bankers will be considerably less than when any local or general difficulties oblige them to make more ample preparations against large and sudden demands; and this reserve must, in the present state of our circulating medium, consist of a great proportion of notes of the Bank of England, into which their own notes are legally convertible. It will consist also, to some extent, of notes of other Country Banks, in exchange for which they can demand from those Banks, notes of the Bank of England. In a state of imperfect credit, the Country Banks will also reduce their own issues, and will either never issue at all, or refrain from re-issuing a larger proportion of their own notes, which they keep by them ready stamped; so that, even if the amount of stamped notes actually in existence in any given year could be ascertained with certainty, (which is very far from being the case), the proportion of such notes at that time actually in circulation could not from thence be inferred with accuracy. A similar degree of uncertainty as to the amount of the circulating medium must exist, as far as it arises from the varying reserves of all bankers, even when that circulating medium consists in part of gold, and will then equally apply, which it does not now, to the reserve of the Bank of England.

With respect, however, to that part of our currency which has consisted of Country Bank-notes, the Committee have endeavoured, from such accounts as have been furnished them from the Stamp-office, to form some estimate of their amount. The difficulties of various descriptions, which throw a great uncertainty upon any calculations founded upon these accounts, are explained in statements delivered in by Mr Sedgewick, which are to be found

in the Appendix. From these materials two calculations have been drawn. The grounds upon which each of them rest are to be found in the appendix. The Committee are inclined to that of these two approximating estimates, the second is the best adapted to their view of the subject; but they submit them both to the House with a full sense of the imperfection to which they are necessarily liable.

F. 7.

21,374,000 20,977,000

20,047,000 22,342,000

21,672,000

20,378,000 15,525,000

15,862,000

....... 1817 ....... 15,898,000 20,044,000 ....... 1818 ....... 20,507,000

These estimates must indeed be not only far removed from accuracy respecting any particular year, but many causes of uncertainty attach to them even if they were considered merely as affording data for calculating the relative circulation of different years. In this respect, however, they derive confirmation, especially the latter, from their correspondence with the general tenor of the evidence of persons connected with the Country Banks. The estimates which these persons have formed as to the amount of the country notes, grounded upon local knowledge, and extended by inference to the whole kingdom, will be found in the minutes.

Much important information respecting the nature of this circulation will be found in the evidence, and particularly as to the different practice which obtains in different parts of the kingdom, more especially in Norfolk and in Lancashire.

The calculations founded upon the

To this must be added about L.271,000 for the average circulation of unstamped small notes issued by the three Chartered Banks in Scotland, which are not included in the Stamp-office accounts.

The result of this estimate would be, that the circulating medium of England, as far as it consists of notes of the Bank of England or of Country Bank-notes, between 1810 and 1818, both years inclusive, has varied from about forty-two millions to above forty-eight millions; and that it was highest in 1814, and lowest in

1816.

With respect to the numerical amount of circulating medium necessary to carry on with facility the transactions of the country, whatever may be the composition of such circulating medium, it is evidently impossible to form any judgment.

The great increase of the transactions of this country in every part of its home trade and agriculture; the rise of the amount of its exports and imports (even according to the official value, which is much below the real value) from L.51,231,000, on the average of three years preceding 1797, to L 82,750,000, on

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 transactions 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 judg

ment 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 standard, 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 transac tions of the country should be carried 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 question, 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 preparation, 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 degree, 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 metallic 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 inconvenience, 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