there been an obligation on the Bank to pay its notes in specie on demand. However the exchanges may have been thus effected, in the course of the last and the preceding year, your Committee see no reason to apprehend that the causes above mentioned, or any similar causes, can continue to affect them in such a degree as to preclude the Bank of England, by a constant reference to the exchanges and the price of gold, and when necessary, by a cautious reduction of the paper currency, from gradually approximating its value to that of gold, and ultimately re-establishing and maintaining it at

par.

Your Committee have had submitted to them a calculation of the amount of British capital now invested in foreign securities, and of the remittances which may probably be required for further payment on account of foreign loans. The calculation is founded on the estimates of three commercial houses, extensively engaged in foreign loans, which estimates are stated to vary to an inconsiderable extent; and it is computed that the amount of British capital in foreign public securities is about L. 10,500,000, L.7,000,000 of which are supposed to be in French stock. This estimate was furnished to the Committee by Mr Haldimand, who thinks there is a possibility of error, to the extent of 1 or L.2,000,000. He is of opinion, that little or nothing more will be sent from this country on account of foreign loans, now in course of pay

ment.

Mr Holland, a partner in the house of Messrs Baring, does not consider the whole amount of British capital invested in foreign, including American, funds, to be L. 10,000,000; he speaks of capital permanently invested, and does not

take into the account that which must have been employed in speculation in foreign funds, a great part of which, he observed, had been drawn back with profit to this country. He does not think that more than L. 3,000,000 of British property are permanently invested in French stock; and is of opinion, that if it advances in price, a considerable portion of that will be withdrawn, and that there is no probability that any considerable sum will be remitted from this country, in consequence of loans now contracted for abroad.

Your Committee are of opinion, that the future effect upon the exchanges of remittances on account of foreign loans will be very limited; that preparations for the resumption of cash payments will tend to diminish that effect; and that subseqently to their resumption it will be sub ject to a constantly operating control. In corroboration of this opinion, the Committee refer to the manner in which the exchanges of France and Holland (countries having a metallic currency) have been affected by similar remittances.

The Dutch capitalists have embarked to a very considerable extent in the foreign loans that have recently been made, and are supposed to have taken nearly three-fourths of those made by Russia; but no sensible effect has been produced upon the exchanges or currency of Holland. France, notwithstanding the great extent of contributions to foreign Powers, which have been defrayed by that country, has maintained an ample metallic currency. It appears in the evidence of Mr Holland and Mr Irving, that the price of gold has remained nearly stationary at Paris for the last four years; that in 1807, when there was in this country a variation in its price to the extent of seven per cent. there

was none in Paris; and that between the 5th of October and the 22d of December last, whilst the variation in the exchanges between Paris and this country amounted to four per cent., the greatest variation between Paris and any country which had a metallic currency did not exceed one half per cent.

Mr Rothschild being examined, as to the effect of the contributions which France has paid to foreign countries, upon her exchanges, replied, "Perhaps from one to one and a half per cent."

When your Committee consider the extent and value of the export able produce of this country, they can have no doubt of its ability to command such a portion of the precious metals as may be necessary for the purposes of internal currency, and to maintain them in circulation by the same means by which they are maintained in other countries, where, from an imperfect state of credit and confidence, and the absence of banking establishments, a much larger metallic currency is necessary than this country will require, in proportion to its foreign trade and internal commercial dealings.

Difficulties must be encountered during the preparations for the resumption of payments in specie; but those difficulties are, in the estimation of your Committee, outweighed by the important and permanent benefit of restoring the standard by which, previously to the year 1797, the value of commodities was measured, and which, though variable in a certain degree, is much less exposed to fluctuation than any other that can be devised.

Your Committee abstain from entering more at large into this important topic, from a consideration that the Legislature has on various

occasions expressly pronounced its opinion on the policy of re-establishing the metallic standard of value; and that the duty which it has devolved on your Committee is no other than that of considering at what period, and by what means, that great object can be best effected. They see nothing in the circumstances of this country, or of Europe, which can render it expedient to postpone preparations for the resumption of cash payments, and by thus deferring, most probably to aggravate the difficulties which may be inseparable from that measure. If, however, the Committee can suggest to the House any plan by which in their opinion the pressure of such difficulties may be greatly relieved, and at the same time the most important of the advantages which would accompany a return to cash payments can be realized, they trust they shall not be considered to exceed the powers committed to them by the suggestion of such a plan, though it may involve a temporary departure from the laws which regulated our cur rency previously to the restriction.

A plan of this nature has been under the consideration of your Committee; and before they explain its details, or assign the ground on which they are disposed to recommend the several measures which form a part of it, they will present its general outline to the house.

They propose, that after the 1st May 1821, the Bank shall be liable to deliver a quantity of gold, not less than sixty ounces, of standard fineness, to be first assayed and stamped at his Majesty's Mint, at the established Mint-price of L. 3: 17:10 per ounce, in exchange for such an amount of notes presented to them as shall represent at that rate the value of the gold demanded.

That this liability of the Bank to deliver gold in exchange for their notes shall continue for not less than two nor more than three years, from the 1st of May 1821, and that at the end of that period cash payments shall be resumed.

That on a day to be fixed by Parliament, not later than the 1st of February 1820, the Bank shall be required to deliver gold of standard fineness, assayed and stamped as before mentioned, in exchange for their notes, (an amount of not less than sixty ounces being demanded,) at L. 4, 1s. per ounce, that being nearly the market price of standard gold in bars, on an average of the last three months.

That on or before the 1st of October 1820, the Bank shall pay their notes in gold of standard fineness, at the rate of L.3:19:6; and on or before the 1st of May 1821, as before mentioned, at the ancient standard rate of L. 3: 17: 10.

Your Committee proceed to state the reasons which induce them to recommend the adoption of these suggestions.

By requiring the Bank to pay, after the 1st of May 1821, a given quantity of notes in standard gold, at the Mint price, a security against fluctuation in the value of the paper currency will be provided, of the same nature with that which payments in specie afforded previously to the restriction act. If the issues of the Bank shall at any time exceed the amount to which they must be limited in order to maintain their value on a par with gold, the Bank will be subjected to an immediate demand for gold, and will naturally have recourse, as before the restriction, to the contraction of the issues of their paper.

The chief recommendation of this plan, in the opinion of the Commit

tee, is, that it will enable the Bank to pay their notes in gold at a much earlier period than they could pay them in the present gold currency. There cannot, while this plan is acted on, be any demand for gold for the purpose of internal circulation; and whatever quantity it would be necessary to provide with the view of replacing the small notes at present in circulation, may therefore be dispensed with. That portion of capital which must otherwise be applied to the purchase of an expensive and unproductive instrument of commerce will be less available for the employment of productive labour; or, at any rate, time will be afforded, during the operation of the plan, for the gradual abstraction of that capital, and for the accumulation of such a stock of the precious metals as may enable the Bank with perfect safety to supply a metallic currency. Although in the event of general panic, and a want of confidence in the stability of paper credit, the Bank would be exposed to the same demand to which they would be liable were cash payments resumed; yet it is probable that the drain caused by sudden and local alarms would be greatly diminished, if not altogether prevented.

In speaking of this plan, Mr Baring observes," Under such a system, the whole amount of bullion that would be required must be that amount which the Bank would be under the necessity of keeping, for the purpose of balancing the variations that may from time to time occur in the amount of currency which at different periods the state of the country may require, and farther, any amount which the public may be disposed to hoard. I should not think that the amount so required by the Bank could much exceed 5 or L. 6,000,000, because I should

not think that the contraction and expansion of currency at different periods could go much beyond that amount. Hoarding would go certainly to a less extent than under a system of coin, because there could be no small hoards, and persons would be less disposed to hoard larger sums when they had not the means of issuing them as currency, if they should be disposed to do so, otherwise than by selling or carrying them to the Bank. Under these circumstances, I should incline to think, that L. 10,000,000 of bullion would be abundant for every purpose; but it is difficult to speak with accuracy of an untried plan."

With respect to the preservation of the standard of value, Mr Baring states, "That he is quite confident that the standard of the country, and of course the par value of the paper, would be preserved in much greater purity than under any system of coin."

Mr Holland delivered a paper to the Committee in reference to the plan of bullion payments, in which he thus expresses his opinion: "I can venture to assert, as a practical man of business, that there will be little if any difficulty in carrying it into effect; that it will not unnecessarily cramp circulation; that it will not impede the ordinary measures, either of Government or the mercantile community; but that, on the contrary, it will restore order and harmony to the system, and give to the country what all parties who wish its welfare desire-a safe and efficient standard of value; variable, it is true, in a certain degree, but less variable than any standard which any country has ever yet established."

Your Committee will now give their reasons for recommending the arrangement, which they have suggest ed, for regulating the mode in which

gold shall be issued in exchange for Bank-notes, between February 1st 1820 and May 1. 1821.

The Committee consider it neces sary to fix a definite period at which the Bank shall be under the obligation of issuing gold at the Mint price; and a standard be thus established to which the value of the paper currency shall conform, and by which its issues shall be regulated. Parliament has on more than one occasion since the peace fixed a period for the return to payments in specie; and when it has consented to a further suspension of them, has expressed an opinion that their resumption was highly desirable; and has assigned as the reason for continuing the restriction, the expediency of enabling the Bank to make such preparations as to their discretion and experience might appear most expedient, for enabling them to resume payments in cash without public inconvenience.

Your Committee, therefore, are desirous, in recommending the further postponement of those pay. ments, to devise some additional se curity that preparations shall be made for their resumption; to prevent an impression on the public mind that further suspensions will take place; and to induce a gradual accommodation of commercial transactions to a system of currency which, having been long discontinu ed, could not be suddenly resumed without restraint and embarrassment. They conceive that such security will be best provided by requiring the Bank to revert at an early pe riod to that principle on which, previously to the restriction act, their issues were regulated-a reference to the price of gold. They propose, therefore, that, time having been al lowed for the repayment of a por tion of the advances to Government,

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the Bank shall undertake at a given period to deliver gold in exchange for their notes in the manner already described.

Between the present time and the commencement of the year 1820, the Committee cannot anticipate an operation of any of those causes which affect the value of the precious metals so extensive as to prevent the Bank from counteracting the effect of them, by such a reduction of their issues as may be made without producing public inconvenience.

If the price of gold shall remain the same as it is at present, the demand from the Bank, which will have to deliver it at that price, will necessarily be very limited. If in the interval any causes shall affect it, and produce a rise in its price, the Bank must in that case contract its paper, either positively, as compared with its present amount, or relatively, to any increased demand which there may be for it; and thus by increasing its value as currency, proportionately diminish the inducement to demand gold.

It may be objected that the adoption of this suggestion appears to re@cognise a departure from the ancient standard of value; but it recognises it no otherwise than as it at present practically exists: it recognises it for a very limited period, and with no other view than to provide for the gradual return to that standard, the deviation from which it acknow⚫ ledges.

The Committee trust that they have sufficiently explained the grounds on which they recommend that, with a view to the establishment of a metallic standard of value at the earliest period, the Bank should be required to deliver standard gold in exchange for their

ence for the system of bullion payments over that of payments in specie abstractedly; nor are they prepared to recommend them as a permanent substitute: but they consider them the best means of facilitating and ensuring the resumption of payments in specie with the least public inconvenience. They are of opinion, that when once the ancient standard of value in this country has been re-established, the great impediments to a return to our former system will be overcome; and it will be in the power of the Bank, or of individuals, by taking advantage of a favourable state of exchange, to increase the supply of the precious metals in this country to any extent to which they are likely to be required.

Your Committee are aware that it may be objected to the plan of bullion payments which they have recommended, first, that by necessarily continuing the notes below five pounds in circulation, it continues the present inducements to the crime of forgery; and, secondly, that by requiring the presentation of a large amount of notes in demand for gold, it gives to the possessor of notes to that amount an accommodation which the holder of a smaller quantity will not possess.

On the first of these objections, your Committee observe, that it is scarcely possible to calculate on a resumption of specie payments accompanied with the total exclusion of the small notes, at a period much if at all earlier than that at which it may take place, if the recommendation of the Committee be adopt d. When the Legislature has, at former periods, contemplated the removal of the restrictions, the necessity of continuing the circulation of the small notes for some time subsequently has been foreseen, and is at present provided for by law.

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