L I E) R_ARY 
 
 OF THL 
 
 U N 1 VER_S ITY 
 
 Of ILLINOIS 
 
 e>a75 
 
 V.I7
 
 Itfioaant, pbintsb, trvro,'}
 
 TWO 
 
 Supplementary Letters 
 
 (Being the 5th and 6lh of a Series) 
 ON THE 
 
 CIRCULATING 3IEDIUM 
 
 OF 
 
 ADDRESSED TO 
 
 The Editor of the Royal Cormvall Gazettty 
 
 AND 
 
 ORIGINALLY PUBLISHED 
 
 IN THE 
 
 JiTumbers of (hat Paper for I3lh, 20th, and 27/ft Feb. 1819; 
 
 WITH 
 
 ^•rummarg oi m (tonttnt^ 
 
 OF EACH OF THE SIX LETTERS PREFIXED'. 
 
 Wherein certain objection* to which the Counters as proposed 
 in the former Letters were open are entirely removed, and no 
 temptation in any possible fluctuation of the relative value of the 
 precious metals is left to the Melter or Exporter on the one hand, 
 or to the Coiner on the oilier, excepting by imitations in less 
 pure metals, for the detection of which an easy method is 
 suggested. 
 
 Containing also some Observations on the General.Principles of 
 Currency — the Bank of England — The Restrictiou Act — and on 
 the before suggested Establishment in London of a State BuHi(>n 
 Bank, and of branch State Bullion Banks in the proTinces. 
 
 TRURO ; 
 
 Printed by F. Shoberl, Cornwall Gazelle Office, and (as likeicist 
 
 IhcformtfT Letters, re-jmblisheri in January, price Is. (id.) 
 
 sold by J. Bjgg, 51, I'arliamrnt Street, London; 
 
 Upham, Exeter; and Constablb 
 
 and Co. Edinburgh. 
 
 Price If. Gd.
 
 CONTENTS. 
 
 LETTER I. 
 
 The preseDtpaper currency offers great temptation to forgery.— 
 \ot to be replaced by specie at actual standard, each fluctuation 
 in relative valile of gold and stiver bullion exposing gold or silver 
 coin to melter or exporter. 
 
 General deprelialion natural consequence of reduction of stand> 
 ard — May be obviated by m vking reduced currency convertible 
 into bullion of greater worth, at Bank of England, 9rat a propotd 
 State Bank. 
 
 LETTER II. 
 
 Gold token convertible into bullion of so much more value as 
 to pay for trouble of changing can offer no temptation to melter, 
 &c. — Silver token must rise ii> current w«rlh with every advance 
 of gold bullion, but without great reduction of intrinsic worth, 
 offers temptation to melter, &c. on each advance of silver bullion. — 
 A reduction of 20 per cent, proposed for its security. — Same also 
 in the gold counter furunitorn)ity,&c. — Not insisted on in latter. — 
 Thus reduced is still less liable to imitation than small note. — Bul- 
 lion likely to be liltle drawn for domestic use. — Extraordinary de- 
 mand of g«ild bullion fur exportation an opportunity to purchase sil- 
 ver bullion f(»r future coi/ia^c, and a means of restoring precious 
 iiietaU to their usual relulive value. — Such counters, with the 
 larger notes improved, would forma currency free from most 
 objections to present. 
 
 LETTER in. 
 
 Farther security to s1!v(t couatt-r in Bank's occasional reiale 
 of silver t)ullion. — I'urihaici/ of it to be moderate, lest they lower 
 gold too much. — Suggotion for kctping silver bullinn and pro- 
 duce in gsneral at a coraparalively lower value relalivs to gold ia
 
 11 
 
 lliis country. — Whether, in great foreign demands for gold, its 
 permiineiil hij^h price here may not check drafts on Bank, and 
 accelerate its return.— In ils long continued and general diminu- 
 tion further subdivision of gold counter in silver coin recom- 
 mended. — No probable necessity for Bmk's slopping payment for 
 want of means. — Drafts of bullion depend ou exchange. — That 
 much influenced by Bank. — Fluctuation of prices of things 
 caused by that of demand and supply of the aggregate of commer- 
 cial currency ; therefore little subject to domestic control. — The 
 change of system involves no risk : combines with the best pri- 
 vate or national security to creditor, and large profit to State.— 
 Currency of ^^S and higher notes to continue.— Change to be ef- 
 fected lhr()ug,h Bank of England, or New National Bai.k. — Funds of 
 latter would accumulate in ratio of pledges issued. — Mostly dis- 
 posable for discounting bills, &c. — Profits available, under par- 
 liamentary control, for exigencies of Slate. — Nation's supporting 
 expence convenient, not requisite. — Detailed plan for such Bank. 
 — Public revenue to be pledged for expences and obligations of 
 Establisl'iiisiit. — State's arbitrary encroachment ou trading fund 
 guari!ed against. — Bank then morally safe.— Bankruptcy of Slate 
 need i:ot involve it. — Many of these advantages attainable through 
 a private Ennk — In other altcrnilive not fully so till close of 
 Bank of England's charter. — Probable inducement for their then 
 selling their stock to Government.— Might meanwhile circulate 
 the Siatj Counters, and, on close of charter approaching, State 
 Brink £b and higher notes. — Stute Bank then to complete the 
 change. — The Bank of England declining to sell its properly to 
 Govcri:ment, it would yet eventually be at its disposal.— The 
 -Directors' assistance and transfer of their services to New Esla- 
 lilisluuent more probable. — Paying commissioners by a jjer ctnlage 
 on prijils suggested. — Object yet more easily attained and without 
 new p;ilronagc it limited to securing the currency through the 
 ao-ency o^ Bank of England. — Dread of a noa renewal of charter 
 might draw from them larger pecuniary grants. — But, their 
 agency acccpte«a, the creditor loses the belter of the two surelies 
 ofilred by the Slate Eauk — Writer prefers the latter. 
 
 Early profit to the nation therefrom. — Beneficial efifecls of 
 change of system ou morals of the people.
 
 HI 
 
 LETTER IV. 
 
 Writer hears of Mr. Ric;»rdo's w.)rk. — I;>fers that Mr. R'a plan 
 differs from his own. — What first su^ji^e^ted latter. — Motive for 
 publishiiiof it. — Two persons ciMniuij to iika comliision iiidcpcQ- 
 dentiy probably butii near truth. 
 
 Objections mide to phn: 1st. To use of bullion — in necessity, 
 for frequent assays — 2J. To counle.-s — !iold."r*s jjreitvT rcspt>nsi- 
 bility when below current weight — and greater tomplation to 
 coining. — 3J. Sufficiency of prot.u'tioa to a currency of specie 
 under former laws. — Answer: 1st. Bullion would pass cliitfly 
 between importer. State B.iuk, an I exporter. — 2J. Loss to holder 
 of light coin onlj/ on actual waste, sa:ne as now on guinea. — 
 Coining, less bonus on, than on forgery, and offered to fewer.— 
 3d. One or other branch of old specie always in danger. 
 
 Branch Banks recomnaenJed. — Conveyance of bullion lo and 
 fro per Mail. — Suggestion of paying in specie according to aver- 
 age paper price of bullion examined. — Danger of consequent 
 deprelitttion and gambliug speculation. 
 
 LETTER V. 
 
 To guard against coining, counters should be a« near valac 
 represented as thej may without iacurring danger of being melted 
 &c. — This obviated in gold counter by very little reduction.— 
 Error in admission of any deviation from this principle — The 
 stiver counter cannot be secured from both dangers whilst its car- 
 rent value is apportioned at a permanent ratio to that of the gold. 
 — ShouLl be convertible into silver bullion. — Inconvenience of 
 consequent fluctuatisn in gold and silver coin obviatco. — Gold 
 bullion supposed the standard. — Reasoning equally conclusive 
 were silvers*. — JW motive left for fraud in standard metals.— 
 Method for easy detection in others. — No possible gain by export- 
 ing, &c. either gold or silver counter. — Correspondence coni- 
 raeuced under impression of Restriction Act being suffered to 
 expire without farther renewal. — Interesting qnestions arising 
 from actual uncertainty on this head. — Observations on general 
 principles of currency. — Demand and cost in labour true standard 
 of value; but not of ready applicution.->-Gold an iraperiect bat 
 coDveDienl substitute.
 
 IV 
 
 LETTER VI. 
 
 Account of Bank of England. — Solvency when Restridion Act 
 passed. — Act orijijiiiated in itate policy. — Advanced the interests 
 of Bank only collatcr ally wilh Ihose of the Slate and the country.— 
 Conliimaiice nquired by circuraslauces. — Forced paper currency 
 attended with evils and liable to abu)*e. — Should not be needlessly 
 prolonged. — Use of smaller notes began with hut will not neces- 
 sarily terminnle with Act. — That It should. — Dcpretiation takes 
 place even where ultim;ite solvency is undoubted, from over- 
 issues and limited circulation. — Kelatire value of notes and of gold 
 no jusl criterion of depreliation in former. — Supposed actual di- 
 minution of gold in European market. — Causes temporary.— 
 Should cease before consumption be aujjmented. — Plan for re- 
 ducing our paper money to due portion of whole medium of com- 
 merce; also for estimating rea/ value of gold before Act, and 
 what it will be on Act's expirvtion, with a view to resumption of 
 cash payments in currency of just value. — The steady supply of 
 metals once equal to consumption, cash payments may safely be 
 resumed in proposed counters. — Re-consideration of the idea of 
 regulating payments in specie periodically according to paper 
 price of gold bullion. — Error of estimating fluctuation in value of 
 gold relative to silver bullion by its price in silver coitt acknow- 
 ledged. — Conclusion,
 
 LETTERS 
 
 ON THE 
 
 Circulating Jtledium. 
 
 LETTER V. 
 
 Timrsday, Feh.W, I8l9. 
 Sir, 
 
 In my second letter on the currency I ob- 
 served that any reduction in the intrinsic below 
 the representative value of the proposed gold 
 counter, which, in the event of gold being wanted 
 for exportation or manufactures, would pay the 
 holder for the trouble of exchanging it for bul- 
 lion, would suffice to protect that branch of the 
 coinage from the melter and exporter; but that 
 as the silver counter was only representative of 
 and convertible into a given portion of gold, 
 and any fluctuation in the relative value of silver 
 and gold bullion in favour of the former, to a 
 greater amount than the reduction in the intrin- 
 sic value of the nlver counter below its repre 
 sentative, must consequently offer a temptation 
 for melting down or exporting it, that reduction 
 could not be less than 20 per cent, with a pro- 
 bability of making it permanently safe; and 
 that I would therefore suggest, for the sake of
 
 uiiiforinityj and a regard to the customary pro- 
 portional value of the gold and silver branches 
 of the coinage, a reduction to that amount in 
 them both. 
 
 But the importance of lessening to the utmost 
 every temptation to illegal coining ought to 
 outweigh every minor consideration ; and if 
 such reduction in the silver coinage were un- 
 avoidable, it should, though forming part of a 
 system on the whole far less pregnant with evil 
 than the old; it should, I say, itself be consi- 
 dered a great evil, and only submitted to from 
 necessity. 
 
 Having then at first entertained and even 
 publicly suggested, the idea of such a reduction 
 in each of those branches of the coinage, I beg 
 your permission at once, and through the same 
 channel, to acknowledge my error in ever having 
 thought of that measure with regard to the o^old 
 branch, and in atonement to ofl'er an expedient, 
 for, as 1 trust, safely dispensing with it in both; 
 attended indeed by some apparent inconve- 
 niences ; but which I believe to be more than 
 compensated by its advantages, and capable of 
 being, in a great measure, obviated in practice. 
 
 1 believe it is in the nature of things impossible 
 excepting by such reduction, to protect the silver 
 coinage from dangers arising from fluctuation in 
 the relative value of gold and silver bullion as 
 long as that coinage shall continue, as it hai
 
 always hitherto been, solely representative of and 
 convertible into a given portion of t^old in a 
 limited fixed ratio. Did no ill consequences 
 result from this old custom of fixing the relative 
 value of the gold and silver coin without regard 
 to and amidst the never ceasing fluctuation 
 of that of their respective materials, conve- 
 nience would certainly recommend an adhe- 
 rence to the custom, for it would then be 
 attended with a real, not as at present a falla- 
 cious convenience, betraying us into a thousand 
 !€vils; but as the case really stands, to suffer 
 ourselves to be shackled by this custom would 
 be mere folly. 
 
 Let then all accounts be kept, and bargains con- 
 tracted as heretofore^ in pounds, shillings and 
 pence: but let the shillingy equally with the 
 French livre, and the pound sterling, have in fu- 
 ture no existence but in accounts, and t/ie silver 
 currency be supplied by counters representative 
 of, and optionally exchangeable for an ounce, a 
 half, a qtutrter, and an eighth of am ounce, of sil- 
 ver, and {as likewise the gold counter,) be under 
 but as near the weight represented as may be with 
 assurance of the holder s preferring t/te trouble of 
 exchanging it for bullion to the loss he would sus- 
 tain by the use in manufactures or the exportation 
 of the counter itself This currency might be 
 originally issued in exchange, partly for the 
 silver bullion represented by it, and partly for
 
 8 
 
 the present silver coin : in the latter instance 
 at a rate to he determined by the avera^re prices 
 of silver bullion in a certain number of markets 
 taken from sworn returns made up to the latest 
 period : and mighl be inade a laral tender, to the 
 amount of say six ounces, according to such aver- 
 age, till the last day of the current quarter of the 
 year : some tveeks prior to which the average of 
 a like number of markets to the latest convenient 
 period should, by proclamation in every town, 
 fix the legal value Jor the next subsequent three 
 months, and so successively. These counters, 
 thus varying in value and in exact ratio with 
 the silver bullion represented by them, for which 
 ('suppose in 20 oiince or in 40 ounce stamped 
 bars, and above,) they should be legal demands 
 en ti e Establishment, could o^w no temptation 
 to the forger, the metier, or exporter; and 
 thou;ih they would be attended with some incon- 
 venience to trade from their fluctuation in value 
 relative to the gold coin, the periodical estab- 
 lishment of their legal value in small payments 
 from one cjiiarter day to the follovi ing, as pro- 
 posed, will greatly qualify that inconvenience, 
 and 1 hope remove every serious objection. 
 Supposing a favqurable season for repealing 
 the Bank liestriction Act to have occurred : 
 let the nearest sum in pence and farthings to 
 the inai kot juice of the tight h of an otince of 
 silverbullion be made the teuioorarv standard
 
 9 
 
 value of that branch of the currency, and mul- 
 tiplied by 2 and 4 for the half ounce and ounce 
 counter respectively, (thereby avoiding the em- 
 barrassment that must arise from the fractions 
 which the division of the price of the ounce 
 would frequently give in the adoption of the op- 
 posite method:) — a coinage of farthings, (other- 
 wise much required for the accommodation of 
 the poorer classes in their petty retail dealings) 
 be provided : the copper currency continued as 
 at piesent a legal tender to the amount of twei\ e 
 pence : and £5 and higher notes, manufactured 
 with superior skill, be got ready; and every ne- 
 cessary preparation for the issue of . both the 
 gold and silver branches of the proposed cur- 
 rency will have been made: when their circu- 
 lation commencing under tjje auspices of the 
 New System and Estabhshmcnt, the national 
 currency and the morals of the people as con- 
 nected therewith will be equally protected, and 
 with due precaution, 1 should tiiink the necessi- 
 ty for the Bank Restriction Act not lilcdu again 
 to recur. 
 
 Bullion, it must be obvious, would, under 
 this system, as at present, only be exported for 
 its full value. Small sums of the proposed cur- 
 rency also would indeed, on tliis less reduction 
 of intrinsic value of the counter, be for conve- 
 nience soujetimes exported, but evidently, were 
 vihe seignorage or reduction of intrinsic value
 
 10 
 
 greater than the cost of coinage, at a profit to the 
 State, and at any rate, on account of their higher 
 current value here than abroad, probably soon 
 to return. 
 
 I have argued on the supposition of gold 
 bullion being preferred for the final standard of 
 the currency, but were silver so my reasoning 
 would be equally conclusive; and reading gold 
 and silver mutually each for the other, the result 
 precisely the same. 
 
 In these counters, whether gold or silver^ sup- 
 posing their reduction of intrinsic value not to 
 exceed a sufficiency for covering the expence of 
 coinage^ (and on the Establishment of Branch 
 Banks, the facilities they will afford for the 
 optional conversion to bullion considered, no 
 greater, it may be presumed, would be requisite 
 for their protection from the opposite danger,) 
 there can, (as I observed before oi the silver) be 
 no temptation for illegal couiing : excepting it 
 be with a })artial use of the baser metal, which 
 will very easily be detected. Such imitations, 
 indeed, might possibly be made of the same 
 weight with, and so like the genuine counters, 
 as to deceive the inexperienced. But different 
 metals varying in their specific weight, the adul- 
 terated coin, of like weight with the true, must 
 be larger or smaller than it, in exact proportion 
 to the specific difference of weight in the base 
 metal and in the quantity of the pure whose
 
 11 
 
 place it usurps : and as, of two masses of dif- 
 ferent bulks, balancinj^ each other in the ordi- 
 nary method of weighing, the larger would be 
 sensibly more buoyant in water; the easily 
 provided apparatus of a water balance, if kept 
 by the bankers and other principal money 
 dealers, (through whose hands, most of the 
 gold and silver currency frequently passes in 
 its circulation) for the occasional proof of the 
 counter and the ingot, would almost prevent 
 the possibility of a successful prosecution of that 
 fraudulent practice on the currency. 
 
 At present I will say no more of the counters; 
 but there is another question relative to the cur- 
 rency, without a due consideration of which all 
 the preceding discussion (were it at all probable 
 that the suggestion of an anonymous individual 
 could be adopted precipitately and without pre- 
 vious examination of the circumstances) might 
 prove worse than useless. In my original com- 
 munication to you I had no other design thau 
 to lay before the public in your pages the sketch 
 of a plan for changing the system of our cur- 
 rency; and when I was afterwards induced at 
 different times to trouble you with a farther 
 development of it, and its examination in dif- 
 ferent bearings, and finally, to describe at large 
 how it might be brought into operation ; each 
 letter being intended for the last, and to forna 
 part of no general inquiry, 1 still omitted to
 
 12 
 
 examine tvhether, and if so, when it would be 
 piopfT to put it in execution, and to withdraw 
 the. Re&triction on cash payments ; as consider- 
 ing that part of the subject ah'eady decided on 
 by the legislature. 
 
 As, however, no more would necessarily fol- 
 low from a repeal of the Restriction Act than 
 the option of convertingthe Banknotes in gene- 
 ral into ppecie : which would neither necessarily, 
 uor even probably, cause all the smaller notes 
 to be withdrawn from circulation; and at any 
 rate would leave the temptation for melting 
 down or exporting the coin wholly unchecked, 
 my then more limited object w^as still one of 
 great interest and such as I trust will sufficient- 
 ly apologize for every honest effort for its attain- 
 ment. But having now, with a riew of submit- 
 ting to the public a supposed improvement of 
 that plan, taken the liberty of again soliciting 
 your indulgence, allow me to make use of the op- 
 portunity for entejing into an enquiry respect* 
 ing the resumption of cash payments (since I 
 find the idea of a farther prolongation of the 
 ResUi^;'ion Act for an indefinite period is at 
 present in contemplation) ; and (as intimately 
 connected therewith) that of the motives in 
 which that Act may be presumed to have 
 originated ; before entering on which it may be 
 well to make some prefatory observations on 
 the nature of currency in general.
 
 IS 
 
 I would not he understood to entertain tlitf 
 preposterous idea of wishing:, on the expiration 
 of the Restriction Act, to prevent the exporta- 
 tion of gold hidlion- — Such an attempt would 
 doubtless be impracticable, and if practicable, 
 by no means desirable. Allowing for the com- 
 paratively small poition of the precious metals 
 (particularly gold) consumed in manufactures, 
 they should not generally be considered the 
 ultimate object of commercial pursuit, butsolely 
 as part of a circulating medium, or in other 
 words a means for the acquisition of things use- 
 ful to the support or convenience of life. It is 
 their exportation or domestic transfer in ex- 
 change for such articles that really enriches , and 
 the exchange of our superfluities for them is, 
 with the exception before noticed, advantageous 
 only as providing means for the prosecution of 
 that directly profitable barter. We have only 
 then to guard against the exportation of the 
 precious metals trenching too much on the 
 domestic demand ; (which last is more impor- 
 tant in proportion to its more frequent recur- 
 rence) and as I have formerly shewn that the 
 cure of that evil would commence from the mo- 
 ment it was felt, through their now greater value 
 for home, in a general view, than for foreign 
 commerce, the increased demand by foreign- 
 ers for our now cheaper produce and the ope- 
 rations of the Bank : such exportation might 
 
 u
 
 14 
 
 be coutiinicd in each branch of commerce where 
 it was still advantageous to the merchant, with- 
 out, as I conceive, endangering a seriously in- 
 convenient scarcity at home — and would mean- 
 while tend to quicken our own powers of pro- 
 ductiveness. 
 
 The resources of a country are only limited by 
 the number of its people, the extent and fertility 
 of its soil, and the means natural and artificial of 
 improving that soil and its produce, and of ex-- 
 changing the superfluous part of the latter for fo- 
 reign produce that may mediately or immedi- 
 ately be more for its advantage. Now an excess of 
 currency, it has been shewn^ mcreases the price of 
 each article of produce, and checks the foreign 
 demand; but on the other hand, di< facility of lyrC' 
 duciion is the only permanent criterion of value, 
 wherever that is greatest the article \y'\\\, in ajree 
 international circulation of specie, be on a general 
 average of markets cheapest; and that country 
 will consequently be able to undersell its neigh- 
 bours, and insure more extensive orders for its 
 produce, and finally add more to its ov/wreal 
 wealth in the returns. But thai facility depends 
 much on division of labour for which great Es- 
 tablishments and a command of money are neces- 
 sary. Whilst therefore, the currency, may be 
 too abundant, it is evidently requisite in certain 
 circumstances to guard against an occurrence of 
 the opposite extreme,. In a natural state of
 
 15 
 
 things care would be superfluous — specie in a 
 free international circulation would find its level, 
 and that level would he determined by the re- 
 lative proportion of productiveness in soil and 
 industry of the respective states : the superfluous 
 currency of the poorer being disposed of in con- 
 veniences, of the richer in luxuries and magnifi- 
 ■cence. 
 
 Should peculiar circumstances cause at any 
 time such a superfluity, whether in paper or in 
 coin, it should be withdrawn from circulation ; 
 and its being so withdrawn would be advanta- 
 geous at once to the Government and to the 
 people. It could however in neither instance 
 be permanent but from a too great and indis- 
 creet issue of non-convertible notes or counters, 
 and the evil in both would he preciseli/ t lie same 
 and two-fold; namely, the immediate and the 
 future — of them the former will consist first in 
 the comparatively trifling inconvenience on the 
 necessary rise of prices of every individual being 
 obliged to incumber himself with greater sums 
 of money for like purposes than in the natural 
 state of the currency: next in the more serious, 
 one of q, diminution in the real value of all re- 
 ceipts under contracts made before, or in a less 
 advanced state of the depretiation, among which 
 must be classed rents, salaries, annuities, and 
 money bargains of every kind, and, abo^eall, 
 the Government Annuities. Tiiis latter incon-
 
 16 
 
 venieiice would, indeed, be less felt, and would 
 be actually less in proportion as it had been 
 longer in its gradual rise. But the most for- 
 midable evil is in the consequences ; on the cur- 
 rency being suffered to resume its natural level 
 the converse of all this must take place, more 
 distresshiir in the re-action, which, unless it may 
 be prevented by some strong and early precau- 
 tionary measure on the part of the legislature, 
 must after any considerable depretiation of the 
 currency, be sudden and violent in the extreme. 
 
 A rise in the comparative value ofgold to such 
 forced currency of whatever material, is, how- 
 ever no decisive proof of depretiation in the 
 latter — The Bank note may have retained its 
 relative value to produce in gjeneral. This is 
 its real standard, on principles drawn from true 
 reason, and the nature of things; gold being 
 only an imperfect substitute for it, highly con- 
 venient iadeed, as being something tangible and 
 easy to be referred to, but (seeing the facility of 
 its production from the mines and consequently 
 tfs relative value to other produce varies with 
 oircumstaiices,) not to be precipitately re-adopt- 
 ed after long disuse or without regard to the 
 rise or fall mreal value it may have suffered in 
 the interval. 
 
 To this reasoning I shall refer, when I come 
 to speak of the Restriction Act and the resunip- 
 liou of payuionts in gold ; but as 1 foresee that
 
 17 
 
 these questions will involve a large field of 
 enquiry, and would extend this letter, already 
 long, beyond all reasonable bounds, 1 shall 
 defer the consideiation of them to another, 
 ■which I trust, will finally relieve you from i\m 
 too protracted correspondence. 
 
 1 am &c. 
 
 Y. Z. 
 
 LETTER VI. 
 
 Tuesdai/, Feb. 16, 1819; 
 Sir, 
 
 According to the intimation in my last letter, 
 I will now, by your permission, attempt some 
 examination of the question whether, and, if so 
 when cash payments may safely be resumed, and 
 the change of system and the national establish- 
 ment recommended under a presumption of that 
 jneasure taking place, commence their operation. 
 In order to this some previous understanding 
 of the principle of the present Bank of England 
 Establishment, and of its connection with the 
 ^Government, seems indispensible. 
 
 The Corporation of the Bank of England 
 ihen, is a joint stock company of Money Mer- 
 chants, incorporated about 120 years since by 
 RoyalCharter,for the accommodation of the pub- 
 lic (particularly the commercial part of it) and 
 of the State; — limited originally as to time and 
 stock to a term of years, and to a certain extent
 
 18 
 
 of capital ; — of which they have been allowed 
 to renew the first, and to enlarge the latter, in 
 return for various loans, and other financial 
 arran|2;emeiits beneficial to the Nation ; and been 
 privileged as the sole Corporation of Bankers in 
 the Kingdom. Their stock may be supposed 
 to have originated in a certain per-centage on 
 each share, in the currency of the country and 
 in bullion, and the remainder in good securities 
 bearing interest, all placed at the disposal of 
 the body of directors under certain established 
 rejrulations. 
 
 With a great stock at command, and under 
 the credit of their known responsibility, they 
 •were of course enabled to commence the busi- 
 i.es5 of discounting bills of exchange, purchas- 
 ing and selling foreign coins and bullion, &c. &c. 
 on a respectable scale, making the advances 
 partly in the currency of the country and partly 
 in their own bills ; always taking care to reserve 
 enouf^h of the former in their coffers for redeem- 
 ing the latter as presented, and to receive a 
 reasonal)le per-centage in discount for covering 
 occasional losses in particular transactions and 
 the expences of their establishmeilt, and return- 
 ing a fair profit to the subscribers. — As the pub- 
 lic became familiarized with it, the Bank paper 
 would gradually be considered as part of the 
 established currency of the country, and be 
 generally preferred in trade for its greater faci*-
 
 19 
 
 lity of conveyance. — Meanwhile they mijjhf, fni 
 the course of these transactions, reserving suf- 
 ficient coin and bullion to meet all probable de- 
 mands, and under such other precautions as the 
 above^ have converted their capital chiefly into 
 bills of exchange and such other property as 
 made the quickest returns, and the greatest 
 profit — and having begun originally with a 
 capital of about two millions, the superior con- 
 venience of such large means of accommodation 
 beyond all private firms must have insured 
 them constant applications from merchants and 
 manufacturers for loans, to enable them to an- 
 ticipate their returns, and to go into the market 
 for fresh purchases : the number of applications 
 have given them means of disposing of their 
 money with due attention to t!ie responsibility 
 of the parties; and their opulence to disregard all 
 temptation to break through the provident re- 
 gulations of the establishment for gambling spe- 
 culations. Their gains accordingly seem to 
 have been steady from the first, enabling them 
 after payment of their dividend still to add to 
 their floating capital : and at various times to 
 apply part of the profits of their thus improved 
 trade to the purchasing a renewal of their term, 
 and licence to enlarge their chartered stock; 
 and with the remainder proportionably to in- 
 crease that stock itself (on which they declare 
 their dividends) till it reached the amount of
 
 20 
 
 at)ont 12 millions, besides a permanent dehi 
 of little inferior nominal value^ from the Govern- 
 ment. The last pnrchase renewed their term 
 for 3) years, of which about 14 remain unex- 
 pired. At two examinations of their accounts 
 in 1797, (the year itj which the Restrictioa 
 was laid on,) they had in Cash, Bullion, Ex- 
 chequer Bills, Bills of Exchange, and other 
 easily saleable floating capital, nearly four mil- 
 lions moretlian the amount of their out-standing: 
 demands, independent of the above-mentioned 
 permanent debt from the Government. It was 
 obseiTed that their privileges and the renewal of 
 them have been conferred in return for the 
 grant of large loans to the Government on 
 peculiarly favourable terms, and of various 
 money accommodations of great extent and 
 importance. A mong these we hstve particularly 
 to reckon a general payment in advance of the 
 yearly taxes on the Land and on iVTalt &c ; the 
 making a like advance on, and putting in cir- 
 ci;lation. Exchequer and other Government 
 Bills, to the total amount of from 8 to 10 millions. 
 But,as these mutual grants and accommodations 
 are optional, all such advances to the State as 
 well as to individuals, are of course made with 
 proper regard to their remaining means for 
 meeting all legal demands on their funds. 
 
 The amount of their Notes in circulation in 
 1797 was little more than 8 millions, since
 
 21 
 
 increased, under the Restriction Act, partly to 
 replace the coin, partly in an undue extension 
 of a forced currency (which, however, without 
 some limit to the issues of Country Banks, no 
 self-denial on the part of the Bank of England 
 could have prevented) to nearly 30; but besides 
 that the gains of the Establishment must mean- 
 while have been immense and their opportuni- 
 ties of purchasing bullion peculiarly favourable 
 from the sudden decrease of its demand for 
 coin through the influence of the Restriction 
 Act over so large a commercial nation (of which 
 they doubtlessly availed themselves sufficiently 
 for their own security) — they had already at the 
 second examination in J 797 increased their 
 bullion from about one and a quarter to 6 millions 
 under the Restriction, add to which their ef- 
 fects are all personal and by law answerable to 
 make good their pledges, and including the 
 Government Annuities at the time of the in- 
 quiries exceeded their debts two-fold. My 
 information as to the amount of those Annuities 
 and of their capital stock does not reach to a 
 very recent date. 
 
 Through this Establishment, Government and 
 Commerce have equally been in the habitual 
 practice of anticipating their revenues, and 
 frequently at critical moments, collecting and 
 concentrating their resources for some great 
 object of policy or profit : each in its depart-
 
 22 
 
 raent thus advancing in a double ratio the 
 success of their respective operations for their 
 own and the country's good. 
 
 It would seem, from the observations in my 
 former letters, that a permanent superfluity of 
 the currency, even in the precious metals, would 
 be at best an incumbrance did it ever occur : 
 but that in such a currency it never could. — In 
 a country opulent as this was at the imposition 
 of the Restriction, neither was the opposite ex- 
 treme much more to be dreaded, excepting from 
 impediments to the natural course of currency^ 
 originating in great political convulsions, or in 
 domestic or foreign legislative control — When 
 that measure was resorted to, it was not im- 
 mediately requisite for the protection either of 
 the Bank or of Commerce : but seemed meant as 
 an expedient whence the State might, on an un- 
 exampled emergency, anticipate its revenues on 
 a larger scale, in order to make an effort com- 
 mensurate wiih the occasion. — But, supposing 
 for a moment that the late contest could have 
 been, and actually had been, carried on with- 
 out any legislative interference with the Bank; 
 the necessities of the State and of the people 
 would, in taxes, forced loans and money pay- 
 ments for corn &c. have soon absorbed all the 
 floating capital of the country, and have finally 
 dissipated it in foreign loans and expeditions 
 and commercial payments^ which, (the want of
 
 23 
 
 a command of money amongst our great manu- 
 facturers and merchants and the closing of half 
 the continent against our produce concurring 
 in the destruction of our former advantages in 
 the market) there would then have been no pos- 
 sibility of recalling in a balance of trade;, and, 
 next to the floating capital, and for want of its 
 support, that part of the national wealth vested 
 in the extensive buildings and machinery of the 
 master manufacturers, and other great employ- 
 ers, must have rapidly fallen to decay, and thus 
 all hope of a quick recovery from those un- 
 happy effects of the war have been precluded. 
 Yet these consequences, however grievous, 
 should resolutely have been incurred and pa- 
 tiently endured, even for a chance of protection 
 from so ferocious an enemy, and his demorali- 
 zing systen), could no expedient have been found 
 for defending ourselves at a less sacrifice. What 
 then do we not owe to the sagacity and decision 
 of that statesman, who, by a measure of great 
 political responsibility, and which indeed no 
 other circumstances could have warranted, not 
 only saved us from subjection to the most un- 
 principled tyranny, but enabled us to come from 
 the contest with an accession of national pros- 
 perity and honour, as the acknowledged saviour 
 of the continent? 
 
 A parUamentary inquiry had ascertained the 
 sufficiency of the assets of the Bank for con-
 
 24 
 
 tinning its payments ; and from the limitation 
 of its necessary expences to the support of its 
 biiilding-s, and to the salaries of its officers, no 
 other consequences, in the prudent management 
 of its affairs, could have been reasonably appre- 
 hended, from the current of poHtical and com- 
 mercial distress, than a necessity for greatly 
 reducing the proprietors' dividends, till it per- 
 haps JinaUif , with the natioTifJell a sacrifice /• an 
 invade)', 
 
 A restriction, then, could, we may believe, 
 under no circumstances have been necesfsary for 
 the protection of the Establishment, considered 
 in an insulated point of view ; neither in any 
 ordinary emergency could it have been either 
 necessary or even advantageous for the country ; 
 which however I most sincerely believe it to 
 have been in that wherein it originated. Poll- 
 ileal expediency, after the resumption of cash 
 payments, may again command a recurrence to 
 the Restriction Act ; but, as I formerly observed, 
 in all human ^Yoh?ih\\\iy, nothing else, unless it 
 be the aggressions of anarchy or tyranny. 
 
 The result of the whole of this, I must con- 
 fers, extremely loose and desultory reasoning, 
 is that ti^e circtilatins" medium of commerce, 
 nalnrally seeking its own level, would, but for 
 the Restriction Act, have been, by the unexam- 
 pled circumstances of the times, diverted and 
 wilhlit Id from this country, to the rapid destruc-
 
 25 
 
 tion of our floating capitul and with it, or as a 
 consequence, of every source of our superiority 
 in the scale of nations above tlie poorest country 
 of equal population and fertility, ieaviuji,- besides, 
 (an evil not incident to States not previously rich) 
 a large portion of its manufacturing population 
 unemployed and a dead weight on the agricul- 
 tural : that the measure was never necessary, 
 (with regard to its solvency) to the Bank itself, 
 which might have continued, and might now 
 quickly resume its payments in specie : but 
 that under the influence of this measure we have 
 maintained, and (as combined with the events 
 of the war, carried on through its aid, and the 
 consequences of that war on other nations) 
 rapidly increased our wealth and moral or arti- 
 ficial resources; and might safely as a people 
 (could ti>e overlook the consequences to individuals 
 and the State) return to cash payments as soon as 
 the causes /or origiimlly laying on the restriction 
 ceased to operate: that among those causes 
 however, must be classed all contracts for loans 
 to foreign powers from this State, or that the 
 State thinks itself compelled by a liberal and 
 just policy to leave its private capitalists the 
 power to complete, and which the revulsion 
 arising from a sudden return to cash payments 
 must have rendered aborti\e: and this from no 
 regard for the interests of the contractors, who, 
 if not acting with the sanction of the legislature or
 
 26 
 
 the Executive, are far from meritinq^ national 
 protection, in a measure of such political deli- 
 cacy and importance. 
 
 But our attention is powerfully called to 
 another consideration, namely^ that if, during 
 the long continued forced circulation of paper, 
 our currency necessarily (as being unconver- 
 tible) confined to this country, has been impro- 
 vidently suffered to increase beyond its due 
 proportion to the extent of our real commercial 
 resources as compared with those of the rest of 
 the world, (amongst other preparatives) the 
 excess must gradually be reduced before the re- 
 striction can be ivithdrawn ; unless we chuse to 
 incur a great internal convulsion and incalcula- 
 ble individual distress. 
 
 Supposing, for argument sake, our forced cur- 
 rency were of double the amount of our due 
 share of a common medium of commerce, 
 how could we, on the currency finding its natural 
 level, make good our mutual domestic engage- 
 ments contracted under such different circum- 
 stances? Rents, salaries, annuities, commer- 
 cial and other debts, all bargained for under 
 the paper currency, would be demanded in a 
 currency, which, being but half as abundant, 
 would consequently be, in any given sum, of 
 double the real and market value; and the par- 
 ties would in law be liable to pay really double 
 what they had contracted for — and in general,
 
 27 
 
 double as much as it would be possible for them 
 to pay. 
 
 It would indeed be of little importance, 
 things having' once found their level, whether 
 an ox were, as under the forced paper system, 
 sold for £20, or whether it and every other 
 produce were sold for specie of half iheir late 
 nominal value, provided the coin were sul)di- 
 vided in the smaller currency for the conveni- 
 ence of the market. But a tooprecipate change 
 must, in such circumstances have terrible con- 
 sequences on our domestic relations. The 
 forced currency, therefore, cannot prudently be 
 superseded for specie, or a currency of con- 
 vertible tokens, without the utmost previous 
 care gradually, and if the difference be very 
 great, slowly and in a course of many years, 
 (combined perhaps with some legislative mea- 
 sure in favour of those who had, in a reliance 
 on the permanency of value in the then curren- 
 cy of the country, im providently taken long 
 leases, and contracted for distant payments) 
 to effect the nearest possible approximation of 
 the forced paper currency, in aggregate amount, 
 to our due proportion of the general currency 
 of the great Connnercial Republic, after which, 
 if at any time the balance of trade were steady 
 and not unfavourable, and a sufficiency of the 
 precious metals secured for replacing the por- 
 tion of the paper currency intended to be super-
 
 28 
 
 seded and for supplying all losses and wear of 
 tlie coin itself in its circulation— a favourable 
 opportunity would, at first view, seem present- 
 ed for a general re-issue of specie. Meanwhile, 
 and in furtherance of this object, the currency 
 will be brought nearer to its level (though inter- 
 rupted in its spontaneous tendency thereto) in 
 an accelerated ratio, tlirovigh the loans to fo- 
 reign powers increasing the currency of neigh- 
 bouring count! ies, whilst the proposed reduc- 
 tion ofissues decreases our own. This general 
 reduction of issues, however, can only he effected 
 by legislative interference, which might, if ap- 
 proved of, be exercised m limiting every existing 
 Bank in its issues of each year to the average 
 amount of so many preceding years ; and a refu- 
 sal to license any new. But though the Bank 
 of England being answerable only for pledges al- 
 leady issued could redeem them in the present le- 
 gal coin (and considering the great profits they 
 have derived from the excessive issue and non- 
 payment under the Restriction Act, would have 
 no right to complain, were it required to do so) 
 yet, agreeably to the principle advanced near 
 the conclusion of my last letter, such payments 
 might greatly exceed in r^a/ value sums of the 
 same nominal amount at the commencement of 
 the Restriction, (a comparison with which is 
 the onlyjust metliod of estimating the relative 
 value of the present paper currency and of
 
 29 
 
 gold : ) since the growtli of the ago^regate of 
 the circulating medium of international and 
 general conunerce may, by the peculiar cir- 
 cumstances of the times, have been prevented 
 from keeping pace with that of the commnrce 
 itself. And, if it be true that the present sup- 
 plies from the nnnes are inadequate to the sup- 
 port of a currency in specie, even of the actual 
 limited extent, the precious hietals must daily 
 increase in value, antl, on the additional de- 
 mand for the maintenance of the domestic 
 circulation of this country, and for its foreign 
 commerce, would necessarily make a farther 
 most rapid and abrupt advance. The dis- 
 counting Bills of Exchange and Exchequer Bills 
 being optional, it would of course be no longer 
 done but on terms suited to the scarcity of coin, 
 and Government and commerce would equally 
 suffer from that cause ; but the greatest evil, (as 
 I observed in my prefatory remarks on the ^ewe- 
 ral principles of ciu'rency), would be the advance 
 in the real amount of every -debt contracted be- 
 fore the resuniption of cash payments, particu- 
 larly during an over-issue of Bank Notes; and 
 under this head is to be reckoned the national 
 debt. — The actual difference of relative value of 
 the r>;r;k p.i]):r and of gold is not very great — 
 but under [)resent circumstances the resumption 
 of cash payments might advance its proportional 
 value to other articles of consumption, very
 
 30 
 
 probably to as great a height as at any time 
 during the late war, anil that daily to increase : 
 and v\here bankruptcy did not intervene, credit- 
 ors, as well the Slate as individuals, would be 
 continuing to pay really at a ratio perhaps of 40 
 per cent, (and tiiat increasing) more than they 
 borrowed, though nominally to the same 
 amount ; for which evil, as it affects the Govern- 
 ment, it could iind no counterpoise in the greater 
 real than nominal value of the taxes^ without 
 great injustice and oppression. Meanwhile we 
 should in few instances have the satisfaction of 
 considering this a restitution to those, who, 
 having property in tiie funds prior to the Re- 
 striction, had suffered by that measure and the 
 over-issue of Bank Paper ; most of them, pro- 
 bably, having aheady sold out at war or at least 
 forced currency prices. 
 
 The resumption of payments is a question of 
 great delicacy. Commerce both domestic and 
 foreign has undoubtedly very much increased 
 and is daily increasing fand that in part by 
 drawing the most distant and heretofore unci- 
 vilized nations into its circle) in its real amount 
 and value (not merely in the office sense of the 
 word, as referring to the present currency for 
 a standard, but estimated by tonnage and cost 
 of /aiowr^ and it is no less certain that elegance 
 and luxury have greatly extended their sphere 
 ofaction. as in other things so in tke demand
 
 31 
 
 of the precious metals for inanufactiires: whilst 
 for these uses and the extension of the currency 
 of specie, on the old scale, it is more than pro- 
 bable that the produce of the mines has of late 
 been inadequate. 
 
 Nevertheless some way may, perhaps, be 
 found for obviating these difficulties, and return- 
 ing to metallic currency, without exciting a 
 dangerous re-action ; and if so, I think there 
 can be no doubt but there ought. — -More need 
 not be said of the evils resulting from a currency 
 of small notes — but, without an option of con- 
 version into the only tangible standard, it 
 will not be easy to prevent a great fluctuation 
 in the value of the paper currency/ in general, 
 and though with an ever vigilant and judicious 
 superintendence this may, possibly, be done, 
 the very necessity for such care proves the state 
 of things to be unnatural, and bids us endeavour 
 to restore them to one in which it would be no 
 longer requisite. 
 
 How then is this object to be effected ? There 
 are two expedients that readily suggest them- 
 selves; both on the same principle, embracing 
 at once justice to all parties, and a cure for the 
 existing evils; but I fear, though the first was 
 practically adopted, almost generally, as to 
 the amount of rents on unexpired leases in a late 
 rise of our present currency as compared with 
 our home produce ; yet, were the principle by a
 
 32 
 
 legislative enactment applied, on a resumption 
 ' of cash payments, to all poor contracts (that 
 niiirht appear to havehad the value of the forced 
 paper currency in view) Avith regard to the 
 actual coin of the realm, on account of the 
 greater y^-a/than nominal value of the latter; I 
 fear, I say, that, independent of prejudice, there 
 Mould be insujierahle difficulties to contend 
 with ; no small portion of which would arise 
 from the confusion of accounts that would 
 luiavoidably ensue. The other expedient is to 
 make the sovereign of an intrinsic value justly 
 corresponding nil h the qua n lily of merchandize 
 &c. that, after a careful and well conducted 
 examination, from the best authorities, of the 
 ag<iregate amount of the circulating medium of 
 the great Commercial Republic on the one hand, 
 and of its trade on the other, it may actually 
 reprebent, on some such plan as the following ; 
 which 1 merely beg leave to suggest, without 
 presuming to decide how far it maybe practi- 
 cable. 
 
 PLAN. 
 
 Tirsl — To wait the efiects of a return of 
 i.eace in Spanish America, and the consequen- 
 ce» of a more open commerce with that country, 
 aijd cf tbe introduction there of our improved 
 ~ method of mining: as likely to cause a pro- 
 gressive increase of bullion for the market 
 commensuiate with the extension of commerce :
 
 3S 
 
 And, whenever by the rctnrns of the bulHon 
 imported thence, and from other mines, it may 
 be jiKlaed that the average yearly supplies are 
 sufficient to leplace the consumption (and if 
 the produce of the old mines, from a continuance 
 of the disturbed state of the South American 
 Provinces, or from other causes, prove inade- 
 quate, much may be expected from Briiish en- 
 terprize, capital and minium;' ski'i, in the infant 
 discoveries in Africa and elsewhere :) 
 
 Let the quantity of bullion aiul specie in the 
 European market be accurately estimated : 
 
 Next: Let the lelalive amount, from official 
 returns, of our exports and imports, and of 
 articles suhje^tto the excise, for the seven years 
 immediately precerling- the war, and for ihe last 
 seven years, to ihe nearest convenient period to 
 that of the proposed resumption of cash pay- 
 ments be asceriained : 
 
 Then the amount of gold and silver coin in 
 circulation on the average during the former 
 peri()<l : 
 
 And Jiual/y, from these and other criterions 
 of the relative demands for currency in the 
 two period'^, let an estimate be taken of what 
 portion of the buHion and specie would rcmaia 
 with us on the international currency finding its 
 natural level ; and (the currency of Bank Notes 
 being meanwhile reduced to a similar j)ropor- 
 tion) i/ie sovereign be made of such weight as to
 
 34 
 
 enable tis, out oj our due share of the precious 
 metals y to put in circulation a currency increased 
 in nominal aggregate value beyond that of the 
 period preceding the war, in the exact ratio of 
 our increase oJ commerce : which in my view of 
 the case, (and I believe that of much better 
 judges) is the only just standard of value, and 
 to which every thing must ultimately be refer- 
 red. 
 
 On reflection, I find myself in this plan (a 
 circumstance of which till now I had entertained 
 no suspicion) getting very near the idea advert- 
 ed to toward the close of my fourth Letter. 
 Were the paper currency of this country first 
 brought as a whole to its due comparative 
 amount with the aggregate currency of the 
 great Commercial Republic : the average paper 
 price of gold bullion in our markets would not 
 only, as there supposed, be a fair temporary cri- 
 terion for the convertible value of the note into 
 specie, but thB.t for a permanent resumption of 
 cash or metallic token payments. But without 
 a previous restoration of the medium of com- 
 merce to its natural level, we should leave 
 Bankers the power, by an increase of their is- 
 sues, of paying us for a given sum in their paper 
 with one ounce of gold instead of two : and 
 that through a real depretiation in the former, 
 effected at so much unqualified and unjust loss 
 to their creditors and gain to themselves.
 
 35 
 
 When speaking of the inconveniences to the 
 currency resulting from the fluctuation in, re- 
 lative value of gold and silver bullion, I have 
 sometimes, as well in my former observations 
 on the above suggestion as elsewhere, been 
 inadvertently led to consider the price at which 
 the guinea was bought up by Fpeculators in 
 exchange for our silver currency as a criterion 
 ofthe amount of that fluctuation. It was a 
 criterion in truth only of the fluctuation between 
 the guinea, or rather gold bullion, and our pa- 
 per currency, the former of which would soon 
 have been followed to the crucible by the silver 
 coins also, but for the great debasement and 
 loss of weight in this part of our currency ; and, 
 this circumstance notwithstanding, in fact was 
 by the crown and half crown pieces that had 
 suffered less comparative deterioration. The 
 Bank of England Note was then, and under the 
 Restriction Act must still continue, oursolesub- 
 stitute for gold as a tangible standard of value. 
 The extent of fluctuation in the relative value of 
 gold and silver bullion at any period under that 
 Act is only to be learnt from their comparative 
 market prices, which can have no reference to 
 the intrinsic value, but to the representative ivith 
 ret^ard to the Note, of any pai t of the metallic 
 currency; even of gold coin itself, if any still 
 remain in circulation. A less reduction of rela- 
 tive intrinsic value in the silver coinage might
 
 36 
 
 then possibly suffice to preserve it to the circu- 
 lation, but my arguments against the principle 
 of affixing to it an unvarying proportional value 
 to the goI;l remain unsliaken. 
 
 To conclude : In order to shew the practica- 
 liility and safety of making ^specific change of 
 system in our cnrrercy, and of transferring its 
 agency to a nf<tional establishment, I liave, in a 
 former letter, offered iu detail a plan for putting » 
 in circulation metallic tokens for the resumption 
 of cash payments, and gradually bringing (hat 
 system and establishment into full operation ; 
 and in the beginning of my last, have proposed 
 an amendment of that plan. This system has . 
 not, indeed the advantages in point of economy 
 that the old possessed: but were all other ob- 
 jections to the change obviated, we should be 
 ill-justified in obstinately persisting in the latter, 
 and continuing to make yearly sacrifices of 
 hecatombs of our fellow-men on the altar of 
 Manmion. 
 
 If then such gold and silver counters, as de- 
 scribed in this and my last letter, offeiing no 
 temptation, in either of those branches of the 
 proposed currency, and in any fluctuation of the 
 relative value of gold and silver bullion, to the 
 fo/ger on the one hand, or to the exporter or 
 meheron the other : if^ I say, such counters, 
 (repiesentaiive, as to the gold, either of the 
 actual legal standard, or of one to be established
 
 37 
 
 on the only just principle, namely that of its 
 relative value to produce in general ;) -with £-5 
 and larger notes, of an improved manufacture, 
 were adopted, in combination with a system 
 and establishment such as I have ventured to 
 suggest ; and through their agency, and on the 
 first favourable opportunity, payments in the 
 precious metals were resumed; J conceive, yet 
 with all deference to men of more knowledge 
 and experience, we might congratulate ourselves 
 on having, in the old system, rooted from our 
 soil, a plant that has long continued to shed 
 .unwholesome dcM's from its widely-extended 
 branches, and to obstruct the genial influence 
 of the atmosphere, and might confidently hope 
 soon and long to enjoy health and rofrcshmeut 
 Tuider the shadow of the new. 
 
 It is readily acknowledged that tlie old tree 
 has formerly produced excellent fruits, of which 
 we had the advantage of pre-emption. But 
 surely that gardener would be thought very un- 
 wise, who from term to term gave anotiier t!)e 
 privilege of planting fruit-tiees aniidst and to 
 overshadow his crops, without reserving to him- 
 self a right to prune them ; and who, not calcula- 
 ting on their growth, pledged himself for tii.? 
 purchase of tlieir whole produce. Tiie trees 
 and the crops amidst which they grow should 
 be one property, and under one nianagement; 
 or theiuteresst o.'the proprietors will uudoubt-
 
 38 
 
 edly clash. But llie owner of tlie soil will have 
 him self only to blame if he voluntaiily renews 
 such an unequal and disadvantageous contract, 
 and exposes the valne of his own toil and in- 
 dustry to the arbitrary control of one whose 
 interests are wholly distinct from and often op- 
 posite to his own. These rem;uks are not 
 meant exclusively to apply to the Bank of Eng- 
 land. I have on the contrary before observed, 
 that no forbearance on tlie part of tiiat respect- 
 able corporation could have prevented the evil 
 resulting from the late over-issues, whilst every 
 needy adventurer thought liimself at liberty to 
 prey on the credulity of the people, and their 
 eagerness to extend their various trading specu- 
 lations; and that through advances in too fre- 
 quently never to be redeemed pledges given itj 
 consideration of real securities. Accordingly, 
 my views to amendment have not been confined 
 to the substituting anew Establishmen^t tor that 
 of the Bank of England, but have looked to an 
 extension of the former in its bran-hes to tha 
 provinces, and, through a qualification of the 
 licences to Country Banks, to enabling the State 
 gradually to appropriate to itself, if tiionglit ex- 
 pedient, the whole banking bu^.iness of the 
 United Kingdom. We need apprehend no 
 embarrassment to trade from thus superseding 
 the present Bank Establishment; >\\\c^ the 
 National Bank, simultaneously with the issue of
 
 39 
 
 its pledges, will have realized a large fund both 
 for its creditors' security and for discounting 
 bills; and the State will, on the credit of the 
 taxes, be able to place as much greater a capital 
 at the disposal of the Commissioners for those 
 purposes as may be consistent with the public 
 good ; and any capital withdrawn by the pre- 
 sent Bank Proprietors^ though diverted to other 
 channels, will not be lost to tlie country. Great 
 trust must be lodged somewhere; but where so 
 well as in a responsible ministry and the repre- 
 sentatives of the people ? 
 
 The increased issues of the Bank of England 
 during the late war were probably at no time 
 more than sufficient to replace the specie ex- 
 ported in loans &c ; and, its solvency consider- 
 ed, there would, but for like issues from Country 
 Banks taking place at the same period, have 
 been no counterpoise to their practical utility, 
 but that comprized in the temptations therein 
 offered to the forger; whilst, on the other hand 
 those of the Country Banks were preferable to 
 them in this latter respect alone; the signatures 
 being better known, and the proprietors better 
 quaUtied by local facilities to observe and check 
 every attempt at fraud in the more limited cir- 
 culation of their respective pledges. But, had 
 there been no increased issue froui Country 
 Banks, we are not assured, neither is it probable, 
 that the Bank of Knajland would have extended
 
 40 
 
 theirs no farther ; whilst every advantage pe- 
 culiar either to tlie Bank of England or the 
 Country Banks, together with those of the im- 
 proved note, national emolument and legislative 
 control on the whole economy of the Establish- 
 ment, are combined in the proposed State and 
 State Branch Banks — or easily may be so by 
 the addition of simple and unobjectionable re- 
 gulations. 
 
 I flatter myself that, from the wisdom of Par- 
 liament and the highly commendable zeal of 
 the Bank Directors, we may look forward with 
 undoubted assurance to some palliation of the 
 actual evils, in an early and considerable im- 
 provement of the whole of our paper currency ; 
 but a resumption of cash payments and total 
 change of system are the only radical cure; 
 and nothing should cause us to lose sight of 
 this, as our ultimate object, even for a moment. 
 
 Begging pardon for so much trespassing on 
 your patience, I remain. Sir, 
 
 Yourveiy humble Servant 
 Y. Z. 
 
 [sHOBERIif PAINTER, TRVROj,