he explains the system of the bank to be "as far as may be practicable to throw the action of the increase or decrease of the circulation upon the public, with reference to the state of the foreign exchanges in the import or export of bullion." Mr Palmer's examination then goes on:

1145. "Is the committee to understand, that the object of keeping the amount of securities nearly invariable, is to preserve a certain fixed amount of notes outstanding, and to suffer the remainder of the circulation to be regulated by the action of the public exclusively?-Certainly.

1146. Is the proportion of onethird reserve in bullion fixed with regard to the circulation only, or with regard to the joint capacity of the bank as a bank of issue and a bank of deposit? In regard to the joint character of the Bank as a bank of issue and a bank of deposit."

It is to be understood from this, that when merchants and exchange brokers draw upon the bank of England for bullion to be exported, the bank-notes that they pay to the bank on the occasion are not to be re-issued,* in order that by that means the aggregate of notes in circulation being re. duced, money may be rendered so scarce throughout the country that Bank of England notes cannot be parted with to a large extent for this operation on the bullion.

The actual transactions of the bank, especially taken in conjunction with those of the other paper money issuers

of the country, have, it appears from evidence in the report, by no means corresponded with this interpretation of the proposed system of action; but it would be unjust to the bank directors not to point out that any departure from their own system probably results from the ill working of the whole paper-money system of the country, which is neither regulated by the bank of England, nor by any satisfactory principle.

Evidence of Mr W. R. Wood:

667. "Are you not aware that Mr Horsley Palmer, in his pamphlet on the conduct of the Bank of England, published early in the year 1837, ascribed the drain for gold during the year 1836 to the demand for gold which originated in the United States? I think his statement was, that he ascribed it in a great measure, not I think wholly, to the demand for gold for America; that the gold did go to America, there is, I believe, no doubt; but I apprehend, first, that if the bank had acted upon the rule of regulating the amount of her circulation by the fluctuations of the bullion, the demand of gold for America would soon have checked itself; and, secondly, that, acting as the Bank did act, the gold was sure to go away, either to America or somewhere else.

668. "Have you any further statement to make with reference to the conduct of the Bank of England ?-In the course of the year, from January the 1st, 1837, to January the 1st, 1838, things were brought back to a healthy position; the amount of securities, representing the circulation, the bullion, and the circulation, [deposits,] being all brought back to something like the points from which they had departed; but in the year commencing January the 1st, 1839, the Bank pursued the same course as in 1836, and with the same unfortunate results. From the 1st of January 1839, to the 1st of January 1840, there is an increase in that portion of the securities which, conjointly with. the bullion in the Bank, represents the circulation, of more than £4,000,000 in what ought to be a fixed amount; there is a decrease in the deposits of more than £3,000,000, whilst there is an actual increase of more than £1,000,000

*I am disposed to concur with several of the witnesses in considering a large proportion of the Bank deposits precisely the same, to all intents and purposes, as banknotes in circulation.

in the total securities; the Bank, therefore, in place of selling securities to meet the amount of £3,000,000 of deposits withdrawn, actually increased her securities; and the consequence was that she was on the verge of stopping payment. This calculation is made without reference to alterations which ought to be made for the Paris loan, which makes the matter so much the worse.

669. "You are aware that the rule you have stated for the management of the issues is not a rule which the Bank of England has herself laid down; can you state any case in which injury has arisen from the Bank's departing from such rules as she has herself laid down?—The rule of the Bank, I believe, proceeds upon the assumption that the deposits and the circulation are precisely upon the same footing with regard to the provision which she is bound to make for meeting them; but in the year 1839, the Bank departed from her own rule by increasing the securities. Mr Horsley Palmer, inh is evidence in 1832, in answer to question 84, says, he considers it important to keep the securities at as nearly the same amount as can be managed. Mr Warde Norman, in his evidence in 1832, in answer to question 2394, says, the object is to keep the securities, upon the whole, at the same amount, or nearly the same amount. In 1839, the Bank increased her securities from £21,680,000 to £22,913,000, or more than a million. The rule of providing for a drain upon her deposits by a sale of securities would have told her to reduce her securities; her own rule would have told her to remain at all events stationary. In violation of her own rule, she increased her securities, and the committee are aware how nearly very serious consequences have resulted from this.

And Mr S. J. Loyd says, 3077, "Under the existing system, the deviations from the state requisite to be maintained for the certain preservation of convertibility, have been such, that reflecting persons, and indeed the whole community, have been seriously apprehensive that payment in gold on demand would cease; and therefore we are now dealing not with an evil that has actually occurred, but with a danger of the occurrence of that evil

which has been of the most imminent and alarming kind."

It is probable that the confusion and discrepancy discovered in any attempt to reconcile system and practice in the management of the paper circulation, result partly from the mixture of the regulation of the currency with banking operations in general, which, though they have never yet been separated in practice, are in their nature perfectly distinct.

How the Bank of England and other bankers may deal with stocks, exchequer bills, deposits, and bills of exchange, is a matter which it is unnecessary for Government to control, or for the committee to be informed of. The parties concerned in managing those things, with due care of their own interest, are not suspected of endangering that of the public; but there is ample experience and evidence that the creation of paper money cannot be left to the uncontrolled management of the same parties, without extreme hazard to the most important interests of the country. Mr Norman says, q. 3324, "The rule of 1832 certainly acted satisfactorily about the period referred to in the question, but I certainly consider that it is a rule founded on incorrect principle, and which cannot be maintained at all times and under all circumstances; and it seems to me that the error of the rule, as I have already so often stated, arises from its uniting deposits and circulation, and mixing together the business of issue and ordinary banking business, which I conceive ought to be completely separated."

Upon this one subject there is complete agreement among all the wit. nesses, though they differ as to the mode and principles of the future regulation of the paper currency; and those best qualified to form an opinion on the subject are not only undecided as to plan, but are evidently unable to point out any system of conducting the issue that would be satisfactory to the country.

A distinct bank of issue seems to be rather the favourite project; but we apprehend that the country at large would at once repudiate such a scheme. -How is such a bank to be constituted? How managed? Is it to be an overwhelming monopoly? or a Government engine?

Edinburgh: Printed by Ballantyne and Hughes, Paul's Work.

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THE TREASURE-CONVOY; A PASSAGE IN THE EARLY CAREER of
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HERE was a distinguished man; of a distinguished father the more distinguished son. Few people but have heard his name as a name of power and revolutionary value in the historical application of old Pagan fables, previously useless or incoherent. Many are aware of the particular direction given to his researches -that through the best part of his life that direction tended determinately towards Roman antiquities, and of the particular success which crowned them-that it was the success of a creator. It is known pretty generally, perhaps, that the Roman history, before and after Niebuhr, corresponds, by analogy, to the system of the heavens before and after Sir Isaac Newton. Kepler, before Newton, had delivered pregnant oracles of truth; and, without those, even Newton must have wasted his powers. So had many writers directed a fixed stream of sceptical light upon the fables of the early Roman history; and without such an awakening of his attention, it is possible that the combining faculty of Niebuhr might never have been solicited to that field of enquiry. The echo of the internal contradictions amongst Roman fables might have sounded less clamorous in his ear; and the harvest of new truths, or of new relations amongst old ones, might have seemed less promising in the prospect, even where the existing barrenness was most painfully undeniable. Not, therefore, absolutely without a warning from his predecessors, did Niebuhr come to this great

VOL. XLIX. NO. CCCVII.

task. Glareanus had sent forward a morning breeze over the dead sea of the Roman annals; Bayle had shot his sceptical spirit into the most superficial of the Roman legends; Beaufort, amidst his general superficiality, had laid bare some veins of new truth, leading into far ampler strata; Perizonius had operated on the same general body of materials in a mode better adapted for lasting results, though less immediately attractive. Then came the great events of Niebuhr's own times; the resurrections, as from the dead, of three separate authors, indispensable to his full success-viz. Lydus, Gaius, and Cicero De Republicâ. Secondly, the great lights which Savigny was able to spread over the Roman jurisprudence, and the advantage at one time of daily intercourse with this oracle of civil law. Thirdly, the favour of the Prussian Government, shown both personally to Niebuhr, and with almost equal benefit to his studies, through the munificence applied to two royal foundations-the universities of Bonn and Berlin.

At the time when Niebuhr reached mature manhood, it might be said that for Roman history both philosophy and learning had severally done its utmost; and as yet with no result whatever. Archæology, applied to Roman infancy, was confounded. Political sagacity, applied by the very subtlest of political thinkers to the same impracticable problem, had terminated in the same unprofitable result. Machiavel had failed; Montes

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