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mines, and lately we bought 800,000l. worth of gold in Paris, which had been locked up in the cellars of the Dey of Algiers, doing no good to any one. Certainly, countries that cannot exchange with us for commodities, gradually grow poor, and then we make loans to them of five or ten millions, or what they want. Corn dealers have little credit; they sell instantly, and their bills are drawn without regard to exchanges, so they cause most effect. During the bank restrictions the exchanges were against us thirtytwo per cent. This depreciation of our paper rose from our vast expenditure in our own armies and in subsidies. I have received this day 1,400,000 francs; it cost me 14,000 francs premium. In 1825, The Paris premium on gold is one per cent. to-day. when the exchange turned adverse, the Bank discounted most liberally; they tried to discourage the speculation; but when the country bankers were threatened with ruin, they discounted every thing. They deserve the highest credit from the country for their conduct.

10. Prefers one Bank of issue in London, and opposed to Publication of Accounts. (p. 4904.)

The witness was asked if he thought the establishment of several joint stock company banks would be preferable to the Bank of England? The answer was, "As there would be jealousy, there would be rivalry in the amount of gold. One bank might act imprudently, and cause a run on itself which might involve the others. In one body the Bank can aid the government, be useful to the country, be useful to every body. I like the Bank of England to be the head bank, to have all the specie under their care, and all I think that the issues, and to be as liberal of money as they can. a publication of the affairs of the Bank would be a dangerous thing for the country." Suppose that the Bank had twelve millions today, six months hence there might be only seven, people would become alarmed, and a run would be made on the Bank; besides, party spirit might make an ill use of it. Then, if publicity be required to make the Bank keep up its stock of bullion, it would contract the issues. If the Bank have only five millions, it must cease to issue notes. Better, far bettter that the Bank should not tell the public what gold and silver it has. They would not read and see that the assets were over the liabilities, nor would they follow the example of rich and intelligent men, by placing confidence in the Bank. They would run like a flock of sheep, each with his 107. or his 5., and get gold, and the middle classes would draw out their all in alarm. It was the middle class that caused the run in 1825 and in 1832. "Now, if I were governor of the Bank, and my assets were thirty millions, ten millions in gold, and by a run seven or eight millions were drawn, I should get alarmed; and a private banker, who had many customers, being drawn upon, would take alarm also. He would refuse to discount a bill, however good, lest he should not be able to meet his liabilities. The Bank of England would do the same. Then men could not raise money, nor bring

goods, nor ship them; the great bill-payer on the exchange would find a scarcity, and he would lie back. The whole machine of commerce would stand still. I do not think that any combination of persons can break the Bank. Suppose they take out a million or two, the Bank loses nothing, but they who draw out do it at a loss." Individuals of large capital would never be so mad, but the holders of 51., 10, and 501. notes are to be apprehended; they would not read for themselves, but would take false statements from the newspapers. The influence of the wiser and the wealthier produces very little effect on the common people. The little shopkeepers would get their money, and would not believe in any declaration of merchants or rich men. It is these little people that drain the country banks and take gold from the Bank of England. The effect of such a publication would always be to cause a run on the Bank, when its bullion was low in amount. The Bank may have nine millions, and these little holders may draw only 1,600,000., but the remainder is not safe; the panic spreads, the whole nine millions may go as the wealthier become affected with the epidemic alarm, which will thus become every hour more rational; and, in fact, the public anxiety will create the evil it fears. A banker lately had orders from a customer to get him 20,000 sovereigns, and lock them up in his iron box, and in a few days afterwards the same customer said, "Do me the favour to fetch me 10,000 more sovereigns." The cause of the run last May, was not the successful policy of those who set it on, but the people dreaded a revolution, and therefore drew their money. True, these little sums will come back again; but why show the low state of bullion, and cause the run? If the payments in gold were even suspended, the Bank would not break; but the Bank at last gets alarmed, and refuses accommodation, and then arises distress to commerce. "I know the management is good, because I feel its effect; but the principles of that management are not made public. Confidence is their very soul." The Bank, in May last, lent to all good borrowers. Had they taken alarm, and refused advances, the panic would have been frightful. The best policy is to keep a full currency. If money be abundant, this country gets all the trade of the world; if it grow scarce here, then the trade gues elsewhere. If the bank bullion account be published, it will become matter of speculation immediately. Commentaries, by the press, on this subject do evil. The Bank keeps its credit, and the public ought to be satisfied. The public never form correct notions of the state of the bullion in the Bank, and so individuals act freely. They generally believe the amount of bullion held by the Bank is double its real value, otherwise there would be fear where there is now confidence. Bullion might rise in value, if it were known the Bank wanted it, and the public would suffer. It would likewise throw the proprietors and even the directors into alarms which might cause a stagnation in commerce. There would be no benefit gained by reducing the stamps on bills of exchange. A 17. note inay well be paid on a 1000l. bill.

AUGUST 3.

JOHN EASTHOPE, ESQ., M.P.

A Stockbroker.

Condemns the Management, and is opposed to the Monopoly of the Bank of England. Is in favour of Publicity of Accounts, and in favour of a competition amongst Banks of Issue in London, &c. &c. (p. 5782.)

The exclusive privileges of the Bank of England are injurious to the public interest. The safest principle for the public interest would comprise small profits. The bank system is to make large profits; in doing which, they risk the public safety. Before 1825, their issues were large; they then suddenly and ruinously contracted them. The system is manifest from the Bank's being choked up with unavailable securities; but they are so involved in secrecy, that we can only occasionally get a peep. In addition to the dividends, there have been large bonuses. The increase of bank notes, previous to 1825, was not large; there was a large drain upon the Bank for gold, but no proper comparative contraction of their notes. The Bank, by its conduct during 1824 and 1825, contributed much to the distress at the end of 1825. The fears

of the public have prevented the recurrence of similar evils. A regard to the foreign exchanges is the last stage, and not the first by which the Bank Directors should regulate their conduct. They should regulate their system of management in a considerable degree by the amount of their deposits, which have been very large for many years. If people, upon a reduction of interest, go into speculations which lead to an export of gold, the Bank prevent the export, but ruin the speculators, as in 1825. When the Bank lent the London Bridge Company a million of money, they had many millions of deposits: this was an evidence of an excessive circulation. The Bank should not wait, as a rule for diminishing its issues, till the demand for gold upon it takes place. When the deposits are increasing, they should contract their circulation; but when the deposits are diminishing, the circulation is increased by drawing out. The Bank should then contract, to prevent any ill effect from the increase by drawing out the deposits. A fall of the foreign exchanges is the consequence of a redundant currency. The existence of foreign loans increases the difficulty of foreseeing when the foreign exchanges may turn against the country. The deposits of the Bank are part of their liabilities, as well as the circulating medium. Bank deposits form a source of profit. To employ the deposits in discounting bills or purchasing government securities is a most unsafe principle for the Bank, lest their credit be put to the test by extraordinary circumstances. There can be no objection to the Bank employing their money in available securities. If any great claim were made upon the Bank for gold, and its circulation were contracted, exchequer bills would not be available in the hands of the Bank. The profits of the Bank must

necessarily be small, if it be managed with safety to the public interests. In a time of a run upon the Bank, the most available securities would be bills of exchange, as they expire at a fixed day. The government may fairly claim the reduction of the profits of the Bank by requiring the increase of its store of bullion beyond what it has hitherto been. If an increased demand for commercial discounts be made upon the Bank, they should bring into the market a different class of securities. By selling exchequer bills, they deprive the public of an equivalent amount of currency, and distress the money market to that extent. If the Bank be for commercial convenience, they should be engaged in affording those facilities to commerce which depend on the discounting bills of exchange. A bank that deals in discount will be more beneficial to trade than a bank dealing in public securities. The Scotch banking system. would be much safer than the present. The system of the banks checking each other, and especially if it were controlled by publicity, would be most secure. The return of paper upon banks dealing under competition would more effectually protect the public from over issue of paper and a redundant currency. Periods of great distress and convulsion would not so often arise under a free system as under the monopoly system. Under a free system, the trade of London would more rarely be under the necessity of seeking relief. If there were many establishments, well managed, and conducted with simplicity, there would be no motive for distrust. It would be much better if the Bank did not trouble themselves with foreign exchanges. There is no reason to doubt, that if the exclusive privileges were withheld from the Bank of England, a number of banks would be established in London with very considerable capitals. If the Bank of England were compelled to make their proceedings public, there would be less advantage in an alteration. There is secrecy enough for the purpose of mischief, but none for the purpose of good. If ten banks of issue were established in the metropolis, they would not have all the injurious character of monopoly, whilst they would comprise the advantages of communication and competition. The principle of private interest and making profits would operate in banking when free, as they do in every other trade when free. Increasing their issues is a principal source of profit to the Bank of England. A rise of prices would open to bankers a facility to increase their issues, but a regard for their safety would operate against their embracing it. A rise of prices would increase the demand for the discount of good bills. If any bank, through motives of apparent interest, issued more than a proper number of notes, their immediate return would prove the redundancy of their currency. They would then check their accommodation of every sort. The bank directors are in part legislators as well as bankers. Where there are several banks they are controlled by competition. A wise banker, having a great demand upon him, in consequence of high prices, would act with great caution, but not to the same extent as a merchant, as the profit of the merchant depends entirely upon the fluctuations

of price, and that of the banker on the use of money. Great prosperity, arising from very high prices, has been followed, in every instance, by a sudden fall of prices and a consequent revulsion. The publicity would be of more importance than the increased number of banks. Stating the principles upon which they intend to act, and the frequent publication of their accounts, is the only efficient system of publicity. The separate interests of the different banks, controlled by the particular fears of each body, may lead to a contraction of the issues. If there were several banks, they would so far unite as to act upon certain regulations contributing to their own security. They would have separate interests, as other traders. Those separate interests would lead to rivalry, and give a greater security against over issues than one bank can. Under the present system the public has no security against over issues, save the discretion of twenty-four individuals. The public should have positive information as to the amount of currency in the country. The Bank of England should publish its issues, upon which the credit of the country is mainly based. The over issues of the country bankers are grounded upon the over issues of the Bank of England. Country bankers look more to the state of the money market in London than to that of the foreign exchanges. Another system of banking more safe to the public, would diminish the business of the private bankers. If it were not engaged in by the leading capitalists, a subscription of capital by individuals not comprising many of the leading capitalists, if well managed, may be productive of public benefit. Those joint stock banking companies would afford every convenience now afforded by private bankers. If they would furnish a safe basis for public credit, their extension to the country would be advantageous as well as their establishment in London. It would be expedient to make a trial of the operation of perfect publicity upon the present system, by an avowal of the principles upon which the bank was to be conducted, and then a plain statement of its issues and assets. All concealment should be destroyed. Seven years would be much too long for a further trial of the principle of monopoly. Many persons of eminence and experience in the city of London are prevented from appearing before the committee, through the fear of opposing themselves to the Bank of England. 'The Bank is managed on a plan of making the largest dividends they can, without that reference to their security which is essential to the public interest. It is generally understood that, since December 1825, they controul their issues by a reference to the foreign exchanges. They have not anticipated the action of the foreign exchanges so much as they ought to have done. They are not applied to for large discounts. They have sent exchequer bills into the market by all sorts of private contrivances. They have been sold so privately, that it has not been known they were exchequer bills of the Bank of England. The Bank have to sell the exchequerbills of other parties. The Bank were greatly instrumental in causing the panic of 1825. They issued their notes upon mortgage;