the average of the three last years of which the accounts have been given in; the increase of the charge of the national debt from L. 13,430,000 in 1797 to L.43,819,000 in 1819; and the amount of the taxes, which since 1792 have arisen from about 16 to 50 millions (an increase occasioned not merely by an increased rate of taxation upon the same articles but by the imposition of new taxes upon a great variety of articles) might have been expected to require a much larger increase of circulating medium. It is, however, obvious that such amount would not have necessarily borne any specific proportion to the amount of transac tions of every kind, or to that of revenue. The flourishing state of commerce and of credit producing a greater rapidity of circulation, will have enabled the same quantity of circulating medium to carry on a much greater amount of transactions; and the various modifications of credit to which such a state of things gives birth, together with the successive improvements in the arrangements of commercial and banking business, must have had the same effect to a great extent. There must also obviously be a great difference in the required amount of a currency consisting of paper only, and that of a currency consisting partly of paper, and also, in a large proportion, of gold. It is to these circumstances (co-operating possibly with others) that we may perhaps attribute the sufficiency of the circulating medium actually existing to perform functions to so much larger an amount than were performed in 1797 by the circulating medium then existing, which was probably not many millions less than at present.

What proportions the various

component parts of the circulating medium may bear to each other, after the resumption of cash payments, it is difficult to conjecture. They must evidently be influenced by the future regulations of Parliament, with respect to the nature and description of the paper currency.

If the paper currency is to be confined, as it was within a short period before the Bank restriction, to the issue of notes of L. 10 and upwards by the Bank of England, and of L 5 and upwards by the Country Banks, the necessity for a very large amount of gold coin for smaller payments is evidently indispensable. Should Parliament think proper to continue both to the Bank of England and to Country Banks the liberty of issuing notes of a lower denomination, and particularly of L. 1 and L.2, this permission would probably have the effect of keeping up a paper circulation bearing a much larger proportion to the whole, than in the former case, and would so far diminish the necessity of an extensive circulation of gold coin. But although it would diminish that necessity, the degree in which it would diminish the demand for gold coin can only be stated as a matter of conjecture. The established habits of the public may operate so decidedly in favour of a paper circulation, that there might be only a very small demand for gold coin; and as far as any judgment can be formed from the short interval during which the Bank issued gold coin in exchange for their notes before the rise in the market price of gold occasioned a demand for exportation, this might probably be the case; the period was, however, too short to afford sufficient grounds for any decisive inference as to the future; and it is on the other

hand the opinion of some of the witnesses, that the new coin would be preferred to paper.

The Committee, attaching great importance to the restoration of the paper currency to a metallic stand ard, are also deeply impressed with the great advantages of such a currency when so regulated; and they think it highly desirable that a large proportion at least of the transactions of the country should be car ried on by that medium. But the question, what proportion ought to be so carried on, (if it were a point capable of solution, or could be the subject of regulation), wherever a mixed circulating medium is permitted, is very different from the ques tion, what proportion the different classes of such a mixed circulating medium will actually bear to each other, when left to be decided by the supposed interest, or even by the inclination of the public.

The latter question, however, is one, upon the result of which, one way or the other, the most serious practical consequences depend. Any judgment formed beforehand must unavoidably be conjectural, and yet upon such judgment we must be forced in some degree to act. Upon the greater or less probability that, in the event of the opening of the Bank upon the ancient system, paper would still be preferred to coin, must depend the extent of the accumulation of such coin, with which the Bank must be prepared to meet that demand. Unless this point be rightly estimated, the Bank, on its first re-opening, might experience a demand, against which it would be difficult, if not impossible, to guard.

If the Bank is to make prepara tion, in the interval between the present time and the expiration of the restriction, to fill with gold coin all

those channels of circulation which might possibly require to be so filled, the very extent of the purchases of bullion, necessary to be made for such a purpose, must in some de gree, whatever may be the interval, and in a very great degree, if that interval be short, tend to obstruct the attainment of the ultimate object→→→ the equalization of the market price of gold to its Mint price; and unless the effect of these purchases were counteracted by a rapid reduction of the issues of the Bank, for commercial discounts and other pur poses, to an extent of which the mischief has been so frequently referred to, the price of gold might be such, at the very moment of the resumption of cash payments (supposing that moment to be previously and unalterably fixed), as to render the continuance of such payments difficult and hazardous.

These considerations have led the Committee to examine with parti cular attention a plan which has been suggested to them, and which, as it will appear by the evidence, is viewed in a very favourable light by many persons well qualified to form a judgment upon such a subject.

The leading principle of this plan is, to restore to the country, by the speediest and safest means, a metal. lic standard, as the regulator of its paper currency, by permitting the Bank to pay its notes in gold bullion, at the Mint price, instead of gold coin.

Various advantages appear to the Committee to attend this plan in preference to a simple resumption, in the first instance, of cash payments by the Bank. It establishes, equally with cash payments, the principle and the salutary control of a metallic standard, while it affords the best prospect of avoiding or di minishing many of the inconvenien

ces which are by many persons apprehended from that measure. It exempts the Bank from the obligation of providing a quantity of gold necessary to replace, in case the public should prefer coin to paper, all the smaller notes to the amount probably of 15 or 16 millions, which are now circulated in London and in the country; and therefore, by relieving the bullion market from this demand, it prevents that augmentation of the price of gold which might be the consequence of large purchases of that article made in a short space of time, under the pressure of a necessity publicly and previously known. And it continues to the Bank, and therefore to the nation at large, all the advantages to be derived from the employment of a capital equal to the amount of all the small notes in circulation, whether of the Bank of England or Country Banks. In the one case, this capital would still be, as it now is, employed in the support and extension of agriculture and of com. merce, whether foreign or domestic; in the other, it would be merely an addition to the dead stock of the country, producing neither profit nor advantage.

It seems probable also, that when the Bank is made liable to pay only in bullion, and that only in exchange for notes to a certain amount, it would be chiefly subject to such demands as might arise from the excess of the market price of gold a bove the Mint price, and the consequent profit upon exportation. To a demand resulting from this source, every Bank issuing paper convertible into either of the precious metals must at all times be liable; and unless the market price of gold can be kept within certain limits of deviation from the Mint price, either by the reduction of the issues of paper,

or by the effect of a favourable balance of payments upon the exchanges, the whole system of banking must necessarily fall to the ground. It is no objection, therefore, to this plan, that it does not provide against a possible inconve nience, which is, under such circumstances, an inseparable attendant upon all paper currency so convertible

that is, upon all paper currency which is secured from great and inconvenient variations. The plan, however, contains in itself, during the period which may elapse before the market price of gold falls to the Mint price, a considerable guard even against this danger, a guard which did not exist in the mixed state of our currency. As it would be impossible for any person to draw bullion from the Bank, except in exchange for Bank-notes, no demand could be made upon the Bank to any great extent for gold without occasioning a scarcity in the currency, which would tend to raise the value of those notes, and to remove the temptation to present them in exchange for bullion. The same circumstance would operate to check any demand, which might arise from a sudden panic; and the rapidity of such demand, in which its chief danger consists, might be somewhat diminished by the necessity of collecting notes to that amount, in exchange for which payment in bullion would be demandable. And in whatever degree a disposition may have existed to hoard coin, there would probably be less disposition to demand bullion from the Bank for that purpose.

The Committee, in recommending the principle of this plan of resumption to the favourable consideration of the House, think it nevertheless their duty to suggest such provisions as have occurred to

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them, by which, in their opinion, without weakening its efficacy, or impairing any of its advantages, its operation would be facilitated and ensured.

In the first suggestion of the plan, it was proposed that the Bank, upon the removal of the present reIstriction, should immediately pay in bullion at the Mint price, instead of paying in coin. The Committee have laid before the House, in the former part of this Report, the considerations which induce them to think that it must be desirable upon the whole to allow a considerable interval of time before the Bank should be required to resume cash payments upon the ancient system. These considerations would operate in a great, although not an equal degree, against the too early adoption of the plan for bullion payments at the Mint price. The objection to the prolongation of the period in the former case was chiefly thisthat the country would be left during that period, whatever it might be, without the certainty of any progress being made towards the readoption of a metallic standard of value. The interposition of bullion payments affords means of obtaining this security, which cannot be provided with equal advantage under the simple resumption of cash payments. The resumption of bullion payments may, if Parliament should think proper, commence at an earlier time, and at the present market price of gold. Successive periods might, if thought necessary, be fixed, at which the rate of bullion payments should be gradually lowered, until it should finally be brought down to the Mint price. The same principle of gradation could not be applied to payments in coin, without the great and obvious inconvenience which must result from succes

sive variations in its circulating value.

The effect of this graduated scale would be to re-establish, from the first commencement of its operation, the principle of a metallic standard. It would indeed not at once be a recurrence to the ancient standard; but an an approximation would be gradually made towards it, and at no distant period it would be attained. The necessity under which the Bank would be placed of regulating its proceedings, with a view to the commencement of bullion payments upon this system, would give a security, perhaps unnecessary, but satisfactory to the public, that some progress was actually making towards the ultimate object. As the Bank would at the same time be relieved from an early recurrence to cash payments upon the ancient system, it would gain a longer interval for the gradual accumulation of its treasures; any reduction of its issues which might be found necessary might be gradually made; and all persons engaged in commerce would also be enabled to accommodate their transactions to the new state of our circulation.

It has been suggested that the Bank might have the option of paying in bullion or in coin: but the Committee are inclined to think, that even at the time when this scale shall have reached the Mint price, the Bank should begin to pay in bullion only. If there is any weight in the argument, that one of the great advantages of the proposed plan, with the modification suggested, is this, that it would render it safe for the Bank to open with a much smaller amount of treasure than might be thought necessary for the resumption of cash payments upon the ancient system, and there

fore that it might begin its operation at an earlier period, it is evident, that were the Bank, from a preference of the ancient system, to determine to avail itself at that period of the option between bullion and cash payments by paying in coin only, it must, in consequence of such determination, make more rapid and more extensive purchases of gold in the interval, and thereby impede the gradual progress of its reduction to the Mint price, which is the main object to be attained.

There is also another evil against which it would be expedient to provide a guard, viz. the possibility of an excessive reduction of the circulating medium during the operation of this plan. This might be prevented by imposing upon the Bank the obligation of giving their notes in exchange for gold bullion (if tendered to them) at fixed prices, either taken somewhat below the Mint price, or, in the first instance, somewhat below the price at which the Bank should commence to pay in bullion; or further, if it should be thought proper to introduce more than one point in a graduated scale, at prices somewhat below those which might successively be fixed. Either of the latter expedients would afford a greater security against any excessive reduction of the issues of the Bank, but they might introduce a degree of complication into the system, and might cramp the operations of the Bank in an inconvenient manner; and the Committee think, that on the whole a preferable security would be afforded by leaving the Mint open to the public, by which any considerable deficiency in the paper currency would be supplied, and its effects counteracted by the coinage of gold.

In order to bring before the view of the House with more distinctness

the whole of the plan which the Committee beg leave to recommeal to their consideration, they wil state shortly the different parts of which it consists :—

1. That provision should be made by Parliament for a repayment of the debt of Government to the Bank to a considerable amount, and the a part of that repayment should take place some time antecedent to the first period which may be fixed for the commencement of bullion payments by the Bank.

2. That from and after the 1st of December 1819, or at latest the 1st February 1820, the Bank of England should be required to pay its notes in gold bullion duly assayed and stamped in his Majesty's Mist if demanded, in sums of not less than the value of sixty ounces, at the price of L. 4, 1s. per ounce of standard bullion; that on the 1st of November 1820, or at such other period as may be fixed, the price shall be reduced to L. 3:19:6, unless the Bank shall have previously reduced it to that rate, it being always understood that the price, when once lowered, shall not again be raised by the Bank; and that on the 1st of May 1821, the Bank shall pay its notes, if demanded, in gold bullion, in sums of not less than the value of thirty ounces, at the price of L. 3:17:10 per ounce of standard bullion:

3. That a weekly account of the average amount of notes in circulation during the preceding week shall be transmitted to the Privy Council; and a quarterly account of the average amount of notes in circulation during the preceding quarter shall be published in the London Gazette:

4. That for 2 years, from and after the 1st of May 1821, the Bank shall pay its notes in gold bullion