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metropolis, and induced them to keep in ftore larger quantities of fpecie, than before the year 1793, in order to make their payments, if such should be required of them. Mr. Thornton confirms in general this account given by Mr. Ellifon. He agrees alfo with Mr. Ellifon with refpect to the demand for cafh made on the metropolis by the country bankers, for the purpofe of being fent to different parts of the kingdom, where it is partly kept by the country bankers, for the ufes before mentioned, and partly drawn out of their hands by individuals, to be hoarded.

It appears by the evidence of Mr. Thornton, that there was, at this time, also a demand of cash to be fent from the metropolis to Scotland.

But thofe demands for caf, from the diftant parts of the kingdom, were not the only caufes of the embarrassments of the bank of England, at this period. It is ftated in an account delivered by Mr. Puget, one of the directors of the bank of England, and agent for the bank of Ireland, that in the commencement of the year 1797, there was an unufual demand of cafh made on the bank of England, to be fent to Ireland; and that there was an expectation of a loan being intended to be raised in Great Britain for the fervice of Ireland, which would have neceffarily occafioned the exportation of a confiderable quantity of coin from the metropolis to the latter kingdom. It is proper to add, that the kingdom of Ireland appears, for fome weeks previous to the iffuing the order of council of the 26th of February, to have experienced a great want of cafh, fimilar to that which was experienced in Great Britain.

There is a circumftance that

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throws a confiderable light on one at least of the caufes which produced this great demand for cash on the bank. It appears by the account of the state of the cash at the bank, at different periods, as laid before the committee, that the greatest drain of cafh which the bank has experienced, fubfequent to the year 1783, was in March and June 1793, that is, a fhort time after the failure of the coun. try banks in that year; and in the commencement of the month of February of this year, that is, a fhort time after the Newcastle banks ftopped payment in cath, and when the alarms before stated produced great demands for cafh, from different parts of the country: fo that, in both those periods, the fame cause appears to have produced an effect nearly fimilar, that is, a very unufual drain of cash from the bank.

The increased demand for cafh must bear a proportion to the decreafe of any other fort of circulation that is a substitute for it. The committee will prefently fhow, to what degree the circulation of the notes of the bank of England had been diminifhed, immediately previous to the 26th of February last. With respect to the decrease of country bank bills in circulation, Mr. Thornton, who appears to have collected his evidence from feveral parts of the kingdom with great accuracy, was defired by the committee to deliver in an account of the proportion in which, according to his information, country bank bills circulated in dif ferent parts of the kingdom, before the failures in 1793; at a period fubfequent to that year; and at the prefent time. This account may be feen at large in the evidence; but the refult is, that at the pre

fent

fent time, the circulation of these bills is in one part of the kingdom not more than about a third; in another, not more than half; and in a third, but a fixth, of what was in circulation before the year 1793: and the committee have already endeavoured to fhow, in a former part of this fummary, to what degree the means of coining, and, in confequence thereof, the regular supply of new coin (which alone could fill up the void occafioned by this decrease of circulat ing paper) had diminished of late

years.

From the evidence of the governor of the bank, and from the report of the laft fecret committee, which has been laid before this committee, it appears, that it was not fingly the diminished state of their call, which gave the directors any great alarm; the governor and Mr. Bofanquet rather impute this alarm to the progreffively increafing demands for cash upon them, particularly in the week preceding the 26th of February, and to the reasons they had to apprehend that thefe demands, and the confequent progreffive reduction of cafh,would continue, and even increase; and they add, that this drain was in great part owing to demands for cafh from the country, fuch demands being made upon the bank indirectly from the country, but directly from the bankers of London, who were to fupply the country.

The directors of the bank, under the impreffion which these alarms and embarraffiments had occafioned, appear to have judged it prudent to diminish their notes in circulation, and the confequent de. mands that might come upon them, fo as to make the demands more nearly correfpond with the state of their cash. In will be feen, in the

accounts prefented to the committee, of the amount of bank notes in circulation, at different periods, that the average amount of these notes in circulation, for feveral years previous to the end of the year 1796, may be flated at between 10,000,000l. and 11,000,000l. hardly ever falling below 9,000,000l. and not often exceeding, to any great amount, 11,000,000l. It will appear by one of the afore-men. tioned accounts, that in the latter end of the year 1796, and in the beginning of 1797, the amount of

the bank notes in circulation was lefs than the average before stated; and on the 25th of February last, it was reduced to 8,640,250l.

It is true, that in an account prefented to the committee, of the amount of bank notes in circulation in the years 1782, 1783, and 1784, the quantity was then gene rally even lefs than the fum laft mentioned; but at that time the foreign commerce of the kingdom was not even one half of what it is at prefent, as will be feen in the account of imports and exports inferted in this report.

It is not probable that the reduction of bank notes to 8,640,250l. immediately previous to the iffuing the order in council of the 26th February, was owing to any diminution of the demands for them; for at that time the merchants of London were fubject to difficulties, from not being able to get their bills difcounted.

The directors of the bank had, on the 31st December, 1795, come to a refolution to diminish their dif counts; but notwithstanding that refolution, they did not diminish the amount of their discounts in the courfe of the year 1796, compared with what they were in 1795, but had rather increafed them, not however to fuch an extent, as to (P 3)

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make them correfpond with the wants of the commercial world. A confiderable degree of diftrefs consequently enfued, which diftrefs may also be imputed to another caufe, in evidence before the committee. By law, no man is to take more than 51. per cent. intereft for money lent or advanced by him; and this reftriction is understood to apply to bankers in the bufinefs of difcounting; fo that in time of war, when a much greater intereft than 51. per cent. can be made of moncy, upon government fecurities, the difcounts which merchants obtain from bankers and other individuals, are neceffarily much diminifhed, and they are forced, on that account, to refort directly to the bank.

Some of the perfons whom the committee examined on this part of the fubject, have expreffed a strong opinion of the inconvenience produced by the conduct of the bank, in diminishing their notes in circulation, and in reftricting their discounts.

One c thefe perfons is of opinion, that an increafed quantity of bank notes, proportioned to the increafed occafion for them, must tend to prevent a demand for guineas rather than to promote it; and that if the quantity of notes iffued is very confiderably lefs than the occafions of the mercantile world require, a run upon the bank will be the confequence. He is of opinion alfo, that the directors of the bank do not avail themselves of the full extent of their credit; and that the caution neceffary to be obferved by private bankers in the amount of their bills, does not ap. ply to the cafe of the bank of England, for several reafons which he affigns. A great quantity of bank notes, in his opinion, is abfolutely

neceffary for the circulation of the metropolis; and that in this respect, it is immaterial whether these notes are iffued for advances made to government, or in discounts to private perfons, except that in the laft cafe, thofe whose bills are difcounted to a greater extent, may fuppofe that more relief is granted to them. He allows, however, that as the bank discounts, even in time of war, at 51. per cent. there may be a greater difpofition to borrow of the bank at 51. per cent, than it may be prudent always for the bank to comply with.

Another of those gentlemen is of opinion, that the refolution of the bank to restrict their discounts, excited an alarm and diftrust that led to an increase of the drain of their cafh; that it has contributed alfo to the forced fale and depreciation of public fecurities, and to other embarraffiments occafioned by an infufficient supply of bank notes and cafh; which fupply has not kept pace with the demand arifing from the employment and circulation of active capital, particularly for the last fifteen months: and he alfo is of opinion, that it would not fignify materially to the public, whether the quantum of bank notes introduced into circulation, was created by discounting bills for the merchants, or by advances to government.

The committee have judged it right to ftate the caufes affigned by thefe gentlemen, of the diftrefs that has lately prevailed from the want of fufficient means of circulation in commercial tranfactions: the committee, however, do not mean to decide whether the bank direc tors might not have folid reafons for their conduct in this respect, or to convey any opinion on this doubtful and delicate question; but

conceive

conceive it their duty to call the attention of the houfe to a point of fo great importance, and refer the houfe to the arguments ftated more at large in the evidence.

The committee have thus gone through the chief points which have occurred in their inquiry refpecting the caufes which produced the order in council of the 26th of February laft, as refulting from the evidence taken by them, and the accounts laid before them. They fubmit the fame to the confideration of the house; but as the minutes of their proceedings are inferted in the former part of this report, and as the houfe is thereby poffeffed of the evidence on the whole of this fubject, in great detail, the members of it will be enabled to fupply any omiffions, and to correct any defects which may be found in this fummary.

The committee being defirous of confining themselves to thofe matters on which they have thought proper to call evidence, and fenfible of the difficulty (even at all times) of appreciating the extent and influence of alarm, forbear from adverting to the effects produced upon the state of pecuniary tranfactions and circulation, by the apprehenfions of invafion generally prevalent towards the clofe of the laft year, and in the beginning of the prefent, but of which the operation muft doubtlefs have been confiderable. Nor will they attempt to estimate how far the interruption given to the banking operations of many great commercial cities, by the troubles and calamities which have agitated Europe, and the entire ruin of many commercial houfes and establishments, may have tended to derange the accuftomed courfe and confidence of general circulation.

The committee think it fufficient merely to enumerate confiderations of fuch general notoriety, and to fubmit them, without farther obfervation, to the wifdom of the house.

Copy of Refolutions moved by the Duke of Bedford, May 15, 1797, in Confequence of the above ReportThe previous question was carried on the whole Series.

I.

"THAT it appears to this houfe, that fubfequent to the month of June, 1795, and during the year 1796, a great diminution was experienced in the fpecie of the bank of England.

2. That the governor and deputy governor of the bank did, at various times, reprefent to the chancellor of the exchequer the danger to the bank, from the diminution of its fpecie, particularly at the following periods:

11th December, 1794,
roth October, 1795,
23d October, 1795,
18th November, 1795,
3d December, 1795,

15th and 16th January, 1796,
28th January, 1796,
5th and 8th February, 1796,
11th February, 1796,

Sth, 10th, and 2ift February,

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tence of the neceffity of the public. fervice, renewed his demands for farther aid; and that under the exigency of the cafe, as ftated to them by the chancellor of the exchequer, the directors of the bank were, from time to time, induced to con fent to farther accommodation.

4. That it appears that the chancellor of the exchequer frequently folicited fuch farther accommodation in the most anxious and preffing terms; declaring, that it was impoffible to avoid the moft ferious embarraffments to the public fervice, unless the bank directors afforded the affiftance he required.

5. That it appears, that although by thefe means the directors of the bank were induced to comply with his demands, they generally expreffed their reluctance in ftrong language; and that they at laft, that is to fay, on the 28th of July, 1796, thought it neceffary for their own juftification, to requeft the chancellor of the exchequer to lay before his majefty's cabinet, their moft ferious and folemn remonftrance; in which they declare, that, "fenfible of the alarming and dangerous ftate of public credit, nothing could induce them to comply with the demand then made upon them, but the dread that this refufal might be productive of a greater evil."

6. That it appears, that during the above period, a confiderable portion of the bank advances was occafioned by payments of bills of exchange drawn on the treafury from abroad.

7. That it appears, that it had feldom been the cuftom of the bank of England to advance, on the account of fuch bills, more than from 20,000l. to 30,000.; and that even during the American war, fuch bills never exceeded at

any one time the fum of 150,000l. the wisdom of our ancestors having forefeen and provided against the mifchief of fimilar advances, by a clause in an act paffed in the 5th year of William and Mary, by which the governor and company of the bank of England were reftrained from advancing any Tums of money, other than on fuch funds on which a credit is granted by parliament.

8. That it appears, that from and after the year 1793, at which time an act of parliament paffed, containing a claufe, by which the directors of the bank are indemnified for the advances they had made on bills drawn from abroad, and exempted in future from the penalties of the faid act of William and Mary refpecting fuch advances to government, the amount of trea fury bills paid at the bank continued progreffively to increase; and that between the ift of January 1795, and the 25th of February 1797, fums to the amount of upwards of 15,000,000l. were at dif. ferent periods advanced to govern ment upon this head.

9. That it appears, that the directors of the bank did, at various times during the years 1795, 1796, and 1797, apply to the chancellor of the exchequer for re-payment of fuch advances, and reprefent to him the ruinous confequences to themfelves and to the public, of continuing the fyftem of making treafury bills payable at the bank: aud that they even declared they conceived it to be "an unconftitutional mode of raifing money, and what they were not warranted by their charter to confent to."

10. That it appears, that the chancellor of the exchequer did, at various times in that period, undertake to reduce the advances on

that

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