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metropolis, and induced them to throw's a coufiderable light on one keep in tore larger quantities of at least of the causes which pro. specie, than before the year 1793, duced this great demand for cash in order to make their payments, on the bank. It appears by the acif such should be required of them. count of the state of the cash at the Mr. Thornton confirms in general bank, at different periods, as laid this account given by Mr. Ellison, before the committee, that the He agrees also with Mr. Ellison with greatest drain of cash which the respect to the demand for cash bank has experienced, subsequent made on the metropolis by the to the year 1783, was in March country bankers, for the purpose and June 1793, that is, a short of being sent to different parts of time after the failure of the coun. the kingdom, where it is partly try banks in that year; and in the kept by the country bankers, for commencement of the month of the uses before mentioned, and February of this year, that is, a partly drawn out of their hands by short time after the Newcastle individuals, to be hoarded. banks stopped payment in cash,
It appears by the evidence of and when the alarms before stated Mr. Thornton, that there was, at produced great demands for cash, this time, also a demand of cath to from different parts of the country: be sent from the metropolis to so that, in both those periods, the Scotland.
same cause appears to have proBut those demands for calli, duced an effect nearly similar, that from the diftant parts of the king. is, a very unusual drain of cash from dom, were not the only causes of the bank. the embarrassments of the bank of The increased demand for cash England, at this period. It is muft bear a proportion to the deAared in an account delivered by crease of any other sort of circula. Mr. Puget, one of the directors of tion that is a substitute for it. The the bank of England, and agent committee will presently thow, to for the bank of Ireland, that in the what degree the circulation of the commencement of the year 1797, notes of the bank of England had there was an unusual demnand of been diminished, immediately precalh made on the bank of England, vious to the 26th of February last. to be sent to Ireland ; and that With respect to the decreale of there was an expectation of a loan country bank bills in circulation, being intended to be raised in Great Mr. Thornton, who appears to Britain for the service of Ireland, have collected his evidence from which would have necessarily oco several parts of the kingdom with casioned the exportation of a con- great accuracy, was desired by the fiderable quantity of coin from the committee to deliver in an account metropolis to the latter kingdom. of the proportion in which, ac. It is proper to add, that the king- cording to his information, coun. dom of Ireland appears, for some try bank bills circulated in dif. weeks previous to ihe issuing the ferent parts of the kingdom, before order of council of the 26th of Fe- the failures in 1793 ; at a period bruary, to have experienced a great subsequent to that year; and at the want of cash, fimilar to that which present time. This account may was experienced in Great Britain. be seen at large in the evidence;
There is a circumstance that but the result is, that at the pre
Tent sent time, the circulation of these accounts presented to the coinmit. bills is in one part of the king. tee, of the amount of bank notes dom not more than about a third ; in circulation, at different periods, in another, not more than half; that the average amount of these and in a third, but a fixth, of what notes in circulation, for several years was in circulation before the year previous to the end of the year 1793: and the committee have al. 1796, may be flated at between ready endeavoured to show, in a 10,000,000l.and 1 1,000,000l. hard former part of this summary, to ly ever falling below 9,000,oool. what degree the means of coining, and not often exceeding, to any and, in consequence thereof, the great amount, 11,000,000l. It will regular supply of new coiu (which appear by one of the afore-men. alone could fill up the void ucca- tioned accounts, that in the latter fioned by this decrease of circulat- end of the year 1996, and in the ing paper) had diminished of late beginning of 1797, the amount of years.
the bank notes in circulation was From the evidence of the go. lefs than the average before stated ; vernor of the bank, and from the and on the 25th of February last, report of the last secret committee, it was reduced to 8,640,250k. which has been laid before this It is true, that in an account pre. committee, it appears, that it was sented to the cominitree, of the not fingly the diminished state of amount of bank notes in circulatheir calh, which gave the directors tion in the years 1782, 1783, and any great alarm; the governor and 1784, the quantity was then geneMr. Bofanquet rather impute this rally even less than the sum laft alarm to the progressively increase mentioned; but at that time the ing demands for cash upon them, foreign commerce of the kingdom particularly in the week preceding was not even one half of what it is the 26th of February, and to the at present, as will be seen in the reasons they had to apprehend that account of imports and exports in. these demands, and the consequent serted in this report. progressive reduction of cash, would It is not probable that the reduc. continue, and even increase; and tion of bank notes to 8,640,2 gol. they add, that this drain was in immediately previous to the issuing great part owing to demands for the order in council of the 26th Fecach from the country, such de- bruary, was owing to any diminu. mands being made upon the bank tion of the demands for them; for indirectly from the country, but at that time the merchants of Lon. dire&tly from the bankers of Lon- don were subject to difficulties, don, who were to supply the coun. from not being able to get their try.
bills discounted. The directors of the bank, under The directors of the bank had, the impression which these alarms on the 31st December, 1795, come and embarrassments had occasion. to a resolution to diminish their dised, appear to have judged it pru- counts; but notwithstanding that dent to dimivish their rotes in cir- resolution, they did not diminish culation, and the consequent de. the ainount of their discounts in mands that might come upon them, the course of the year 1796, com10 as to make the demands more pared with what they were in 1795, nearly correspond with the state of but had rather increased them, not their cash. In will be seen, in the , however to such an extent, as to
make them correspond with the necefTarv for the circulation of the wants of the commercial worid. A metropolis ; and that in this respect, confiderabie degree of ciftress con- it is immaterial whether there notes fequently ensued, which distress are ifTued for advances made to gomay alío be imputed to another vernment, or in discounts to pricause, in evidence before the com- vate persons, except that in the mittee. By law, no man is to take last case, those whole bills are dis. more than 51. per cent. inierest for counted to a greater extent, may money lent or advanced by him; suppoļe that more relief is granted and this restriction is unceritood to them. He aliows, however, that to apply to bankers in the business as the bank discounts, even in time of discoun:ing; so that in time of of war, at sl. per cent, there may war, when a much greater interest be a greater disposition to borrow than sl. rer cept. can be made of of the bank at sl. per cent. than it none; in government securi. may be prudent always for the ties, the discounts wbich merchants bank to comply wiih. obtain from bankers and other in Another of those gentlemen is dividuais, are necessarily much di- of opinion, that the resolution of minished, and they are forced, on the bank to restrict their discounts, that accouni, to resort directly to excited an alarm and distrust that the bank.
led to an increase of the drain of Some of the persons whom the their cash; that it has contributed committee examined on this part also to the forced sale and depreciaof the subject, have exprefled a tion of public securities, and to strong opinion of the inconvenie other embarrassments occasioned by ence produced by the conduct of an insufficient supply of bank the bank, in ciminifhing their notes notes and cash; which supply has in circuiation, and in restricting not kept pace with the demand their discounts.
arising from the employment and One ce these persons is of opi- circulation of aaive capital, partinion, that an increased quantity of cularly for the last ofteen months : bank notes, proportioned to the in- and he alsois of opinion that it would creared occasion for them, must not lignity materially to the public, tend to prevent a demand for whether the quantum of bank notes guineas rather than to promote it; introduced into circulation, was and that if the quantity of notes created by discounting bills for the issued is very considerably less than merchants, or by advances to gothe occasions of the mercantile vernment. world i equire, a run upon the bank The committee have judged it will be the consequence. He is of right to state the causes assigned by opinion also, that the directors of these gentlemen, of the distress that the bank do not avail themselves has lately prevailed from the want of the full extent of their credit; -of sufficient means of circulation and that the caution necessary to be in commercial transactions: the observed by private bankers in the committee, however, do not mean amount of their birls, does not ap to decide whether the bank direcply to the case of the bank of Eng. tors might not have solid reasons land, for several reasons which he for their condu&t in this respect, aliizns. A great quantity of bank or to convey any opinion on this ‘notes, in his opinion, is absolutely doubttui and delicate question ; but
conceive it their duty to call the The committee think it sufficient attention of the house to a point of merely to enumerate considerations so great importance, and refer the of such general notoriety, and to house to the arguments stated more submit them, without farther obat large in the evidence.
servation, to the wisdom of the The committee have thus gone house. through the chief points which have occurred in their inquiry re. specting the causes which produced Copy of Resolutions moved by the the order in council of the 26th of Duke of Bedford, May 15, 1797, , : February last, as resulting from the in Consequence of the above Report evidence taken by them, and the The previous queftion was carried accounts laid before them. They on the whole Series. submit the same to the confideration of the house; but as the mi. 1. 6 THAT it appears to this nutes of their proceedings are in- house, that subsequent to the month serted in the former part of this re- of June, 1795, and during the year port, and as the house is thereby 1796, a great diminution was expofTeffed of the evidence on the perienced in the specie of the bank whole of this subject, in great de- of England. tail, the members of it will be 2. That the governor and deenabled to supply any omissions, puty governor of the barik did, at and to correct any defects which various times, represent to the chanmay be found in this fumniary. celior of the exchequer the danger
The committee being desirous of to the bank, from the dininution confining themselves to those mat- of its specie, particuiarly at the fol. ters on wnich they have thought lowing periods : proper to call evidence, and sensis . 11th December, 1794, ble of the difficulty (even at all ioth O&tober, 1793, times) of appreciating the extent, 23d Oétober, 1795, and influence of alarm, forbear 13th November, 1795, from adverting to the effects pro 3d December, 1795, duced upon the state of pecuniary ifth and 16th January, 1796, transactions and circulation, by the 28th January, 1795, apprehensions of invasion generally 5th and 8th February, 1796, prevalent towards the close of the ith February, 1796, last year, and in the beginning of 8th, noth, and 21st February, the present, but of which the opera.
1797tion must doubtless have been con 3. That it appears, that during siderable. Nor will they attempt these periods the directors of the to estimate how far the interruption bank frequently remonstrated with given to the banking operations of the chancellor of the exchequer on many great commercial cities, by the magnitude of their advances to the troubles and calamities which goverument, anxiously requiring have agitated Europe, and the en- payment, or a considerable reduc-, tire ruin of many commercial tion of the same ; but that never, houses and establishments, may theless the chancellor of the exche, have tended to derange the ac- quer not only neglected to comply custoined course and confidence of with the object of those reinon. general circulation,
strances, but usually, under pre-
tence of the necessity of the public, any one time the sum of 150,00ol. service, renewed his demands for the wisdoin of our ancestors having farther aid; and that under the exi. foreseen and provided against the gency of the case, as stated to them mischief of fimilar advances, by a by the chancellor of the exchequer, clause in an act passed in the sth the directors of the bank were, year of William and Mary, by from time to time, induced to come which the governor and company sent to farther accommodation of the bank of England were re.
4. That it appears that the chan. ftrained from advancing any lums cellor of the exchequer frequently of money, other than on such folicited such farther accommoda fuods on which a credit is granted tion in the most anxious and presle by parliament. ing terms; declaring, that it was 8. That it appears, that from and impossible to avoid the most serious after the year 1793, at which time embarrassments to the public fer- an act of parliament passed, con• vice, unless the bank directors af- taining a clause, by which the di. forded the assistance he required. rectors of the bank are indemnified
5. That it appears, that although for the advances they had made on by these means the directors of the bills drawn from abroad, and ex. bank were induced to comply with empted in future from the penalhis demands, they generally exprell- ties of the said act of William and ed their reluctance in strong lan- Mary respeting such advances to guage; and that they at last, that government, the amount of treas is to say, on the 28th of July, 1796, lury bills paid at the bank continu. thought it necessary for their own ed progressively to increase; and justification, to request the chan- that between the ist of January cellor of the exchequer to lay be. 1795, and the 25th of February fore his majesty's cabinet, their 1797, funis to the amount of upmost serious and solemn remon. wards of 15,000,000l, were at dif. strance; in which they declare, ferent periods advanced to governo that, “ sensible of the alarming and ment upon this head. dangerous state of public credit, 9. That it appears, that the dinothing could induce them to como rectors of the bank did, at various ply with the demand then made times during the years 1795, 1796, upon them, but the dread that this and 1797, apply to the chancellor refusal might be productive of a of the exchequer for re-payment of greater evil.”
such advances, and represent to him 6. That it appears, that during the ruinous consequences to them. the above period, a considerable felves and to the public, of contiportion of the bank advances was nuing the system of making trea. occasioned by payments of bills of sury bills payable at the bank : and exchange drawn on the treasury that they even declared they confrom abroad.
ceived it to be " an unconftitu7. That it appears, that it had tional mode of raising money, and seldom been the custom of the what they were not warranted by bank of England to advanice, on their charter to consent to.” the account of such bills, more 10. That it appears, that the than from 20,00ol. to 30,000.; chancellor of the exchequer did, at and that even during the American various times in that period, under war, such bills never exceeded at take to reduce the advances on