striction was originally imposed by order in Council in the year 1797, as they became the subject of Parliamentary inquiry previously to the passing of the act by which the restriction was confirmed and continued. Its duration was limited by the first act, which received the royal assent on the 3d May 1797, to the 24th June following. From that period it was continued until one month after the commencement of the succeeding session; and again, by the first act of that session, until one month after the conclusion of the war, by a definitive treaty of peace.

In 1802, the provisions of the acts above referred to were continued in operation until the 1st March of the following year; they were further continued until six weeks after the commencement of the then next session of Parliament, before which riod war having again broken out, they were continued until six months after the ratification of a definitive treaty of peace.

pe

An act which passed in the year 1814 continued the restriction until the 25th March of the following year, when, by an act which recited in the preamble, " that it was highly desirable that the Bank of England should as soon as possible return, to the payment of its notes in cash," the further suspension of cash payments was directed until the 5th of July 1816.

In 1816 it was again continued till the 5th July 1818, the preamble of the act reciting, " that it is highly desirable that the Bank of England should as soon as possible return to the payment of its notes in cash, but it is expedient that the provisions of the acts imposing the restriction shall be further continued, in order to afford time to the Directors of the Bank to make such preparations as to their discretion and experience

may appear most expedient for enabling them to resume payments in cash without public inconvenience, and at the earliest period, and that a time should be fixed at which the said restriction should cease."

The act which passed in the last session, after reciting that it is highly desirable that the Bank of Eng. land should as soon as possible return to the payment of its notes in cash, and that" unforeseen circumstances, which have occurred since the passing of the last act continuing the restriction, have rendered it expedient that the restriction should be further continued, and that another period should be fixed for the termination thereof," directed that the suspension should remain in force another year.

The restriction therefore at present stands limited to the 5th July next; and, in fulfilment of the duty imposed upon them by the House, your Committee will proceed, in the first instance, to report the result of their inquiries into the state of the Bank of England, and their opinion with respect to the expediency of the resumption of payments in specie, at the period at which by law they are to be resumed.

1. Your Committee called for an account of the total amount of outstanding demands on the Bank of England, and of the funds in the possession of the bank for the discharge of those demands; and have ascertained that the sum which the Bank were liable to be called on to pay in fulfilment of their engagements, amounted on the 30th January last to L. 33,894,580, and that the Bank were then in possession of Government securities and other credits to the amount of L.39,096,900, leaving a surplus in favour of the Bank of England of L. 5,202,320 ; exclusive of the permanent debt due

from Government to the Bank of L.14,686,808, repayable on the expiration of the charter.

This document furnishes a clear and decisive proof of the flourishing condition of the affairs of the Bank of England, and justifies that ample confidence which the public have reposed in the stability of their re

sources.

The next point upon which the Committee required information respects the amount of cash and bullion in the coffers of the Bank, at the present and at various other periods since the year 1797.

After several fluctuations in the amount of their treasure, which was very much reduced at the close of the war, there appears to have been a gradual increase from the month of July 1815, to the month of October in the year 1817. During the interval between July 1816 and July 1817, the market price of gold did not exceed L.3, 198. per oz. The exchanges with the Continent for a very considerable portion of that pe riod were in favour of this country; and the Bank took advantage of those circumstances, and made a great addition to the amount of the precious metals in their possession. The purchases made by the Bank appear to have had no unfavourable effect on the price of gold; and there is reason to believe, that it would have fallen to the Mint price, had not the Bank fixed the rate, at which they were willing to purchase, at L. 3:18: 6 per oz. Mr Goldsmid informed the Committee, that "at that period there were no other buyers in the market at the price which was given by the Bank; had there been, they would have been supplied on the same terms, if they had wanted gold." Being asked whether, if the Bank had not been purchasers at L.3: 18:6, he believes

VOL. XII. PART II.

the price of gold would have fallen to the Mint price, he answers, “I think it might after some time; but that is matter of opinion only."

In the year 1817, the Bank had a much larger amount of cash and bullion in their coffers, than they had been in possession of at any former period since their establishment. From the commencement of the year 1818 the stock has been progressively diminished. This diminution has taken place in consequence of engagements into which the Bank entered (in conformity with the power reserved to them by the original restriction act) in the months of November 1816, and April and September of the following year, to pay in the first and second instance cash for all notes issued prior to the 1st of January 1812 and 1st of January 1816; and in the latter to pay cash for their notes of every denomination dated prior to the 1st of January 1817.

The total quantity of gold coin issued from the Bank, in consequence of the engagements thus entered into, and the continuance of the fractional payments under five pounds, appears, by accounts before the House, to have amounted, between the 1st of January 1817 and the 1st of January 1819, to the sum of L. 1,596,256 in guineas and half guineas, and in sovereigns and half sovereigns to L. 4,459,725. Your Committee have ascertained, that subsequently to the 1st of January there has been a further demand on the Bank for gold to the extent of about L. 700,000. The total sum, therefore, which has been issued by the Bank since the commencement of the year 1817 has been about L. 6,756,000; and no doubt can be entertained that the coin thus drawn from the Bank was demanded, not for the purposes of 2 F

internal circulation, but in order to realize a profit, either on its sale as bullion in this country, or on its exportation.

Your Committee are confirmed in this conclusion by the documents before the House, from which it appears, that the sum issued from the 9th of December 1816, (when the notes of the Bank became payable under the notice issued in the preceding month), to July 1817, amounted only to L. 38,020, 10s., though the Bank had become liable on the 2d of May of the latter year to pay cash for all their notes of L.1 and L.2 value, dated prior to the 1st of January 1816.

In July 1817, the former exchanges became unfavourable, and have continued so since that period; a profit has been realized on the exportation of gold coin, and the Bank has been subject to a constant demand for cash in payment of their

notes.

The following extract from the evidence given by Mr Alexander Baring shows the purposes to which a considerable portion of the gold thus withdrawn from the coffers of the Bank has been applied:-In France it appears, by the Report of the Minister of Finance, that there has been carried to the Mint of France, in the 16 months preceding the 31st December last, gold to the, amount of L.125,000,000 of francs (being equal to about L. 5,000,000 Sterling); and silver to the amount of a little more than L.3,000,000 of francs. Of that gold upwards of three-fourths were in coin from this country; and this operation has continued during the present year, though the amount of the importations of this year has not been reported.

Your Committee are satisfied that the Bank, in undertaking to pay

their notes in cash, under the cir cumstances above mentioned, acted from the best motives, and from a belief that the measure would tend to facilitate the complete resumption of payments in specie. Unfortunately it has had a contrary effect; the last of the three notices having been given at a period when the exchanges were unfavourable, when the price of gold had risen from L.3:18:6 to L.4 per ounce; and at a time when the Bank had not (according to the evidence given by Mr Harman) that control over their issues which might have enabled them to counteract the effect of the unfavourable exchange, by a reduction of their paper currency.

There was, in fact, in the halfyear between July and December 1817, a considerable increase in the amount of notes issued by the Bank. The average amount outstanding in the four half years preceding had not exceeded L.26,771,914; in this half year it was increased to L.29,210,035, having been in the previous half year L.27,339,768. It appears by the returns, that on the 5th July 1817, immediately preceding the payments of the dividends, the amount outstanding was L.25,800,000; and on the 4th of October, being a few days before the payment of the dividends of that quarter, the amount was L.28,900,000.

The issue of sovereigns between July and December 1817, amounted to L.1,240,422; so that, had the sovereigns remained in circulation, there would have been an increase to the circulating medium issued by the Bank of England, in the course of that half year, compared with the average amount outstanding in the four half years preceding, to the extent of L. 3,678,543.

Your Committee cannot avoid expressing an opinion, that whatever

might be the policy, and however laudable the intentions of the Bank, in engaging to make partial issues of coin in payment of their notes, yet, when the exchanges became unfavourable, and the price of gold rose above the Mint price, the only mode by which they could have retained the coin in circulation would have been a contraction of their issues; and unless the Bank at that period possessed such a control over the amount of those issues, as would have enabled them to effect that object, your Committee must consider it to have been expedient in the then state of the exchanges, to undertake an extensive though partial issue of coin, which subjected the Bank to considerable loss, and a great drain of treasure.

Under these impressions, and from a firm conviction that the continued issue of coin from the Bank, by diminishing the amount of their treasure, would have the effect of postponing the period at which the termination of the restriction can take place, without producing, on the other hand, any advantage whatever to the country, while the exchanges and the price of gold are in their present state, your Committee were induced to recommend to the House, in their first report, the immediate enactment of a law to suspend all payments in gold coin by the Bank, until your Committee might be enabled to present to the House their view of the whole subject which has been referred to their consideration.

The next important point to which the Committee will call the attention of the House is the amount of the issues of the Bank of England, which are outstanding upon Government securities; or, in other words, the amount of the debt due by the public to the Bank of England.

The necessity of the repayment of a large portion of that debt has been so earnestly insisted on by the Bank, and the nature and extent of the connexion between the Government and the Bank involve so many important considerations, that your Committee deem it incumbent upon them to enter into some detail with respect to the origin and gradual increase of the advances made by the Bank on behalf of the public, and the effect which they have, when carried to the amount at which they at present stand, of depriving the Bank of that control over their issues of notes, the possession of which is deemed by them an essential preliminary to the resumption of cash payments.

In the Appendix to the Report will be found an account of the amount of advances made by the Bank of England to Government on Exchequer Bills and other securities, from the year 1792 to the latest period to which it can be made up.

The first item of this account, entitled, "An advance out of sums issued for the payment of dividends now amounting to the sum of L. 1,098,820," ought not, in the opinion of your Committee, to be considered as any portion of the debt due by the Government to the Bank. It arises from money originally lodged by Government at the Bank, for payment of dividends to public creditors, which, not having been claimed, has been withdrawn from the Bank, and applied to the public service, under the provisions of acts of the Legislature passed in the years 1791, 1808, and 1816. It is not therefore an advance from the funds of the Bank, but it is the property of the public creditors, which has been made available for public purposes, until demanded by them. It will be seen from the account,

that a great proportion of the advances of the Bank are at present made under the two heads of "Exchequer bills issued," and "Exchequer bills purchased;" and before the Committee point out the distinction between those heads of the account, they will shortly advert to the laws which have been passed since the institution of the Bank for the regulation of their advances to Go

vernment.

upon

On the original establishment of the Bank, by the 5th and 6th William and Mary, a penalty is imposed the Directors, if they purchase, on account of the Corporation, any Crown lands, or if they advance to his Majesty any sum, of money by way of loan or anticipation on any branch of the public revenue, other than on such funds only on which a credit of loan is or shall be granted by Parliament. Such credits have ever since been granted from time to time, and advances made upon them. The amount annually, from the year 1777 to the year 1792, extracted from the documents published in the Report of the Committee of Secrecy of 1797, will be found in the Appendix.

In the year 1793 an act was passed, protecting the Governor and Company of the Bank of England from any penalty, on account of their having advanced, or advancing in future, any sums of money in payment of bills of exchange accepted by the Lords of the Treasury, and made payable at the Bank, but not charged on any branch of the revenue. The motives for passing this act are fully detailed in the evidence given by Mr Bosanquet, then a Director of the Bank, to the Committee of Secrecy in the year 1797. He states, "that it had been the custom of the Bank, time out of mind, to advance,

for the amount of such Treasurybills of exchange as were directed for payment to the Bank, until the amount was about 20 or L. 30,000, when the Treasury usually sent orders for the amount of such advance to be set off from the respective accounts to which the bills properly belonged. In the American war, they had been permitted to run to a larger amount, but he believed they never exceeded L. 150,000. Doubts occurred to him, when Governor, whether the penalties of the Act of William and Mary did not extend to this transaction; and for the purpose of removing them, the Act of 1793 was introduced and passed." It appears to have been originally proposed, that the Bank should be empowered to advance to a limited amount of L. 50,000 or L. 100,000; but the act passed without any limitation; its operation being of course confined to advances upon Treasury bills of exchange; on which species of security, however, no advances appear to have been made since the restriction.

By an act which passed very shortly after the first restriction act, the Bank were prohibited from making any loan or advance on account of the public service during the continuance of the restriction; but at the commencement of the following session it was enacted," that the Bank may make an advance on the credit of duties on malt, and on the land-tax imposed in that session, and any other advance which may be authorised by any other acts which may be passed during the continuance of the restriction."

In almost all the acts authorising the issue of Exchequer-bills passed subsequently, a special clause has been introduced, empowering the Bank to advance the whole or 3