« AnteriorContinuar »
only at the Mint price; and that whenever Parliament shall think proper to require the Bank to pay its notes in coin, notice thereof shall be given to the Bank one year beforehand, such notice not to be given before the 1st of May 1822.
Should Parliament think proper to adopt this plan for the regulation - of the Bank of England, it is evident that provision must be made for applying the same principle to the Bank of Ireland.
The Committee are perfectly a ware of an objection which may be stated to this plan, viz. that during its operation the country will probably have no currency except paper, for payments beyond 40s., and that the advantage resulting from the convertibility of Bank notes into bullion appears to be given, at least in the first instance, only to the holders of large sums.
In answer to this it must be remembered, that so long as the price of gold shall continue high enough to afford a profit upon the melting and exportation of coin, framed according to the present Mint regulations, there can be no circulation of gold coin in the country. Under such circumstances any further issue of gold coin would be useless; it would indeed be worse than useless, as the purchase of the bullion to be coined would raise the price of gold, and the expense of coining it would be a waste of public money. Such an issue could only be useful whenever the price of gold is so far below the Mint price as to compensate for the interest lost during the time of coinage. But although the Committee entertain great hopes that, during the operation of the plan in question, the price of gold will fall to the Mint price at an earlier period than what is fixed for its completion, yet the plan itself presumes that such fall
may not take place and have been established before the 1st of May 1821.
Under this certainty it would be difficult, if not impossible, to foresee any moment previous to that date at which it might be expedient to make such an issue, or at which the public would be able to avail itself of the power of resorting to the Mint for the conversion of bullion into coin. But it will be able to avail itself of that power under the operation of this plan at as early a period as could reasonably be expected under any plan for the simple resumption of cash payments. In the interval the currency must consist (as it has long consisted) of paper alone; but from the moment this plan begins to operate, this paper would have what it has not had since the Bank restriction, and what it could not have in the interval preceding a simple resumption of cash payments, a metaldic standard for its regulator. The holder of large sums in notes would indeed have the power of converting them into bullion at a fixed price by presenting them at the Bank; but the holder of a small sum in notes has not now, and could not have, the power of converting it into coin, under circumstances when, as has been before stated, no coin could remain and circulate in the country. The latter, therefore, is exposed to no disadvantage whatever during the operation of the present plan, to which he would not be exposed during the interval which must precede a simple resumption of cash payments; but he derives from the first moment of its commencement a participation in the security against fluctuation afforded to the holder of large sums.
This detail of the plan now proposed by the Committee will, they hope, be sufficient to explain both its nature and its objects. Above all, they trust, it will be manifest that the
plan is now recommended by them as a temporary measure, as the mode which appears to them at once the most desirable, and the most effectual for the attainment of the object which Parliament has in view-the restoration of our currency to its ancient standard of metallic value. They think it probable, as they have already stated, that this object may thus be attained at a period comparatively earlier than that for which they have ultimately provided. But they entertain a confident expectation that in this mode it will be effected at that period, if not before, and with the least practical inconvenience to any of the interests which it may affect.
After the attainment of this first and great object, many important questions will still remain to be determined by the Legislature, respecting the system on which our currency, when regulated by a metallic standard, may in other respects, with most advantage, be ultimately and permanently founded. But in these points the Committee think they should have exceeded the limits of their duty, if they had ventured at the present period even to form, much more if they had submitted to Parliament, any final or decisive opinion.
Whether the whole of our circulation and currency shall thenceforth be replaced either entirely on its ancient footing, or with what degree of alteration, particularly in respect of the smaller notes, the issue of which was formerly prohibited; whether the payments of the Bank shall be made at their option in bullion or in coin; or those payments continuing to be made in bullion only, the Mint shall be open to the public for coining such bullion into gold coin, with or without a seignorage or brassage; or whether, with a view to realize to
the country a profit equal to the whole value of the gold employed as dead capital for the purpose of circulation, an endeavour shall be made to confine the whole of our currency (except for the small payments now made in silver) to paper only, but to paper regulated by convertibility into bullion;-these, with the nume rous details connected with and dependent on them, are points upon which the House will find much useful information in various parts of the evidence contained in the minutes, and upon which the Committee are satisfied that a better judgment than can be formed at present will be derived from the experience of the operation of the plan immediately in question.
With respect to the decision to be taken as to the future circulation of the smaller notes, the Committee are fully sensible that all views of expediency or profit in this respect must be combined with another most important consideration-that of the comparative facility with which such paper, or the coins for which it is substituted, may respectively be counterfeited. This point is essential to the success of any measure on this subject; and it is of great weight in the opinion of the Committee, as connected with the comparative degree of temptation or encouragement which any of these systems may af ford to crime, and the consequent necessity of frequent and severe punishment.
Under these impressions the Committee have endeavoured with much anxiety to obtain information as to the progress and probable results of the inquiries which have lately been made, under the authority of his Majesty's commission, into the means of preventing, or rendering much more difficult than at present, the forgery of Bank paper. They have learnt
that these results are not yet sufficiently matured to be brought with this view in a complete shape under the consideration of Parliament; but they find that the very able persons whose attention has been so beneficially employed in the examination of this subject, entertain sanguine expectations that the principles which they have adopted for this purpose will, in their application, provide, if not a complete, at least a much more effective check than has been provided by any means yet adopted for the security of the Bank and of the public. In so far as the Committee has felt itself competent to judge of the probable operation of those principles, they fully partake in this hope; and it is much strengthened by learning, from the testimony of the Go. vernor of the Bank of Ireland, that the application even of a part of those principles has been found there, in a very great degree, effectual for that purpose.
There is another point to which the Committee think it of great importance that Parliament should advert. The large amount and nature of the advances made by the Bank for the public service have been stated, on different occasions, as opposing considerable obstacles to the measures which would otherwise have been adopted by the Bank; and the plan now recommended essentially depends upon a previous reduction of them. But the inconvenience of this mode of habitually providing for the public exigencies to so great an extent is not merely temporary. It involves principles of considerable moment, with reference to the relation in which Government and the Bank are thereby placed towards each other. This system is not, however, of recent date. It had been acted upon to a large extent, for a long period of years before the
first restriction upon the Bank. The amount of the advances appears to have subsequently increased with the succeeding embarrassments of the public service; and the extraordinary exertions of the concluding years of the last war naturally produced an unprecedented extension of them. A considerable reduction of these advances has since been effected, and a still further diminution of them is recommended in this Report. It will be for the wisdom of Parliament to determine, whether, in order to guard against the unobserved recurrence of this practice, some permanent regulation ought not to be established, extending the very narrow restraint under which the Bank was originally placed in this respect, but imposing some new principle of limitation, so as on the one hand to allow the Bank such a free use of its capital as might enable it (as it appears to have done previously to the Bank restriction) to invest either the whole or some limited proportion thereof, if not demanded for commercial discounts, in the purchase of Government securities; and, on the other, to prevent it from engaging in such purchases for the accommodation of Government, when its own convenience or interest did not require them, or from entering into any engagement, express or implied, which shall prevent its bringing those securities freely into the market. It is obvious, that in imposing any new principle of limitation, exception must be made for cases of great emergency, to be stated to Parliament and provided for by its express authority.
Whatever may be the decision of Parliament upon all or any of the measures now in contemplation, the Committee think it will be desirable to repeal the laws which prohibit the melting and exportation of the coin,
and which enact that all bullion intended for exportation shall be sworn to consist of foreign gold or silver. The policy of these laws has long been held by the best writers on the subject to be at least dubious. From the nature of the article, so portable and so easily concealed, they could hardly be expected to be efficacious; and experience has abundantly proved their inefficacy. Notwithstanding the existence of these laws, the whole, or nearly the whole, of the gold coin of this kingdom, amounting probably to between 20 and 30 millions, has entirely disappeared, and scarcely a remnant now remains of the sovereigns which were issued in the year 1817. The prohibition, indeed, adds something to the difficulty, and consequently to the expense of exportation; and may, therefore, be supposed to operate, in some degree, as a seignorage upon our coin; but it is a seignorage perpetually varying, according to the greater or lesser facilities for smuggling which may at different moments exist, and affording therefore an uncertain, and, in point of fact, an inadequate protection.
The means also, by which this protection is afforded are highly objectionable, there being no possibility of distinguishing between bullion produced by the melting of foreign or of English coin. The only security is that of an oath; and the law, therefore, has no other operation than to offer a great, and, as experience proves, a successful temptation to perjury.
Even upon our ancient system of coinage, in which the value of the metal in coin is equal to that of the metal in bullion, and the whole expense of the coinage falls upon the public, it may be doubted whether the prohibition does not increase rather than diminish that expense; al
though the latter was probably one of the chief objects which the law had in view. As our coin is now either melted previously to exportation, or melted in the country to which it is exported, because it is not there known or current, when it returns, it returns in the shape of bullion, and if the Mint is open, and the price such as to make it worth coining, it is carried to the Mint and coined at the public expense. Whereas, if our coin were legally exportable, it would probably return into this country as coin, whenever the state of the exchanges rendered it a more profitable remittance than bills or merchandise. No country in Europe has maintained so large a metallic currency as France, without any prohibition upon the melting, the export, or the sale of the coin.
The Committee cannot conclude their Report, without adverting to the opinions which have been expressed and very fully explained by some of the witnesses, that the present regulations of the Mint for the coinage of silver must of themselves occasion a perpetual drain of gold from this country, and thereby oppose an insurmountable obstacle to the resumption of metallic payments by the Bank, at the ancient standard of value. These opinions. have been directly and strongly controverted by other witnesses. The Committee more particularly refer to the evidence of Mr Page and Mr Fletcher on one side, and Mr Mushett on the other; and to a paper received from the master of his Majesty's Mint: but much important information on this part of the subject may likewise be collected from the testimony of others, whose sentiments and authority upon such matters must be of great weight. The Committee, being fully sensible, that if the opinions of the two first witnesses
be well founded, any attempt to remove the restriction upon the Bank must prove ineffectual, unless the Mint regulations for the coinage of silver were first altered, according to the principle upon which that opinion appears to be founded, have given this part of the subject full consideration; and they think it their duty to state, that they see no ground to apprehend that the present Mint regulations respecting the silver coinage, so long as such silver coin shall not be a legal tender beyond the a mount of forty shillings, and the Mint shall not be open to the public for the coinage of that metal, will oppose any obstacle to the successful execution of the plan which they have ventured to recommend.
The House will find, in various
parts of the evidence, and in the Appendix, a great mass of valuable information, illustrating not only those points which the Committee have dwelt upon in their Report, but also many other points of considerable importance to which they did not think it necessary to advert. They have judged it best to confine themselves as much as possible to a practical view of the question referred to them by the House, and to rest the proposal which they have brought forward upon grounds which might recommend it sufficiently, if not equally, to persons widely differing in opinion upon many of the considerations involved in any discussion upon so extensive and complicated a subject.
From the Secret Committee, on the Expediency of the Bank resuming Cash
The Committee of Secrecy appointed to consider of the state of the Bank of England, with reference to the expediency of the resumption of cash payments at the period fixed by law, and into such other matters as are connected therewith; and to report to the House such information relative thereto as may be disclosed without injury to the public interests, with their observations thereupon; have further considered the
matters to them referred, and have agreed upon the following Report:-
Your Committee will preface the observations they have to make upon the matters immediately referred to them by the House, by a brief recapitulation of the laws which imposed and have continued the restrictio upon payments in cash by the Bank of England.
It is not necessary to advert to the circumstances under which that re