"I think that no demand, however pressing, and of whatever nature, would make such a fall in the exchanges as would exceed the expense of the transport of coin, combined with the risk of the violation of the law, so long as a law exists against exporting the coin. This opinion, founded, as it is, upon the principle of circulation, is amply confirmed by the uniform experience of this country before the restriction of cash payments, and of every other country with which I have been acquainted. This principle has been put, perhaps, more severely to the test within the last two years in France than in any other instance. France having had a large payment to make abroad, beyond the apparent means of her commerce, and without any equivalent return, and these payments having produced no derangement whatever of the eirculation of that country."

123. Mr. John Ward, general merchant, with much experience in money operations. Commons' Committee, p. 239

"Is it your opinion that the rate of foreign exchanges, and the market price of gold, are affected by an increase or diminution in the amount of Bank paper?"

"Certainly."

"Do you think it would be in the power of the Bank, by a reduction in the amount of their paper issues, to restore a favourable rate of exchange, and to reduce the market price of gold to the Mint price?"

"That is my opinion."

"Are you of opinion that, under the restriction of cash payments, the excess of the market price above the Mint price of gold is an indication of the paper currency being depreciated, during the restriction of cash payments?"

"Certainly."

"Is the amount of that excess of the market above the Mint price of gold the measure of that depreciation in your opinion?" "It is."

"You have stated that you consider the paper of the Bank of England to have been depreciated by excessive issue; during how long a period do you consider that depreciation to have existed?"

"I cannot distinctly state for how long a period unless I could compare it with the value of gold."

"About how long?

"So long as the price of gold bullion has been above the Mint price."

124. The above extracts, which are only a portion of the evidence given by the great majority of the witnesses, are sufficient to shew the extraordinary change which had taken place in the opinion of the commercial world since the Report of the Bullion Committee, with respect to the great question of the connection between the paper currency, the price of bullion, and the foreign exchanges. The old opinions had scarcely a voice in their favour; even Mr. Harman, who had on all previous occasions been the stoutest antagonist of the principles of the Bullion Report, was considerably shaken in his opinion. Notwithstanding, however, that the governor and deputy-governor, and several other directors of the Bank, had given in their adherence to these doctrines, the majority of the court still persisted in the old opinions; and, on the occasion of some questions having been sent for their consideration by the Committee of the House of Commons, took the opportunity of recording publicly their disapproval of the doctrines which were now in the ascendant. On the 25th March they

resolved

"That this court cannot refrain from adverting to an opinion, strongly insisted upon by some, that the Bank had only to reduce its issues to obtain a favourable turn in the exchanges, and a consequent influx of the precious metals; the court conceives it to be its duty to declare that it is unable to discover any solid foundation for such a sentiment."

125. The Report of the Lords' Committee contented itself with recording the opinions of the different witnesses upon the great question so long agitated, it pronounced no judgment of its own upon the soundness of the different views. It, however, was very decided in the recommendation to return to the ancient metallic standard as speedily as could be done, with a due regard to the interests of commerce. The Committee of the Commons expressed their opinion that, when the exchanges became unfavourable, and the market price of gold rose above the Mint price, the only mode in which the Bank could have

retained the coin in circulation was by contracting their issues. And they said that, however the exchanges might have been affected during the last and preceding year, they had no reason to apprehend the same or any other causes could 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 their paper currency, from gradually approximating its value to that of gold, and ultimately re-establishing and maintaining it at par. Both Houses agreed in recommending that after the 1st February, 1820, the Bank should be required to deliver gold of standard fineness in quantities of not less than 60 ounces, at £ 1s. per ounce; that after the 1st October, 1820, the rate should be reduced to £3 19s. 6d.; and after the 1st May, 1821, it should be reduced to the Mint price of £3 17s. 10d. per ounce, that this liability to pay in bullion should continue for not less than two, nor more than three years, from 1st May, 1821, when payments in cash should be resumed. They also expressed their opinion that the great destruction of country bank paper of 1816-17, had been partly instrumental in reducing the price of gold, and making the exchanges favourable during that period. That, from the numerous circumstances affecting the value of Bank of England paper-the varying state of commercial credit and confidence-the fluctuations in the amount of country bank paper, and other reasons, no satisfactory conclusion could be drawn from the mere numerical amount of their issues at any given time.

126. The Report was brought before the Lords on the 21st May, 1819, when a petition, signed by about 500 merchants, bankers, and others, was presented against it, on the ground that the extensive contraction of the Bank's issues in so short a time, as would be rendered necessary by it, would cause general embarrassment. The directors of the Bank communicated a very strong representation, containing similar views, to Lord Liverpool, which was also laid before the House. Lord Harrowby, however, that evening, brought in the ministerial resolutions, which were framed in accordance with the Report, and the last of which was- "That it was expedient to repeal all laws prohibiting the melting or exportation of the gold or silver

coin of the realm." Lord Lauderdale moved a series of resolutions in opposition, the principal of which was that the Mint price of gold should be altered to correspond with the market price.

127. The resolutions were moved in the Lords by Lord Liverpool, in a speech of singular clearness and ability. Every word that he uttered told with crushing effect upon the course of the Government in 1810. He was an entire convert to the principles of the Bullion Report, in their fullest extent. He said that the three chief points in question were, whether-1. It was expedient to return to some fixed standard of value. 2. Whether that standard should be the ancient one. 3. By what means it could be done. That the first point was the most important, because it would be found that all the opposition to the measure was simply a disguised hostility to return to cash payments at all. Many considered that there should be no standard of value; but what civilised country had ever acted upon this principle since the world began? In former times the most disgraceful measures had been resorted to, to depreciate the standard, but even that was not so bad as having no standard. No country in the world had ever established a currency without a fixed standard of value; it might be gold, silver, copper, or even iron, but it must be something which had a real value; it could not be paper, which had no real value, but is only a promise of value, and England, the first country for commerce and knowledge of political economy, should not be the first to confer on any body of men, however pure their motives and conduct, the power of making money according to the suggestions of their own interests. Policy, good faith, and common honesty called on them to return to the ancient standard. No doubt some of the public debts were contracted in a depreciated currency, but yet the contract was to pay according to the ancient standard, and they must adhere to that if they meant to act honestly. He ridiculed the idea of the danger or difficulty of doing so. In 1816 gold fell to the Mint price, and, when it was quoted at £3 18s. 6d. in the public lists, it might, in fact, have been bought cheaper, only the Bank determined to be the only purchaser, and gave that price. Since then it had risen

to 6 per cent. above the Mint price, but at the time he was speaking it was only 3 per cent. above the standard price. A noble

Earl had doubted whether it was in the Bank's power to bring gold to the Mint price by contracting its issues. The question was, no doubt, somewhat obscure, but the Report would shew that there was not a single practical man, even among those most hostile to the intended measure, who did not admit that a contraction of the Bank's issues must necessarily have the effect of rendering the exchange favourable to this country, and of lowering the price of bullion. He himself entertained no doubt upon the point. The plan proposed by the resolutions, gave ample time for the Bank to make all necessary preparations without injury to the commercial interests by too sudden a contraction. The subject of the quantity of the circulating medium necessary for commercial transactions was one of the greatest importance; it was one, however, in which it was impossible to fix any nice proportion, and, in his opinion, THE ONLY

CRITERION OF A CIRCULATION BEING SUFFICIENT OR EXCESSIVE WAS TO BE FOUND SOLELY IN ITS VALUE WHEN COMPARED WITH

THE PRECIOUS METALS. The real value of paper could only be ascertained by its convertibility into specie. If that test was adopted it made little difference what the circulating medium was composed of. In Lancashire it chiefly consisted of bills of exchange, which was found to succeed perfectly in that county. If any country or district was possessed of real and substantial wealth, it would soon find a circulating medium for itself. The measures proposed, in his opinion, would lead to no inconvenience; if any could have arisen, they had been incurred already, and if Parliament would steadily adhere to the course recommended, they would see the ancient standard restored without material distress to any one.

128. Lord Lauderdale made some severe remarks upon the strong speech made by Lord Liverpool in favour of the very doctrines he had been twelve years in controverting. Lord King heartily approved of the resolutions, and especially that the time was fixed by Parliament, when the Bank should resume cash payments, as the public would now have a security beyond the discretion of the Bank directors. The numerical amount of Bank notes could be no guidance for the amount of issues. The only rule which could be given for their regulation was to keep gold at the Mint price. This was the only check on the vicious

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