78. Some proposals had been made of remedying the evil, by a compulsory limitation of the amount of the Bank's advances or discounts, or of its profits or dividends. All these, however, were futile, because the necessary proportions never could be fixed, and even if it were so, might very much aggravate the inconveniences of a temporary pressure, and even if their efficacy could be made to appear, they would be most hurtful and improper interferences with the rights of commercial property.

79. The only true and proper remedy for all these evils was therefore, A RESUMPTION OF CASH PAYMENTS. That, however, was an operation of the greatest delicacy, and it must be left entirely to the discretion and prudence of the Bank to carry it into effect. Parliament should merely fix the time, and leave it to them to carry out the details. Under all the circumstances, a period of two years seemed to be not longer than necessary, and at the same time sufficient to enable them to prepare for it. The Committee finally concluded by recommending an Act to be passed to compel the resumption of cash payments in two years from that time.

80. Such, we trust, is a fair analysis of this famous Report, which has acquired a celebrity probably exceeding any report that has ever been presented to Parliament. It contains the eternal and immutable principles which must regulate every paper currency which makes any attempt to conform to the value of the gold it represents, and if any legislation on paper currency be considered necessary, it must endeavour to enforce the practical application of the principles of this Report, and just in so far as it deviates from or contravenes them, so it will be found to thwart and contravene the eternal principles of Political Economy. All legislation, then, on the currency should have as its object merely to provide the best machinery for ensuring the practical application of these principles. The general principles laid down in this Report are as complete a matter of demonstration as any in Euclid; the method of treating the subject is as scientific as any of the great discoveries in natural philosophy, which have excited the admiration of the world, nor could it fail to carry conviction to any one of ordinary intelligence who was capable of understanding the force of the arguments. No

sooner, however, was it published than it was assailed by a whole multitude of pamphleteers, whose obscure memory it is not worth while to revive now. The interests affected by the Report were too deep and extensive for it not to be attacked by every species of ridicule and acrimonious controversy. We must now advert to its reception and treatment in the House of Commons.

81. The report was presented by Mr. Horner on the 9th June, 1810, but was not formally taken into consideration till the 6th May, 1811. It was the joint composition of Mr. Horner, Mr. Huskisson, and Mr. Henry Thornton. The debate was opened by Mr. Horner, who addressed the House for upwards of three hours in a speech which obtained the admiration of all who heard it. It is unnecessary to go over that speech here, because its line of argument has already been anticipated. He ended by moving a series of sixteen resolutions. The first seven related to the legal standard of value in this country, with reference to which all contracts were made in this country. 8. That the promissory notes of the Bank were stipulations to pay on demand the number of pounds sterling specified upon them. 9. That when Parliament passed the Restriction Act it had no intention that the value of these notes should be altered. 10. That, nevertheless, they had for a considerable time been below their legal value, (11) which was caused by the excessive issues of them, both by the Bank of England and the country banks. 12, 13. That the extraordinary depression of the foreign exchanges was in great part owing to the depreciation of the currency of this country, relatively to that of other countries. 14. That during the suspension, the Directors of the Bank ought to regulate their issues by the price of bullion and the foreign exchanges. 15. That the only method of preserving the paper currency at its proper value was to make it payable on demand in the legal coin of the realm. 16. That cash payments ought to be resumed at the period of two years from that time.

82. Mr. Rose replied to Mr. Horner-" He said that he could shew that there was no depreciation of Bank paper from excessive issue, and that the Report was more full of errors and misstatements than any that had ever been made to Parliament. He was convinced that the issue of Bank notes could have no

effect on the price of gold, or on the foreign exchanges. He denied that the increased price of commodities was in any way to be attributed to the increase of Bank paper. The report of the Committee was directly in opposition to the opinions of all the witnesses examined, except two. All "experience" was against the "reasonings" of the Report. He produced a table shewing the number of bank notes in circulation at different periods, and the market price of bullion and the exchange with Hamburg, to shew that there was no connection whatever between them. However, the Committee had themselves most pointedly remarked that the numerical amount of notes alone was no test of their depreciation. The enormous payments which England made to the continent during the last two years were quite sufficient to account for the fall in the exchange. That the rise in the prices of all commodities on the continent had been equally great in countries where there was no paper currency as here. He went into arguments at great length to disprove the idea that the issue of Bank notes had any effect on the price of gold or the exchanges.

83. Mr. Henry Thornton stated that the great question at issue between the Bullion Committee and the Bank was, whether its issues should be regulated by the price of gold and the foreign exchanges, and if its excessive issues produced any effect upon them. Mr. Thornton argued at great length in support of the principles of the Report, and cited the case of the Bank of France in 1805 as a remarkable confirmation of the truth of its principles. The French Government, having occasion for a loan, applied to the merchants for it, such a transaction being contrary to the rules of the Bank. The merchants proceeded to fabricate among themselves bills to the requisite amount, which they discounted at the Bank, which thus ultimately became the real lender. There was, in consequence, an enormous increase of the Bank paper, a great demand for specie. The Bank had to bring back specie from the provinces at a great loss-at length it stopped payment. Bank notes fell to a discount of 10 or 12 per cent., and the foreign exchanges fell 10 per cent. But the Bank reduced its paper, and in three months resumed payment without difficulty, and the foreign exchanges were rectified. Mr. Thornton also quoted several other cases of other countries

where the same phenomenon had occurred. He then passed on to the question of the standard of the currency, which he said was becoming endangered by this continued depreciation. Indeed, the argument in favour of a deterioration of the coin grew stronger every day. The very argument of justice, after a certain time, passes over to the side of deterioration. If we have been only two or three years using a depreciated paper, justice is on the side of the former standard; if ten or twenty years have passed since paper fell, it may be deemed unfair to restore the ancient standard. He concluded by strongly urging Parliament to return to the ancient standard before it was too late.

84. Mr. Vansittart, who moved the counter-resolutions to Mr. Horner, controverted, at great length, the principles of the Report. He asserted that the only mode in which a metallic currency could have a favourable effect on the exchanges was by exportation, and that if exportation was prohibited by law, no effect could be produced. The amazing absurdity of this assertion has been sufficiently proved in the course of this work to need repetition here. These assertions, however, were sober good sense compared to the lengths of wild extravagance into which he subsequently plunged. He said that the first seven resolutions argued on the supposition that the standard was something visible and tangible. "I affirm that a standard, in the sense used by these gentlemen, namely, a fixed and invariable weight of the precious metals as a measure of value never existed in this country!!" He ridiculed the idea of the resolution that the weight at which any such money is authorised to pass current is fixed!! These extraordinary ideas he attempted to support by reference to the degraded state the coin had been in at different periods, but which were yet legal tender, and which, he contended, proved that the coin was not any definite weight of bullion. It was upon this point, he said, that the question of depreciation depended. "Now, I do not consider myself bound either to admit or deny that Bank notes have lost a value which they never possessed, and which the legal coin of the country never possessed, namely, a value estimated by a fixed weight of gold or silver bullion. They never had any other than current value, founded on the public

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confidence in the Bank, and this value, I firmly believe, and have distinctly stated in my third proposition, that they possess as much as ever." When the whole of the rest of his speech was a mere repetition and development of such crazy ideas, it is mere waste of time to give any more details of it. There is one more specimen, however, which we cannot refrain from extracting. He says-"It appears, then, that a diminution of the value of currency may have the effect of improving the exchange, but cannot by possibility depress it!!" Which means that the more debased and worthless the currency of a country is, the more favourable should be the foreign exchanges, or the higher should foreigners estimate it. So that, while the French assignats were daily falling lower and lower at home, the more should foreigners have given for them: so that, while the French themselves gave one livre in coin for 1,200 in assignats, the English and other foreigners ought to have given their full nominal value in coin, and even more than that according to Mr. Vansittart. He then made several triumphant observations about there being no difference in transactions between Bank notes and coin. He admitted that he had been a member of the Irish Committee of 1804, and had concurred in the opinion that Irish Bank notes were depreciated, but he said that the two cases were not parallel; for it appeared not only that the current coin was openly sold at a premium, but that an established difference of price existed between payments in coin and in Irish paper, while Bank of England paper passed as equivalent to guineas. This depreciation, however, he denied had proceeded from excessive issues, but from the political circumstances of the period.

85. Such were the leading arguments against the conclusions of the Committee, which, though somewhat varied in expression, were constantly repeated. After the exposition given in our chapter on the Coinage, it would be waste of time to attempt seriously to disprove the outrageous folly of the proposition, that the coins of Great Britain never were intended to contain any fixed or certain quantity of gold or silver bullion in them. If this had been true, what was the need of having any gold or silver in them at all; if it was not to regulate their value?