about five millions sterling. In the budget of 1817 they made a provision of thirty millions of rentes, amounting to about 15 millions of money at the then price of the French funds. This sum was raised in three several loans, and left about three millions of rentes short of the proposed loan. If the committee would compare the dates of these loans with the periods at which the rate of exchange began to be unfavourable towards this country, it would be found to fall soon after the conclusion of the first French loan. He was far from wishing to throw any blame on the contractors for these loans; at the same time it ought to be remembered that these were subjects with which government ought not to interfere.

There

were, moreover, political advantages of great importance connected with these loans; for they had contributed to support the French government, and to enable it to make good its engagements with foreign powers. The effect, however, of these transactions were such as he had described. The two millions and a half of cash issued by the Bank in pay ment of their notes had imme. diately gone out of this country, and had enabled the contractors for the French loans to make good their engagements. But there was at present a negotiation on foot which might probably end in the raising of a much larger sum.

The committee were aware that by the treaty of Paris the allied army might either leave France in the course of the present year, or remain there two years longer.

If it should leave that country in the present year, and the French should fulfil their pecuniary engagements during the same year, in addition to the sum of twelve millions, for which a loan had been concluded, the French government would probably want a farther sum of twenty millions sterling to enable it to liquidate all the claims upon it. He had already stated, that as far as regarded our internal situation, there could be no danger in the resumption of cash payments by the Bank. But when so large a drain might be made from this country as would be occasioned by the French loan in contemplation, he would put it to the committee, whether the danger of resuming cash payments at an undue time would not overbalance any disadvantage which might arise from the temporary prolongation of the restriction. He then drew a comparison be. tween the original stoppage of cash payments from the Bank, and the period which the committee were now led to contemplate; and endeavoured to show the similarity of circumstances in the two periods.

Should he, he proceeded, be asked whether the nature of our currency was to depend upon the operations of foreign powers, he would reply, certainly not. If we could really return to a state of permanent and secure circulation with safety, we ought to resume that state of things with. out delay; but the moment would be ill-chosen for making the attempt when we were under the influence of circumstances very like those when the suspension [F2]

was

was first proposed. He should perhaps be told that the restriction was first proposed in a time of war and danger, and that the measure was rendered necessary in consequence of the advances made to a foreign power, under the guarantee of government. This was true, but still it did not counterbalance the greater extent of the operations at the present time. The imperial loan amounted only to four millions and a half; but besides the loan of last year to France, thirty millions might be necessary for that country in the present year, and five millions had, besides, been raised for Prussia. Even if all those loans were to be negociated abroad, there was no reason to suppose that capital was so abundant on the continent, as that a large proportion of the money would not come from this country.

He wished it to be distinctly understood, that he did not propose to continue the restrictions in consequence of any circumstances in the internal state of the Bank, which he believed was fully prepared to make good its payments; but on account of those external circumstances which would render such an operation extremely dangerous at the present moment. He hoped, how ever, that another measure which he should have the honour to propose might have the effect of considerably alleviating the evil of the restriction, and place a great part of our paper currency on a more secure footing than ever. This part of the subject he would now endeavour to explain as shortly as possible. It was his intention to propose that

the Restriction act should be continued for another year, namely, to July 1819, and that in one year from that period the operation of this new plan should commence. There could be no doubt that the most perfect and desirable currency was a mixed one of specie and paper. Many plans had at different times been in contemplation respecting the best means of security from the abuse of paper currency. It had been proposed that paper should be issued on the security of various deposits, as of landed and other property. The great objection against issuing paper on the deposit of property was, that whatever value the property deposited might possess at the time the deposit was made, it could be converted into money only under favourable circumstances, and that when attempts were made to convert it into money under other circumstances, it often fell so much in value, as not to realize the sum advanced on the security of it. All land banks were particularly liable to this inconvenience; and from the many difficulties attendant on the conveyance of landed property, had generally been unsuccessful. This sort of uncertainty, however, did not exist with regard to another description of property which. existed in this country to a great extent, namely funded property. It was not, indeed, free from fluctuation, but it might always be considered available to a certain extent. If on the deposit of a certain amount of stock, a certain amount of paper had been issued, such paper would have been free from the insecurity of

the

the paper currency that we have hitherto possessed. At present our paper currency was not of equal security in different parts of the kingdom. Scotland, from the nature of its currency, and the extent of the capital of the persons engaged in banking, had had no considerable failures, and enjoyed great advantages in the security of her paper circulation. In England however, and still more in Ireland, that was not the case; but all the inconveniences arising out of the insecurity of the paper of private bankers, might be prevented by the adoption of the plan that he was about to propose. In that plan he wished to keep in view the difference between that part of the paper currency which might be considered as the immediate representative of cash, and notes of larger value, which in some respect answered a different purpose. It was when the metallic currency was first suspended by the act prohibiting cash payments by the Bank of England, that permission was given to circulate notes under five pounds, and of not less than twenty shillings value. This permission had been renewed from time to time; and the period now fixed for the circulation of these notes was one year after the expiration of the term at which the suspension of cash payments should terminate. The Suspension act would expire on the 5th of July 1818; but as he should also propose the continuance of the suspension for another year, it was his intention also to propose that the alteration with respect to the circulation of private bankers, should not take

place before the 5th of July 1820. After this date, he meant to propose that no private banker in England or Ireland should issue notes for any sum under five pounds, without having made a sufficient deposit of government securities, consisting either of stock or of exchequer bills. He therefore proposed that it should be enacted, that every private banker should transfer into the names of the commissioners for the reduction of the national debt, an amount of stock double to that of the nominal value of the notes of that description issued by them, or deposit in the hands of the commissioners exchequer bills of equal value to that issue. The cause of the difference which he recommended in this respect was, that from the frequent fluctuation in the price of stock, the nominal value of the notes in stock might turn out to be a very inadequate security.

This was the general outline of his plan, the details would of course be a matter of much deliberation. He, however, took the occasion to answer at some length two objections which might be made to the plan; one, that the measure proposed would tend to produce a great and unlimited paper circulation; the other, that the circulation of paper under the value of five pounds was not so profitable to the banker as to induce him to continue it under the circumstances of a deposit. The chancellor of the exchequer concluded with moving, "That leave be given to bring in a bill for farther continuing an act of the 44th year of his present majesty to continue the

restrictions

restrictions contained in several acts of his present majesty on payments of cash by the Bank of England."

Mr. Tierney rose to make a number of remarks upon the speech of the right hon. gentleman; but as they were chiefly of a digressive character, we shall not, for the present, take them into consideration. He concluded with saying, that without some inquiry, the right hon. gentleman could not with decency require the assent of the House to his plan; nor would Mr. Pitt, with all his confidence in himself, have ventured to demand it under such circumstances.

Mr. Grenfell shortly considered the many pretexts by which the chancellor of the exchequer had been induced to prolong the Restriction act; and particularly noticed the three reasons which he brought for the measure, all which he treated as futile.

The motion of the chancellor of the exchecquer was at length agreed to; after which the House resumed, and leave was also given to bring in two bills; the first, "For farther continuing an act of the 44th of the king, to continue the Restrictions contained in several acts of his present majesty on Payments of Cash by the Bank of England;" the second, "To authorize Bankers in England and Ireland, to issue and circulate Promissory Notes secured upon a Deposit of Public Funds, or other government securities."

On April 10th the Chancellor of the Exchequer brought in the Bank Restriction Continuance bill. On the motion that it be

read a first time, Sir C. Monck wished to be informed whether the sums paid into the Bank of England by the different saving banks, and amounting in all to 657,000l., and on which exchequer bills had been issued, were included in the sum of 1,800,0007. The chancellor of the exchequer assured him that the money which came from the saving banks was not at all connected with that sum, but was quite a separate account.

The bill was then read a first

time.

Mr. Grenfell said, that as he considered this as a measure for establishing a permanent paper currency in time of peace, he wished to know whether it was in the contemplation of the chancellor of the exchequer to take any steps for securing to the public any share of the vast profits which the Bank of England received from this system.

The Chancellor of the Exchequer said, he was of opinion, as he had always been, that it would not be consistent with the honour and welfare of the country, to make itself a partner in any profits which the Bank of Engand happened to derive from the restriction.

The Chancellor of the Exchequer brought in a bill "to authorize Bankers in England and Ireland to issue and circulate Promissory Notes, secured upon a Deposit of Public Funds, or other Government Securities." The bill was read a first time. On the question that it be read a second time,

Sir J. Newport said, he was confident that no notes would be

issued by country bankers on the conditions prescribed by the bill, and that the consequence would be to drive them out of circulation, to the benefit of the Bank of England. He wished to know whether it was proposed that the notes issued should pay any duty? The Chancellor of the Exche. quer replied, that they would pay the same duty as was now paid, though the form would be different.

Sir J. Newport, alluding to what had fallen from the right hon. gentleman the other day, respecting the total disappearance of the 2,500,000l. issued in coin by the Bank, informed him that it had not been all transmitted to foreign countries, as he seemed to imagine. The fact was, that at that period some bankers, having placed full confidence in the assurance given by the right hon. gentleman respecting the resumption of cash payments, had made preparations for that purpose. With that end in view, a particular banker had drawn a large sum from the Bank in Ireland as a preparation against that period.

Mr. Grenfell observed that 100%. five per cents was of more value than 1007. exchequer bills; and that 100%. four per cents was also of more value; but in a less proportion. He wished to know whether the chancellor of the exchequer intended to propose any clause in the bill which would regulate the difference, as this was a matter of some importance?

The Chancellor of the Exchequer said, that the subject mentioned by the hon. gentleman would be proper for the commit

tee. Great difficulty had been found in making any distinction between the different public stocks; and he should be happy to receive any communication on the subject.

On April 30th the Chancellor of the Exchequer informed the House that the next Monday was fixed for the discussion of the Bank Restriction bill, and on the same night the first reading of the Country Bank Notes bill was to take place. He thought it his duty now to mention, that in consequence of a meeting of the principal country bankers yesterday, in which certain modifications had been proposed in the measure, which would render it impossible to be carried through during the present session, he should move that the order of the day for the second reading of the bill be discharged.

This, after some observations on the bill, was accordingly effected.

On May 18, the order of the day for taking into consideration the report of the committee on the Bank Restriction bill being read,

Mr. Frankland Lewis addressed the House. He said that nothing was now left to the House but to amend the bill as best they might, for in a little more than one month the Bank must resume cash payments should it not pass. He rose therefore to propose an amendment which would steer between those two evils, to the effect of engaging the Bank to resume cash payments at a definite period. The bill therefore ought to contain, not a special enactment, but a distinct expres