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the average of the three last years component parts of the circulating of which the accounts have been gi. medium may bear to each other, ven in ; the increase of the charge of after the resumption of cash pay. the national debt from L. 13,430,000 ments, it is difficult to conjecture. in 1797 to L.43,819,000 in 1819; They must evidently be influenced and the amount of the taxes, which by the future regulations of Parlia. since 1792 have arisen from about ment, with respect to the nature 16 to 50 millions (an increase occa- and description of the paper cur. sioned not merely by an increased rency: rate of taxation upon the same arti- If the paper currency is to be concles but by the imposition of new fined, as it was within a short period taxes upon a great variety of arti- before the Bank restriction, to the cles) might have been expected to issue of notes of L. 10 and upwards require a much larger increase of by the Bank of England, and of L5 circulating medium. It is, however, and upwards by the Country Banks, obvious that such amount would not the necessity for a very large amount have necessarily borne any specific of gold coin for smaller payments proportion to the amount of transac- is evidently indispensable. Should tions of every kind, or to that of re. Parliament think proper to continue

The flourishing state of both to the Bank of England and to commerce and of credit producing a Country Banks the liberty of issuing greater rapidity of circulation, will notes of a lower denomination, and have enabled the same quantity of particularly of L. 1 and L.2, this percirculating medium to carry on a mission would probably have the ef

. much greater amount of transac- fect of keeping up a paper circulations; and the various modifications tion bearing a much larger proporof credit to which such a state of tion to the whole, than in the former things gives birth, together with the case, and would so far diminish the successive improvements in the ar- necessity of an extensive circulation rangements of commercial and bank- of gold coin. But although it would ing business, must have had the diminish that necessity, the degree same effect to a great extent. There in which it would diminish the de must also obviously be a great dif. mand for gold coin can only be staference in the required amount ted as a matter of conjecture. The of a currency consisting of paper established habits of the public may only, and that of a currency consist. operate so decidedly in favour of a ing partly of paper, and also, in a paper circulation, that there might large proportion, of gold. It is to be only a very small demand for these circumstances (co-operating gold coin; and as far as any judg. possibly with others) that we may ment can be formed from the short perhaps attribute the sufficiency of interval during which the Bank isthe circulating medium actually ex. sued gold coin in exchange for their isting to perform functions io so notes before the rise in the market much larger an amount than were price of gold occasioned a demand performed in 1797 by the circulat- for exportation, this might probably ing medium then existing, which be the case; the period was, how. was probably not many millions less ever, too short to afford suficient than at present.

grounds for any decisive inference as What proportions the various to the future, and it is on the other


hand the opinion of some of the wit. those channels of circulation which nesses, that the new coin would be might possibly require to be so fillpreferred to paper.

ed, the very extent of the purchases The Committee, attaching great of bullion, necessary to be made for importance to the restoration of the such a purpose, must in some depaper currency to a metallic stand. gree, whatever may be the interval, ard, are also deeply impressed with and in a very great degree, if that the great advantages of such a cur- interval be short, tend to obstruct the rency when so regulated ; and they attainment of the ultimate objectthink it highly desirable that a large the equalization of the market price proportion at least of the transace of gold to its Mint price; and untions of the country should be car. less the effect of these purchases ried on by that medium. But the were counteracted by a rapid requestion, what proportion ought to duction of the issues of the Bank, for be so carried on, (if it were a point commercial discounts and other purcapable of solution, or could be the poses, to an extent of which the mis. subject of regulation), wherever a chief has been so frequently referred mixed circulating medium is permit- to, the price of gold might be such, ted, is very different from the ques. at the very moment of the resumption, what proportion the different tion of cash payments (supposing classes of such a mixed circulating that moment to be previously and medium will actually bear to each unalterably fixed), as to render the other, when left to be decided by continuance of such payments diffithe supposed interest, or even by the cult and hazardous. inclination of the public.

These considerations have led the The latter question, however, is Committee to examine with partione, upon the result of which, one cular attention a plan which has way or the other, the most serious been suggested to them, and which, practical consequences depend, as it will appear by the evidence, is Any judgment formed beforehand, viewed in a very favourable light by must unavoidably be conjectural, many persons well qualified to form and yet upon such judgment we a judgment upon such a subject. must be forced in some degree to The leading principle of this plan act. Upon the greater or less pro- is, to restore to the country, by the bability that, in the event of the speediest and safest means, a metalopening of the Bank upon the an- líc standard, as the regulator of its cient system, paper would still be paper currency, by permitting the preferred to coin, must depend the Bank to pay its notes in gold bullion, extent of the accumulation of such at the Mint price, instead of gold coin, with which the Bank must be coin. prepared to meet that demand. Un- Various advantages appear to the less this point be rightly estimated, Committee to attend this plan in the Bank, on its first re-opening, preference to a simple resumption, might experience a demand, against in the first instance, of cash paywhich it would be difficult, if not ments by the Bank. It establishes, impossible, to guard.

equally with cash payments, the İf the Bank is to make prepara- principle and the salutary control of tion, in the interval between the pre- a metallic standard, while it affords sent time and the expiration of the the best prospect of avoiding or direstriction, to fill with gold coin all minishing many of the inconvenien. As it would

ces which are by many persons ap- or by the effect of a favourable baprehended from that measure. It lance of payments upon the exexempts the Bank from the obliga- changes, the whole system of banktion of providing a quantity of gold ing must necessarily fall to the necessary to replace, in case the ground. It is no objection, therepublic should prefer coin to paper, fore, to this plan, that it does not all the smaller notes to the amount provide against a possible inconveprobably of 15 or 16 millions, which nience, which is, under such circumare now circulated in London and stances, an inseparable attendant upin the country; and therefore, by on all paper currency so convertible relieving the bullion market from that is, upon all paper currency this demand, it prevents that aug. which is secured from great and inmentation of the price of gold which convenient variations. The plan, might be the consequence of large however, contains in itself, during purchases of that article made in a the period which may elapse before short space of time, under the pres. the market price of gold falls to the sure of a necessity publicly and pre- Mint price, a considerable guard viously known. And it continues to even against this danger, a guard the Bank, and therefore to the na. which did not exist in the mixed tion at large, all the advantages to state of our currency. be derived from the employment of be impossible for any person to draw a capital equal to the amount of all bullion from the Bank, except in the small notes in circulation, whe- exchange for Bank-notes, no demand ther of the Bank of England or could be made upon the Bank to Country Banks. In the one case, any great extent for gold without octhis capital would still be, as it now casioning a scarcity in the currency, is, employed in the support and ex- which would tend to raise the value tension of agriculture and of come of those notes, and to remove the merce, whether foreign or domestic ; temptation to present them in exin the other; it would be merely an change for bullion. The same cir. addition to the dead stock of the cumstance would operate to check country, producing neither profit any demand, which might arise from nor advantage.

a sudden panic; and the rapidity of It seems probable also, that when such demand, in which its chief danthe Bank is made liable to pay only ger consists, might be somewhat dimiin bullion, and that only in exchange nished by the necessity of collecting for notes to a certain amount, it notes to that amount, in exchange would be chiefly subject to such de- for which payment in bullion would mands as might arise from the ex. be demandable. And in whatever cess of the market price of gold a. degree a disposition may have ex. bove the Mint price, and the conse- isted to hoard coin, there would proquent profit upon exportation. To bably be less disposition to demand a demand resulting from this source, bullion from the Bank for that purevery Bank issuing paper convertible pose. into either of the precious metals The Committee, in recommend must at all times be liable; and un- ing the principle of this plan of reless the market price of gold can be sumption to the favourable conkept within certain limits of devia. sideration of the House, think it tion from the Mint price, either by nevertheless their duty to suggest the reduction of the issues of paper, such provisions as have occurred to

them, by which, in their opinion, sive variations in its circulating vawithout weakening its efficacy, or im- lue. pairing any of its advantages, its The effect of this graduated scale operation would be facilitated and would be to re-establish, from the ensured.

first commencement of its operaIn the first suggestion of the plan, tion, the principle of a metallic it was proposed that the Bank, up

standard. It would indeed not at on the removal of the present re- once be a recurrence to the ancient striction, should immediately pay in standard ; but an approximation bullion at the Mint price, instead of would be gradually made towards paying in coin. The Committee it, and at no distant period it would have laid before the House, in the be attained. The necessity under former part of this Report, the con- which the Bank would be placed of siderations which induce them to regulating its proceedings, with a think that it must be desirable upon view to the commencement of bul. the whole to allow a considerable lion payments upon this system, interval of time before the Bank would give a security, perhaps unshould be required to resume cash necessary, but satisfactory to the payments upon the ancient system, public, that some progress was acThese considerations would operate tually making towards the ultimate in a great, although not an equal object. As the Bank would at degree, against the too early adop- the same time be relieved from an tion of the plan for bullion payments early recurrence to cash payments at the Mint price. The objection upon the ancient system, it would to the prolongation of the period in gain a longer interval for the gradual the former case was chiefly thism accumulation of its treasures ; any that the country would be left du- reduction of its issues which might ring that period, whatever it might be found necessary might be gra- . be, without the certainty of any pro- dually made; and all persons engagress being made towards the re- ged in commerce would also be en. adoption of a metallic standard of abled to accommodate their transacvalue. The interposition of bullion tions to the new state of our circula. payments affords means of obtaining tion. this security, which cannot be pro. It has been suggested that the vided with equal advantage under Bank might have the option of pay. the simple resumption of cash pay-ing in bullion or in coin: but the

The resumption of bullion Committee are inclined to think, payments may, if Parliament should that even at the time when this think proper, commence at an earlier scale shall have reached the Mint time, and at the present market price, the Bank should begin to pay price of gold. Successive periods in bullion only. If there is any might, if thought necessary, be fix. weight in the argument, that one of ed, at which the rate of bullion pay. the great advantages of the propoments should be gradually lowered, sed plan, with the modification suguntil it should finally be brought gested, is this, that it would render down to the Mint price. The same it safe for the Bank to open with a principle of gradation could not be much smaller amount of treasure applied to payments in coin, with- than might be thought necessary for out the great and obvious inconveni. the resumption of cash payments ence which must result from succes- upon the ancient system, and therefore that it might begin its opera- the whole of the plan which the tion at an earlier period, it is evi- Committee beg leave to recommend dent, that were the Bank, from a to their consideration, they will preference of the ancient system, to state shortly the different parts of determine to avail itself at that pe- which it consists :riod of the option between bullion 1. That provision should be made and cash payments by paying in coin by Parliament for a repayment of only, it must, in consequence of the debt of Government to the Bank such determination, make more ra- to a considerable amount, and that pid and more extensive purchases a part of that repayment should of gold in the interval, and thereby take place some time antecedent to impede the gradual progress of its the first period which may be fixed reduction to the Mint price, which for the commencement of bullion is the main object to be attained. payments by the Bank. There is also another evil against


2. That from and after the 1st which it would be expedient to pro. of December 1819, or at latest the vide a guard, viz. the possibility of Ist February 1820, the Bank of an excessive reduction of the cir. England should be required to pay culating medium during the opera. its notes in gold bullion duly assayed tion of this plan. This might be and stamped in his Majesty's Miat prevented by imposing upon the if demanded, in sums of not less than Bank the obligation of giving their the value of sixty ounces, at the notes in exchange for gold bullion price of L. 4, 1s. per ounce of stan(if tendered to them) at fixed prices, dard bullion ; that on the 1st of Noeither taken somewhat below the vember 1820, or at such other peMint price, or, in the first instance, riod as may be fixed, the price shall somewhat below the price at which be reduced to L. 3:19:6, unless the the Bank should commence to pay Bank shall have previously reduced in bullion; or further, if it should it to that rate, it being always upbe thought proper to introduce more derstood that the price, when once than one point in a graduated scale, lowered, shall not again be raised at prices somewhat below those by the Bank; and that on the 1st which might successively be fixed. of May 1821, the Bank shall pay its Either of the latter 'expedients notes, if demanded, in gold bullion, would afford a greater security a. in sums of not less than the value gainst any excessive reduction of of thirty ounces, at the price of the issues of the Bank, but they L. 3:17:10} per ounce of standard might introduce a degree of compli- bullion : cation into the system, and might 3. That a weekly account of the cramp the operations of the Bank average amount of notes in circula. in an inconvenient manner; and the tion during the preceding week shall Committee think, that on the whole be transmitted to the Privy Council; a preferable security would be af- and a quarterly account of the forded by leaving the Mint open to average amount of notes in circula. the public, by which any consider. tion during the preceding quarter able deficiency in the paper currency shall be published in the London would be supplied, and its effects Gazette: counteracted by the coinage of gold. 4. That for 2 years, from and af.

In order to bring before the view ter the 1st of May 1821, the Bank of the House with more distinctness shall pay its notes in gold bullion

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