to support his ideas. In the first place, he committed the immense error of omitting to consider that, in the English and Irish cases, these things happened when the English and Irish Bank notes were not payable to bearer on demand, when they were, in fact, inconvertible. In his statement regarding the Bank of England he relied upon the Bullion Report. Now, we have shewn, by the most incontrovertible evidence, in Chapter VIII., that this passage of the Bullion Report is the most amazing mass of chronological error and confusion that can be imagined. It was not the profuse issues of Bank notes that depressed the exchanges, but the badness of the coin; it was not taking Bank notes out of circulation that brought the exchanges to par, but the restoration of the coinage, and the exchanges were brought to par nine months before the Bank note was brought to par. Hence, in this case, the statement that the excessive issues of Bank notes caused the exchanges to fall, and the withdrawal of them restored them to par, has not a shadow of a foundation in truth. Hence, there is no truth whatever in saying that the action was upon the Bank notes the action was simply and solely on the silver coinage. The Irish case is equally inapplicable, because the notes were then inconvertible, and they were the medium in which payment of bills of exchange was made; and then, unquestionably, an excessive quantity of them depressed the exchanges prodigiously; but how does such a case apply to notes strictly convertible? The Scotch case is equally inapplicable-which will be explained in the following chapter, for the notes were not payable to bearer on demand, but six months after demand. Consequently, of these three examples, the first is wholly inaccurate, and the other two are wholly inapplicable to the case he had in hand.

3. He then proceeded to expatiate on the evils of unlimited competition of issues

"Are the lessons of experience at variance with the conclusion we are entitled to draw from reason and from evidence? What has been the result of unlimited competition in the United States? In the United States the paper circulation was supplied, not by private bankers, but by joint stock banks, established on principles apparently the most satisfactory. There was every precaution taken against insolvency, unlimited responsibility of

partners, excellent regulations for the publication and audit of accounts, immediate convertibility of paper into gold. If the principle of unlimited competition, controlled by such checks, be safe, why has it utterly failed in the United States? How can it be shewn that the experiment was not fairly made in that country? Observe this fact, while there existed a central Bank (the United States Bank) standing in some such relation to the other banks of the United States as the Bank of England stands to the banks in this country, there was some degree (imperfect, it is true) of control over the general issues of paper. But when the privileges of the central Bank ceased, when the principle of free competition was left unchecked, then came, notwithstanding professed convertibility, immoderate issues of paper, extravagant speculation, and the natural consequences, suspension of cash payments, and complete insolvency. Hence I conclude, that reason, evidence, and experience, combine to demonstrate the impolicy and danger of unlimited competition in the issue of paper."

4. It is impossible to say which is the more remarkable in this extract the evidence Sir Robert Peel omitted, or the evidence he adduced. The first thing that strikes us is-What was the need of crossing the Atlantic in search of an example of joint stock banks, with unlimited competition of issues? Why did he not cross the Tweed? On the north side of the Tweed there had existed joint stock banks, with unlimited issues, for 150 years, and no central bank to control the others; the principle of free competition was left unchecked, and the natural consequences, "suspension of cash payments, and complete insolvency," had never occurred. But Sir Robert Peel carefully avoided saying one word about that case, and the reason was that it militated against the theory he was determined to carry at all hazards, that of one Central Bank of Issue.

5. But the evidence he adduced was as great a misrepresentation of historical fact as what we have quoted in Section 2. The American Banks, indeed, established on principles the most satisfactory! why John Law was the parent of American banking! They were a formal adoption of the wild theories of Law. However, we cannot fully expose the fallacy of Sir Robert

Peel's views of American banking until a subsequent chapter; but as to the fact of the Central Bank of the United States exercising any due controlling influence over the other Banks, we will only quote a passage from President Van Buren's message to Congress, 1839

"I am aware it has been urged that the control (over the operations of the local Banks) may be best attained and exerted by means of a National Bank. The history of the late National Bank, through all its mutations, shews that it was not so. On the contrary, it may, after a careful consideration of the subject be, I think safely stated, that at every period of banking excess it took the lead; that in 1817 and 1818, in 1823, and in 1833, and in 1834, its vast expansions, followed by distressing contractions, led to those of the State institutions. It swelled and maddened the tides of the banking system, but seldom allayed or safely directed them. At a few periods only was a salutary control exercised, but an eager desire, on the coiftrary, exhibited for profit in the first place; and if afterwards its measures were severe towards other institutions, it was because its own safety compelled it to adopt them. It did not differ from them in principle or in form; its measures emanated from the same spirit of gain; it felt the same temptation to over-issues; it suffered from, and was totally unable to avert, those inevitable laws of trade, by which it was itself affected equally with them, and at least on one occasion, at an early day, it was saved only by extraordinary exertions from the same fate that attended the weakest institution it professed to supervise. In 1837 it failed equally with others in redeeming its notes, though the two years allowed by its charter had not expired, a large amount of which remains at the present time outstanding."

Such was the language held by the Government regarding that institution to whose abolition Sir Robert Peel attributed the destruction of American credit! and if we were to descend from the evidence of the Executive to that of the most eminent private commercial writers, such as Mr. Galatin, Mr. Lee, Mr. Appleton, and others, we shall find that the most reckless mismanagement was the chief characteristic of that Bank. So much for the value of it as an argument in support of Sir Robert Peel's views.

6. Sir Robert Peel then said that some contended-and he was not prepared to deny the proposition-that if we had a new state of society to deal with, the wisest plan would be to claim for the State the exclusive privilege of the issue of promissory notes, as we have claimed for it the exclusive privilege of coining. They considered that the State is entitled to the whole profits to be derived from that which is the representative of coin, and that if the State had the exclusive power of issuing paper, there would be established a controlling power which would ensure, as far as possible, an equilibrium in the currency. Is it necessary to point out the gross and ludicrous fallacy of Sir Robert Peel in this sentence? It is the height of incorrectness to say that the State has the exclusive power over the coinage, or at least, that she has reserved it to herself. Ever since the reign of Charles II., every private person has the right to have bullion coined at the Mint; formerly both gold and silver, to an unlimited extent. Since 1816 this privilege is confined to gold coin. At this moment all persons are entitled to have as much gold bullion as they please coined at the Mint; the only thing the State reserves to itself is the privilege of coining it so as to insure its being of a certain weight and fineness. But in what way is this analogous to the issue of promissory notes? The only duty of the State is to take measures that those who issue notes shall be in a condition to fulfil their promise of payment on demand. He then stated it was the intention of the Government to increase as much as possible the power of a single bank of issue, and that bank should be the Bank of England. The Bank was, therefore, to continue its privileges of issue, but it was to be divided into two departments, the one for the purpose of issuing notes, and the other for the ordinary business of banking. But the Bank was to be deprived, once for all, of the power of unlimited issues. These were to take place in future on two foundations only: 1st, a fixed amount of public securities; and 2ndly, bullion. The amount of issues upon public securities was permanently fixed at £14,000,000; every other note was to be issued in exchange for bullion only, so that the amount of the notes issued on bullion should be governed solely by the action of the public. Although Sir Robert Peel wished that there should only be a single bank of issue, yet existing interests were to be regarded; and those banks which were at that time

lawfully issuing their own notes might remain banks of issue; but their amount was to be strictly limited to a certain definite average. There were other details concerning joint stock banks which we shall reserve.

7. On the 20th of May, Sir Robert Peel introduced his further resolutions, and proposed that, in the event of any country banks of issue failing, or withdrawing their notes voluntarily from circulation, the Bank might, with the consent of the Crown, increase its issues to a definite proportion of the notes thus withdrawn. And further, that the Bank should be obliged to buy all gold bullion presented for purchase at £3 17s. 9d. per ounce (the Bank had been giving only £3 17s. 6d.), and a certain proportion was allowed to be on silver bullion, as the export of that was a proper remedy for the inconvenience of our standard differing from that of other nations. It was, therefore, of great importance to ensure such a stock of silver in this country, as might meet the wants of merchants, and prevent them having to send to the Continent for it. He proposed that the silver bullion upon which the Bank might issue notes should not exceed onefourth of the gold bullion.

8. It was impossible for Sir Robert Peel not to see the inconsistency of his measure of 1844, with his expressed sentiments in 1819 and 1833, that it was inexpedient to limit the issues of the Bank to any fixed amount, because there were times of commercial difficulty, when an increased issue of notes might be the proper remedy. There is no doctrine more strenuously insisted on by the Bullion Report, by the statesmen of 1819, as well as by the Government in 1833, and Sir Robert Peel himself, at both these periods, than that it was impossible to fetter the discretion of the Bank in its issues. Sir Robert Peel knew that he was now taking away this power from the Bank altogether, and, accordingly, he was obliged to meet this objection. He said

"It is said that the Bank of England will not have the means which it has heretofore had of supporting public credit, and of affording assistance to the mercantile world in times of commercial difficulty. Now, in the first place, the means of supporting credit are not means exclusively possessed by banks. All