66

they do not wait till the demand for gold actuall arises, before the contraction takes place, or "whether you anticipate the period of such de"mand by the action of the Bank?"

ANS. "I do not think there is any resolution ❝ recorded to so nice a point as that; but I believe "there is not one person in the Bank direction "that does not consider it a sacred duty to regard the principle of currency predominantly "above any other consideration, and to do always "the very best that can administer to good currency."

66

(2149) QUES. With regard to the answer you

gave as to the nature of the Bank's operations "when they anticipate a bad harvest, do the Bank "on such occasions operate in consequence of "their own opinion as to the prospect of a bad "harvest, or do not they rather operate in con

sequence of the indication which is given by the "operations of those who are engaged in the corn "trade, namely, the quantity of bills drawn from "abroad which are drawn in anticipation of ship"ments of corn?"

ANS." They get the best information they can "to ascertain the fact, and when they find the "fact to exist by a demand upon the Bank for "bullion, they act accordingly; there are various indications, of which that mentioned in t "tion is an important one."

66

qes

It is thus obvious that as soon as a bad harvest

was ascertained, the Bank would begin to contract their issues, for the purpose of preventing a demand for gold. Now this demand would be obviated by the contraction of issues preventing the prices of corn from rising, by which the inducements to import it would be diminished on the one hand, while the exportation of gold, to pay for it on the other, would be reduced in an equal degree. Hence while the additional supply of corn would be comparatively limited, the nation would not by a timely rise of prices, be so early put on short allowance.

It is needless to remark in how great a degree the miseries of a bad harvest would be aggravated by this means. If a ship goes on a twelvemonth's voyage with only eleven months' provision, the privation would hardly be felt, were the crew restricted to eleven-twelfths of their usual allowance from the commencement of it, whereas if they took no such precaution, they would be all starved to death before it terminated. So with the nation, if prices do not rise early after a bad harvest is ascertained, the distress towards the end of the year must be proportionably increased; and if to this we add the diminished foreign supply, together with the commercial and manufacturing embarrassment, which, independent of any other cause, always attends upon a great contraction of issues by the Bank, we may more easily conceive than describe the banefu. conse

quences of the policy which the Bank have thus avowed.

The Directors would, of course, be guided by the best intentions. But the very opposite course is the one which on such occasions ought to be pursued. One advantage of a paper currency undoubtedly is, that it enables us to counteract irregular actions upon the circulation produced by extraneous circumstances, and it appears to us that instead of anticipating a bad harvest by a premature contraction of the currency, the foreign demand for gold ought to be supplied without any contraction whatever. The importation of corn ought to be encouraged rather than checked; and the distresses of the people relieved, while the currency at the same time should be preserved from derangement. In short, instead of increasing the distresses of the country at such a period, the Bank ought to do all in its power to relieve them.

It seems, however, that nothing would probably be done without the approbation of Ministers.

66

Mr. Ward states (2095), QUES." But would "not that system practically bring with it this I difficulty, that whenever it should unfortunately happen that the country should be threatened "with a scarcity of food, it would have immediately the difficulty of a scarcity of money?"

ANS. "I am afraid that is one of the in"herent defects; the probability is that the go

66

vernor of the Bank would communicate with the government, and the benefit of the government "information would be obtained, and it would "be considered whether it was necessary and in what degree anything of the kind should be "done."

66

But the experience of Mr. Ward and the Bank must have determined that this policy would most likely be approved by Ministers, otherwise they would not have mentioned it.

Independent of the objections we have offered to the policy itself; it is still further reprehensible from the secret manner in which the transaction would be conducted. The public would know nothing of the matter, except by its effects. The cause would be kept from them. Corn would not be dear, yet thousands would be in a state of starvation; and if any one were to suspect the cause, they would still not be in a condition to examine the propriety of the principles upon which it took place. Hence, if the policy were good, the manner of pursuing it is not. It can never be right that a matter so important to the welfare of the community should be left to the secret discretionary determination of the Cabinet and the Bank. The principle, at least, on which their decision is founded, ought previously to be discussed and sanctioned by Parliament.

As we have before stated, no doubt whatever can be entertained of the integrity with which the

Bank is managed. Our object is to ascertain whether the judgment exercised in conducting it has been such as to justify the implicit confidence placed by the public in the Bank under the existing system.

Mr. Richardson is of opinion (5130) that so long as the Bank is regulated by honest intentions all will be well; that the best security we can have for good management is to get individuals of integrity to manage it.

Now the question, by which this opinion was elicited, appeared to imply that good management chiefly consisted in having a large stock of bullion: the Committee, no doubt, being satisfied by individual experience, that it is an excellent thing to have plenty of money." This, however, leads us to the consideration of a point of management under this head, for which the Bank take to themselves considerable credit, but which appears to us rather to strengthen the general argument against the existing system than weaken it.

On the Bill for the resumption of cash payments in 1819, the Bank anticipated very serious mischief to the public from that event. They considered that the gold which it would become necessary for the Bank to possess, could only be

*(5130) QUES.- "Do not you think the effect of it would be to render the Bank somewhat more cautious in the conduct of its affairs, and to induce it to keep up a larger store of bullion than it otherwise would?"

ANS. "I think so long as the Bank is regulated by the honest intentions

it has pursued, it would make no difference, and that the best security you have, is to get individuals of integrity to manage it."