L I B R.ARY OF THL U N 1 VERSITY Of ILLINOIS BS75 V.I7 A FEW REMARKS Utpovt^ COMMITTEES ON THE CURRENCY ADDRESSED M EMB E RS OF BOTH HOUSES OF PARLIAMENT. LONDON: PRINTED FOR J. M. RICHARDSON, 23, CORNHILL, OPPOSITE THE ROYAL EXCHANGE. 1819. AS the Reports of the Committees differ a good deal iu the particulars, although they agree in their result and in the proposed plan, it may he proper to state that the following Remarks are principally applicable to the Report from the Committee of the House of Commons. MARCHANT, Printer, Ingratra-Court, Fenchurcli-StrCet, London. REMARKS, 4-c. ^c. FOR three months past the attention of the whole country has been attracted to the labours, of tlic Committees appointed to examine into the Bank affairs, &c. ; and their Reports have been looked for with great anxiety, in hopes that they would act differently from their prede- cessors in 1810; that they would probe the matter to tlie bottom, and completely set at rest a question which has agitated the public mind extremely ; and a right understanding of which is of so inucii importance to it. This expecta- tion was considerably increased by the declara- tion said to have been made by the Chairmen of these Committees, when they brought forward their first R<'port, immediately before the recess. After considerable delay, the Reports have at last made their appearance, and the public again find themselves completely disappointed. That all praise and (X)mniendation is due to the noblemen and gentlemen who composed these Committees, for the time and labour which they have bestowed on this business ; for the assiduity and attention with which they listened to the voluminous evidence brought before them; for the anxiety which they have evinced to give a proper Report, is most cheerfully accorded. That the Reports they have made, are done from the most sincere conviction of the correctness of the principles, and of the utility and benefit to be derived from the adoption of the proposed plan, is also firmly believed. The only question, therefore, is — Have they succeeded in the object in view? Have they attained the end proposed? Before replying- to this, it may be necessary to ascertain exactly what that object — what that end was. The Committees were appointed " to consider" of the state of the Bank of England, " with reference to the expediency of the re- " sumption of cash-payments, at the period fixed *' by law, and unto such other matters as are con- " nected therewith." The object, therefore, evi- dently was the return of the Bank to specie- payments, to endeavour to point out a safe mode by which that could be done; and the Chairmen of the Committees when they brought forward the partial Report, in order to have an Act of Parliament passed to prevent the Bank paying any specie, are said to have declared, it was done with a view to a speedy resumption of general cash- payments ; and they flattered themselves, an infallible plan for that purpose would soon be laid before Parliament. How far they have re- deemed this pledge — how far the Reports con- tain any such plan, a very short examination of them will suffice to show. Instead of fixing an early period for the Bank resuming cash-payments, as was expected, they re- commend that the Restriction shall continue until the 1st of Fehruary next, and then that the Bank shall commence to pay, — how? in specie: no, in bullion, at a fixed rate; and in the October follow- ing, to do so at a lower rate, until May, 1821, when they are to pay at the old rate of o£3 : 17 : 10§ ; but still in bullion ; and this plan, it is asserted, will infallibly lead to the Bank safely assuming specie-payments, in two or three years after the last period, that is to say, in four or five years hence. Whether the Bank resuming cash-pay- ments would be of any real service to the country in general, is a question upon which a consider- able dubiety exists. That no possible benefit, however, could be derived from it, at all equi- valent to the dreadful inconvenience, distress, and actual loss, that the adoption of the proposed plan would entail upon the country, will it is presumed evidently appear, when it is consi- dered that one of the concomitants of this plan is a strong recommendation to restrict the issues of the Bank, in order to accomplish the object in view, — what is called bringing the Bank-paper to a par with gold ; and as it is also recounnended, that Government shall pay to tiie Bank ten millions of their debt, which amount will thus be retired from circulation, without any substi- 6 tute, the circulating medium will, for four years to come, be at least ten millions less than it is at present. The privation and distress the public will suffer during that period, must, therefore, be very great ; more especially if the Committees be correct in asserting, that the Country Banks will limit their issues in the same proportion as the Bank of England. So far, however, from paying any attention to this point, although it seems to have been impressed upon them by some of the evidences, which they quote, the Committees have added another recommendation, which is the more extraordinary, as they acknow- ledge that it is gratuitous, and does not emanate from their plan, it is tiie repeal of the laws against the exportation of the coin ; the reason given for this advice is also extraordinary, be- cause they are ineffectual for the object for which they were designed. By the same rule they might have recommended the repeal of the laws against forging Bank-notes, as being inadequate to pre- vent tiuit crime. Were every law repealed, which has not succeeded in preventing the per- petration of the crime against which it was made, the penal statutes would be thinned very much indeed. In the present instance, by this repeal, the public would be deprived of the possibility of deriving any advantage from the circulation of the few coins yet remaining in the country, as they would infalHbly be exported in preference to bullion, at a higher price. It has been asserted, from the Jiuthority of Mr. Hume, that a diminution of the circulating me- diuin of a country just proportionally increases its value. This is one of the sophisms of that etegant but hollow writer. Money is an article which, from its nature, can never increase or decrease in value positively ; it can only do so relatively. A diminution in the circulating me- dium certainly tends to lower the price of all com- modifies, from the difficulty experienced in mak- ing exchanges ; but, however desirable this may appear to be in abstract reasoning, if put in practice, it will be found to be destructive to in- dividuals, and ruinous to the community in ge- neral, more especially in a! country where two articles abound which no diminution of cir- culating riiedium can have any effect in lower- ing : thes6 are taxes and poor rates. If an article iti wliich' an individual trades, of which h^ has got a stock on hand, should fall in value, it hVay happen, that so far from making a gain on it, he may actually suffer a loss, he may sell it lower than he purchased. How can such a person continue to pay the enormous load of taxes and poor rales ilbw heaped upon every individual, and on Vvhich no diminution will be made for the increased vallte of the circulating medium in which they at-e piaid ? As long as this individual has any capital, he ittust pay thes^e, and his iViairttenahce out of it ; when that is gone, he becomes bankriipt, and his deficiencies in 8 taxes and poor 7'ates must be supported by the sur- vivors. It frequently happens, from the fluctua- tion of trade and commerce, that a fall takes place in the value of some particular article ; and, if great, it is accompanied by the ruin, or at least impoverishment, of those who deal in it. A strong instance of this has occurred lately in the Cotton Trade, in which so many great capitals have been sunk, and so many wealthy individuals totally ruined. Were a similar diminution in the value of all articles to take place, the country would soon sink beneath the load of taxes and poor rates under which it is at present staggering. A diminution of the circulating medium to the ex- tent proposed, (about one third), would go a great way towards accomplishing this in four years. And for what is this risk to be run? For the forlorn hope of the Bank being able at the end of that time to pay in specie ; for of the cer- tainty even of this, no proof is given ; the Com- mittees merely mention it to be the opinion of one or two of the parties who have been examined before them. Were it not for the highly respectable character of these individuals, their evidence would have a very suspicious appearance. Had the Committees been appointed to devise a plan by which Foreign Loans might in future be ne- gotiated in this country, and remitted to the con- tinent without the possibility of the Contractors suffering any loss thereby, they could not possi- bly have hit on a better one. For that purpose it would be most effectual, however ineffectual it may be to bring about cash-payments. One of those parties has estimated the value of the bullion the Bank may be called upon for, at ten millions. Now if they have to procure that, at very proba- bly a considerable expense, and the whole of which will again go out of the country, or be consumed in manufactures in it, what rational expectation, or even hope, can be entertained that at the end of the four years they will be any better prepared, or more capable of paying in specie than at present? Their circulation will be less, and consequently we are told the price of gold will be lower. The Committee appear to have adopted as an uncontrovertable axiom, that the high price of gold is owing to the increased issue of Bank-notes ; and, therefore, as the one is diminished, the other will fall. This opinion pervades, and gives a colour to the whole of their Report ; but they have given no satisfactory proof of its being a fact. One solitary instance they certainly state, where an increase in the issue of Bank-notes, and a rise in the price of gold hap- pen to tally ; but that is not enough to prove that the one was the cause of the other, and always would produce the same effect. To establish this satisfactorily, instead of the average for one six months, the average number of Bank-notes in circulation, and the average price of gold for everi^ six months, not only during the Restriction, but for ten or fifteen years before, should have 10 been given This coCild have easily been done from the documents in their possession ; but it would have shown a very different result. Of this the Committee appear to have been aware, for they conclude their Report with the following paragraph: — "Your Committee have forborne ** from entering into any reasoning upon the effect ** produced upon the value of our currency, by " variations in the numerical account of the notes " issued by the Bank of England. So many " circumstances contribute to affect that value ; " such for instance, as the varying state of com- " mercial credit and confidence, the fluctuations " in the amount of country bank-paper, the dif- " ferent degrees of rapidity with which the same " amount of currency circulates at different pe- " riods; that your Committee are of opinion, that " no satisfactory conclusion can be drawn from " a mere reference to the numerical amount of " the issues of the Bank of England outstanding *' at any given time." This proposed plan may bear still harder on the Bank of England. From the Report, although the Committee handle the subject as tenderly as possible, it appears very evident that the Restriction was not originally passed for the accommodation of the Bank, but of Government, and that the very great increase in the issue of Bank-notes since, has not pro- ceeded from the cupidity of the Directors takings advantage of the Restriction, but from the pres- 11 sure of Government demanding fresh Loans. This point deserves particular attention, because a great deal of abuse and obloquy has been cast on the Bank Directors, which it is now proved they did not deserve. The Committee profess to give statements of the amount of Bank-notes in circulation, and of the advances to Government, for every year from 1790 to 1797; but they only go to 1796 : from these, however, it will be seen, that the advances were generally nearly equal to the amount of notes in circula- tion, — had they been given for 1797, it would have been still stronger, for in February that yeaf it stood thus : — Advances to Government £ 10,672,503 Bank-notes in circulation 8,640,250 Making of advances . . . 2,032,253 more than there were notes in circulation. For two years previous tiie Directors had been making incessant applications to Government to have these reduced. It is stated that, betwixt January 1795 and February 1797, they had presented no le-^s than twenty-nine remonstrances on the subject, but without effect; for Govern- ment found it more convenient to pass the Restriction-Law than to repay them. After the Restriction, the advances ap|)ear to have kept pace with the increase in the issue of Notes, and, on some occasions, even to exceed that; and at the present time, after a considerable 12 reduction, more than three-fourths of the Notes in circulation are upon advances to Government. When the Directors made these advances, they they did it upon a solemn pledge of repayment before the repeal of the Restriction-Act; had they done otherwise, it would have been madness in the extreme : even with that assurance, the prudence of the measure may be doubted ; but the temptation was great, for they have certainly been well paid for the mere loan of their obli- gations. But should they be now^ obliged to pay either in specie or bullion for these obliga- tions, without Government repaying them, the consequences would be dreadful, nothing could possibly save them from bankruptcy : this must be evident, when it is considered that on the 30th January last they owed thirty-four n)illions, and had thirty-nine to pay with; but as one-half of this is owing by Government, take that away, and there will only remain nineteen millions to pay thirty-four, or little more than ten shillings in the pound. The disease therefore is perfectly apparent, and the remedy equally so. If it be desirable to return to cash-payments, then let Govern- ment repay the Bank those advances ; and, as it is the prerogative of the Crown to furnish coins, let this be made in specie, and let the Bank retire their Notes with that specie, and the whole will be well. The Notes being taken out of circulation, the specie will supply 13 their place, and will therefore probably remain in the country ; but fully to insure that, let Government put a seignorage on the gold coins as they have done on the silver, and the result will be equally satisfactory; the silver coins having already remained longer in circulation, than any that have been issued for the last 120 years. Let the Bank issues in future be restricted to the demands from the public; or, if they do make any advances to Government, let these be only upon taxes granted, and to be repaid at the end of each quarter as the produce of these taxes come in. These regulations would keep the circulation of the Bank within moderate bounds. But if all this cannot at present be accomplished ; if the quantity of gold required cannot be found or cannot be paid for, then the country ought to be openly and candidly told so ; instead of new measures being recommended, the adoption of which would have at least a doubtful, if not a highly dangerous, effect. If the constitution of the patient will not bear a regular course of medicine, it is certainly madness to attempt to patch it up by quack remedies. The idea of causing the Bank to be at all the trouble and expense of procuring either bullion or coin, appears extremely unfair. When they gave out their notes, they merely received Government securities, which have lain quietly in their posses- sion ever since. Government certainly, also, only 14 received the Bank obligations ; but these they have used as money ; they have paid them away the same as gold coin ; and by this means, they have been enabled to export the gold coin, and thus to carry on, and bring to an honourable conclu- sion, a war in which every thing precious to the country was at stake; as the country reaped the benefit of this, it ought assuredly to pay the cost. The simplest way, no doubt, were it practicable, would be for Government to return the notes to the Bank, and receive back their securities ; but these notes have been paid away by them, and are now scattered all over the country, so that it is not possible to collect them without paying for them; and how is that to be done? Were Government to attempt to raise a loan of twenty millions for that purpose, and to stipulate that it should be paid down in Bank-notes, and that the Bank should not be allowed to make any advances on these loans; there would either be no offers, or whoever contracted would be completely ruined, for it would be impossible for them to fulfil their contract. In all former loans, the advances made by the Bank threw fresh notes into circulation, in place of those withdrawn ; and thus the circulating medium was kept up. But here the whole amount would, if procured, be abstracted from circulation without any thing being given to replace it. It is impos- sible to calculate what the ruinous consequences of this would be ; more especially at a time when 16 loc^u§ or assistance in soniQ way are required for the daily expenditure of the country. These observations have been hastily thrown together, and without method, in order to be iri time to attract the attention of the members of both houses, before a discussion upon this most iipportant subject take? place: they have been ^iven in as plain language as possible, and all reference to abstruse points has been avoided. It may be necessary, however, to state, that the Conimittees appear to have acted upon the opinion that there is no difference between gold ic( bullion and gold in coin, an^ that they are ^Iways of the same value. The formation of these Committees naturally led to this: how- ever highly respectable, upright, honourable, well-informed, and independent, the Noblemen and Gentlemen who composed these Committees undoubtedly are, yet many of them ought not to have been upon them. It is well known that severaj of the leading Members of both Com- mittees had previously made up their minds upon the subject ; they had prejudged the case, and they had committed themselves by making their opinions public, either in their speeches or writ- ings, or in both. Fully convinced of their truth and correctness, they naturally went into the Committees with a fixed determination to sup- port these opinions, and to listen only to such evidence as did so ; and it will be found, upon a reference to the parties examined, that independent 16 of those interested, the principal part were persons who were known to be of the same way of think- ing. These were listened to with attention, and frequently recalled ; whereas, the few of contrary sentiments, who found their way there, were heard with indifference, and speedily dismissed ; nay, it is reported, that one of the Committees refused to hear evidence tendered to them, because it was against this doctrine. The Committee in 1810 was formed of the same materials, and the result was similar. The question, therefore, never has been fairly discussed: in order to do so, the Com- mittee should consist of members who had never paid any attention to the subject, who had never read any thing upon it, and who would thus sit down with cool heads and unbiassed minds, to listen with equal attention to every thing that was brought forward, in order to Enable them to make a proper conclusion. It is most humbly, but most earnestly, re- commended to the members of both Houses of Parliament to examine and weigh well the present, as well as many other objections that will probably be brought forward against this measure, before they give their sanction to its adoption. THE END. MARCHANT, Printer, Ingram-Court, London.