"The principal points to which the Committee directed their attention were: "1st. Whether the paper circulation of the metropolis should be confined, as at present, to the issues of one Bank, and that a commercial company; or, whether a competition of different Banks of issue, each consisting of an unlimited number of partners, should be permitted. "2dly. If it should be deemed expedient that the paper circulation of the metropolis should be confined, as at present, to the issues of one Bank, how far the whole of the exclusive privileges possessed by the Bank of England are neceessary to effect this object. "3dly. What checks can be provided to secure for the public a proper management of Banks of issue; and, especially, whether it would be expedient and safe to compel them periodically to publish their accounts? "With respect to the circulation of paper in the country, the Committee have examined, first, into the effect produced by the establishment of branch Banks of the Bank of England; and, secondly, into the expediency of encouraging the establishment of joint-stock Banks of issue in the country. "On all these, and on some collateral points, more or less information will be found in the Minutes of Evidence ;' but on no one of them is it so complete as to justify the Committee in giving a decided opinion." The Committee showed wisdom in their Report. An attempt to draw a conclusion from the evidence would be to draw order out of chaos; or to establish propositions from statements which, taken in the mass, disproved every thing sought to be proved. The whole affair resembled a mêlée in which all the combatants are concealed from view by the clouds of dust they raise. The evidence given was a restatement of the dogmas of Adam Smith, furbished up and amplified by the Economists of the later school. It is important only from its bearing upon future legislation, and particularly as leading the way to the Act of 1844. That of the more important witnesses is sufficiently shown in the following extracts, copied from the "Digest of the Evidence on the Bank Charter taken before the Committee of 1832." Mr. Jones Loyd (now Lord Overstone): - "The establishment of joint-stock Banks in London, by increasing the demand for bullion, it is to be presumed would have 1 Report of the Committee of the House of Commons upon the Bank of England Charter, 1832. the effect of raising the market price of gold. A greater amount of gold would be required to manage the same amount of paper circulations, upon the system of multiplied issues, than at present; but any advantage produced by the existence of a greater quantity of gold would be at the sacrifice of the benefit intended to be produced by the paper currency, viz; the transference of capital from the unproductive state of bullion to a productive state. Joint-stock Banks are deficient in every requisite except extended responsibility. Acting through agents, and not by principals, they cannot decide upon special cases with so nice a reference to circumstances as the private banker; nor can they exercise that promptitude and hourly watchfulness, nor preserve that secrecy, which is so essential in banking operations."- Digest, pp. 62, 63. Mr. Ward, one of the Directors of the Bank: "The immediate profit of the Bank requires the smallest possible amount of treasure, and the public interest likewise requires it; for otherwise the currency would be too much depressed. . . . The Bank, in 1822, violated its principles by keeping an excess of gold; but the altered law compelled it. It is the prerogative of the crown to decide what the gold currency shall be, and the Bank does its duty by making its paper issues represent the gold coin as nearly as possible."-Digest, pp 26-28. Mr. Norman, one of the Directors of the Bank: If "There can be no depreciation (from over-issue), unless every article rises in price.... Paper money is depreciated by excess, just as metallic coin is depreciated by a deduction from its weight. . . . Notes should not be issued without securities. the customers of any Bank are satisfied with its solidity, the public at large has very little more to do with it. The objection is in toto to the establishment of joint-stock company Banks in London, or increased competition among the issuers of paper money: ... Exchequer bills, mortgages, and even bonds, might be taken to a certain amount. . . . Landed security might be taken, and the responsibility should be limited or unlimited, as that of other mercantile concerns might. The Bank of England, for instance, has its capital lent to government, the dead weight and Exchequer bills. All these might be made securities for its issues. The Legislature ought to guard, as far as possible, against the insolvency of Banks of issue: their deposits are voluntary transactions on the part of the public. Perhaps, compelling country bankers to give security might induce them to issue Bank of England notes instead of their own. Ninety-nine monopolies out of one hundred are mischievous; but the monopoly of the Bank of England is an exception. The supply of paper money is precisely the case in which monopoly is not a disadvantage. The government might determine to issue £20,000,000 of paper, payable in gold, or secured on bullion to the amount, and then the banking trade of London might be thrown open; but, even then, in times of difficulty, some advantage is derived from one great establishment of undoubted solidity and untarnished credit. Issues of gold are unavoidable the Bank has no control. Issues of government securities are not so absolutely necessary: but this concerns the Bank, not the public; for the note issued is money, and the Bank must provide for the demand on it. In 1825, the issues might have been made a hundred times over without producing excitement."-Digest, 39, 42, 43. ... "There exists no more reason for two or more Banks than for two or more mints. . . . If the cash of the Bank of England were completely drained, and the government issued paper on their own responsibility, the confidence of persons would be increased. All paper money should be issued by the government, on the same ground that coin is. . . . The issuing of paper notes by bankers is a source of profit, which coin is not. The State, therefore, is entitled to a very large portion of the profits arising from the circulation. . . . The establishment of joint-stock companies would be in opposition to the principle of having one Bank of issue for the whole country. . . The amount of issues of the Bank of England does not influence prices, without a consideration of the circumstances at the time. . . . Neither paper nor credit is capital, but investments. All paper (such as the Bank of England's £20,000,000), that bears interest may be called investments in productive securities. The issue of paper money through discount (of bills) or accommodation is objectionable, for the demand in that way prevails most generally at the time when it is most essential to contract the circulation. Therefore, there is often an excess of issue through the medium of private credit, which would not occur if paper were substituted for gold. . . . An increase of paper is most commonly the consequence of a tendency, from other causes, to a rise of prices. In every original instance, the rise or fall of prices has preceded, and therefore could not be the effect of an enlargement and contraction of the Bank circulation. . . . There cannot be an excessive issue of convertible paper as relates to the Bank itself; but there may be as regards the public."-Digest, p. 78, 80, 81, 90. Mr. Grote: "I would have the Bank of England compelled to pay over all the profits of their circulation to the public, saving so much as might be a fair remuneration for the trouble and risk of administering the details of it. This should be accounted for directly to government, and not be made a set-off in any bargain made as to the management of the national debt. In point of principle, the country bankers might also be called upon to give up their profits on the circulation; but, seeing that the number of parties everywhere out of the metropolis had acquired a certain established interest in the circalation, it would be throwing them out of their business to deal similarly with them. Had they all charters expiring, like the Bank, they might be ruled afresh. It is in consideration of the circulation of London being capable of yielding a profit, and of that circulation being at the disposal of Parliament, witness holds that terms may be exacted from the body to be endowed with its administration. "More than one joint-stock Bank of issue in the metropolis would be mischievous. If you have only one such Bank, you get a circulation, considered as a whole, which would be impossible were it distributed among six or eight or ten Banks. No one among these competing Banks would be either able or willing to measure its separate issues in reference to the total amount of circulating medium required. Each might unseasonably maintain or extend its issues; taking the chance of being able to supplant the notes of other Banks. In the provinces, evils of the same nature would arise. Many stock Banks in a district would present less security against over-issue than a single Bank. Under a single Bank, that contraction of the currency which is incident to a fall in prices would be earlier foreseen, and more gradually brought about, than by a number of competing Banks; because their rivalry would induce each to delay the moment of beginning the contraction until its necessity became both urgent and notorious. Then the thing having been too long deferred, would be carried into effect with rigorous violence. "Witness does not see that a metallic currency would give any protection against fluctuations in the price of commodities, in the rate of exchanges, and in the rates of commercial discounts. These would partly depend on the state of the harvest, and the circumstances of dividends being paid in at fixed periods. Fluctuations would occur in a currency referrible to any definite standard whatever; and, doubtless, our present standard is less liable than any other to variations."-Digest, pp. 97-99. Mr. Glyn: "The exclusive privileges of the Bank of England are decidedly advantageous to the London bankers, because the existence of more than one Bank of issue would expose the commercial world to fluctuations, and cause such bankers, in particular, great inconvenience in the details of their business. It would compel them to keep, probably, three or four times the amount of gold in hand now necessary. The establishment of competition among the Banks of issue would affect the circulating medium, exposing it to certain increase and reduction. The natural inclination of all banking companies seeking profit for their proprietors must be to extend their issues. The sense of danger attending over-issues would be a very doubtful check; for, under competition, though a return of paper might be apprehended, every company would speculate on its coming back more upon its competitors than upon itself. The scramble for profits would prevent that due regulation of issues essential to a safe circulation. Joint-stock Banks have been established in the country; but are not, in general opinion, fitted for London and its trade. The competition of four or five joint-stock Banks in London would compel private houses to answer drafts in their own notes, if demanded. To keep cash by them to make payments in gold, whenever the paper of another company was demanded, would be exceedingly inconvenient." - Digest, p. 54. Mr. Gurney: "A mixed circulation is the best state of currency. Such a circulating medium as we now have has the most wholesome effect in controlling these variations (in prices). It is not assumed, in the nature of a paper circulation, that with rising prices there would be enlarged issues, and with falling prices, a contraction; having a tendency in each case to increase the prevailing disposition, so as to lead to greater fluctuations than a metallic currency would; for, in this country, paper money is mainly concerned, and that fluctuates wholly and solely with the state of prices and transactions in the district (where it is issued). The amount cannot be increased beyond what is called for. It cannot be governed by any act of the banker. "No country banking establishment can issue more than there is a demand for.... What has been said of the impossibility of an over-issue by country bankers does not apply to the Bank of England. To a considerable degree, the Bank circulation is founded on government securities, which the witness thinks is the best foundation."-Digest, pp. 70-74. Such are the most material portions of the evidence given before the Committee by men of the very highest repute in their respective callings; men of great wealth, largely acquired by their own exertions, and wielding a wide social and political influence. Mr. Ward and Mr. Norman were Directors of the Bank, while no persons enjoyed a greater reputation in monetary circles than Mr. Glyn, Mr. Loyd, Mr. Gurney and Mr. Grote. Yet their statements and conclusions were as groundless as, and far less valuable than, the speculations of the Alchemists as to the proper combination of the baser metals necessary to produce gold. The Alchemists did make some discoveries of great value, and laid the foundation of a science which, working by exact methods, always advances the inquirer on his way. The evidence or speculations of the witnesses before the Committee, who were favorable to the Bank, did not disclose a single principle, did not lead to a single discovery, in reference to the laws of money. On the contrary, they over |