had tripled or quadrupled; that the agricultural and other transactions may have increased in equal proportions; and yet it was possible that the same amount of circulating medium which existed at the first period might be sufficient at the last, or might even be excessive, though he did not say that it was excessive at the pre

sent moment.

The whole fallacy of the argument to which he referred, had arisen from not considering the great difference between a metallic and a paper circulation. Before the war the circulation (assuming it to have been 50 millions) consisted of 30 millions of gold, and about 20 millions of paper. It now consisted (independent of the silver coinage for small payments) of about 50 millions of paper. Previous to the close of the American war there were few country banks. They were confined to the great commercial towns, and to some of the large cities. The country bank system grew up in fact between that period and the commencement of the succeeding war. Until this system had made considerable progress, the transactions throughout the country were in a great measure carried on by small hoards of money. Individuals received their rents in specie, and kept a considerable amount of specie by them to pay their bills as they came in. But by the extension of the banking system, the habit of keeping specie is almost wholly done away. There is now scarcely such a thing as dead capital, except the small proportion which is kept in the respective banks. Besides the power of paper, by its easy conveyance and transmission, enables a small amount of it to perform many times the same operation which an equal quantity of gold or silver can perform.

In addition to these circumstances commercial ingenuity has since devised a variety of means by which the greatest and most complicated transactions may be carried on by the smallest quantity of paper. He would in the first place beg leave to read a note which would be found in the very valuable work of Mr. Colquhoun, which refers to the evidence that was collected on this part of the subject before the bullion committee in 1810. "A refinement in giving velocity to the circulating medium, by uniting many bankers into one, for their private convenience, is practised by about two-thirds of the 71 private bankers of the metropolis, comprising chiefly those who reside

in the city. According to the report of the bullion committee, the daily payments made to these bankers (46 in number) amount on an average to 4,700,000l. If that sum were to be paid daily by one debtor to his creditor, without the intervention of banking, and in coins, even of gold of one guinea each, the multitude of people that would be required to convey the specie from place to place, would crowd the metropolis from one end to the other, since even more than 4,700,000/. would probably be wanted. To make payments in all the variety of sums which would be necessary by the customers of the whole 71 bankers and the Bank of England, it might require five, ten, or perhaps twenty times 4,700,000l. daily. As the matter however is contrived, instead of this enormous sum of 4,700,000l. in coin, these daily payments, amounting in a year to fourteen hundred and fifty seven millions, are made by means of the comparatively trifling sum of 220,000l. daily for 310 days, or sixty eight millions yearly. The merchants agree that their orders on their respective bankers shall not be presented until the end of the day, when these 46 bankers meet and settle and exchange all the drafts and orders on each other, paying the difference in bank notes, which is calculated to amount on an average to 220,000l. a day. If about two-thirds of the private bankers in London pay one thousand five hundred millions yearly for a part of their customers, how much must that yearly sum be increased by what the whole of the bankers and the bank of England pay, including the public revenue and loans, the latter exceeding one hundred millions alone? When it is considered also, that the vast and almost incalculable number of payments are all accomplished by means of about twenty millions in bank notes, the velocity of its circulation will appear to be most truly astonishing."

It

It will be seen, that by the arrangements to which allusion is here made, the sum of 220,000l. daily performs the ope ration of nearly 5,000,000l. or 20 times its amount. But he had farther information to lay before the House upon this very important branch of the subject. appeared by the papers before them that the average circulation of Bank of England notes in the year 1818 was about 27,000,000. He had called for an account of the number of bank notes and bank post bills of each denomination, issued in

would follow him, who would be fully competent to comment on what he might offer on this part of the subject. He would beg leave only to refer those members of the House, who were desirous of being informed upon this part of the question, to the evidence in the Appendix, of Mr. Page and Mr. Fletcher on one side, and to the very able, and, as he thought, satisfactory evidence of Mr. Mushett on the other. He could conscientiously say, that he had felt most anxious to hear and consider every thing that could be offered on this point. He had heard the noble earl over and over again he entertained no more doubt than he had done at the commencement of the inquiry, and he had the satisfaction of thinking that several noble lords who had doubted, now entirely concurred with him. He could perfectly understand that in countries where gold and silver coins were both of them legal tender to any amount, that if the proper proportion was not observed in the value of the metals, the favoured metal would come in, and the other go out; but in this country, where the Mint was not open to the public for the coinage of silver; where government kept the silver coinage in their own hands; where its amount was so limited as not materially to exceed the necessary demand of the public for it as matter of exchange; where silver was not a legal tender for more than 40s. he really could not understand what the mint regulations regarding the silver coinage could have to do with the state of the exchanges or the price of gold-how it could be supposed that 27,000,000/. of Bank of England paper, and 23 millions of country bank paper could be the representative of a silver coinage not legal tender beyond 40s. and in its total amount not exceeding 4 or 5 millions, was beyond his imagination to conceive. The principle advanced, if true, would apply equally to our copper coinage it would apply still more strongly to the old silver coinage, which, although depreciated by wear to nearly 30 per cent, was nevertheless legal tender, at least to the amount of 251. and yet never banished the gold from circulation. In fact, when so depreciated, a premium was often given for it, from its small amount in quantity, and from the use of it in small payments. He had now introduced this important subject to the consideration of the House in all its different bearings. He felt most desirous that the House should concur

in the report and recommendation of their committee. They had proposed the plan which was now before the House, from a conviction that it would attain the desired object without material public inconvenience; they were deeply anxious that the country should return to some fixed standard of value; they were anxious to return to the ancient standard of value; they were anxious to return to it with the least practicable delay; they anxious to return to it with the least possible distress. It was because this plan appeared calculated to obtain the object by certain, but progressive steps, that they had recommended it to the House. It insured an early, though not an immediate commencement, and that at a standard which now existed. The measures which were to follow were all to be taken so gradually, that the operation of the latter parts of the plan might take place almost insensibly, even if the precaution of some contraction in the circulation should be necessary for that purpose. His own pursuasion was, that no such contraction would be necessary; that most, if not all the inconveniences which might arise from the experiment, had been incurred already; and that if parliament would steadily adhere to the course recommended, they would see the ancient standard of the country restored without material distress to any class of his majesty's subjects.

for

The Earl of Lauderdale observed, that if the noble earl who last addressed their lordships felt how difficult a task he had undertaken in explaining his view of the subject, how much more must he feel, who had to argue it in a more extensive manner, and to explain his impressions, founded as they were on principles much more difficult of elucidation. He could assure their lordships of one thing-that if he had failed to form a correct judgment on the subject, it was to be ascribed entirely to the incapacity of the man, nothing that assiduity could accomplish had been neglected by him in his inquiries. Before he should enter upon the arguments which immediately affected the question, he would say something of the causes of our present difficulties, which the noble earl had treated of very inadequately. When the noble earl said that a fixed standard of value was necessary for this great mercantile country, he only repeated what he (the earl of Lauderdale) and the noble lords around him had been

contending for during the last 12 years, and what the noble earl had uniformly contradicted. The noble earl's doctrine had always been, that Bank paper had never depreciated in value. If it had not, why complain now of a variable standard, and urge the necessity of recurring to a fixed standard? The noble earl's opinion was on the records of that house. Did not the noble earl give his support to that act of the legislature, commonly called lord Stanhope's bill, which absolutely denied any depreciation of the Bank paper? Then how reconcile the support of that legislative measure with the present acknowledgment of its being a variable standard? It was not, however, his intention to contend with the noble earl on that point. On the contrary, he congratulated himself, the House, and the country, upon such a convert to sound principles, on a question of such importance. But, having avowed opinions which for 12 years he had been controverting, the noble earl seemed now anxious to force Bank-paper into proper value. It was not, he could assure the noble earl, so easily forced. One of the noble earl's propositions was, that the Bank should give gold at a certain price for their notes. Like all new converts the noble earl was so eager to proclaim his change of opinion, that nothing could satisfy him now, but that parliament should declare the depreciation of Bank paper. The exchanging of Bank notes for gold at 4. 1s. per ounce, was a substantial declaration to that effect. It was as much so as if it had been enacted, that the ounce of gold was worth 51. 5s. when gold was at that price three years ago. But what was the market price of gold this day? Who in that House could undertake to tell him the market price of gold this day? Was it because 47. 1s. was paid in Bank paper for gold, that that was assumed as the market-price? That was a fallacious foundation. Who knew that if gold now bore that proportion to Bank-notes it was likely to continue? He would show that it was morally impossible it should continue. Did not the noble earl recollect the difficulties they had during the examination of the committee as to that particular point? When Mr. Goldsmid, the Bank broker, was asked, what alteration the laying out of 500,000%. in the purchase of bullion by the Bank would have on the exchanges? he answered, two per cent. And when that answer was followed up

by the question, how such an alteration would affect the price of gold? he replied, from 4s. to 4s. 6d. The fact was, as proved from the evidence, that when they spoke of the price of gold, they spoke of the sum the Bank paid for it, as there was no market, or indeed no demand for it except when its purchases were in operation. It was in October last at its highest price, but after that no purchase was made by the Bank. If the House looked at the returns, it would find there had been no foreign gold brought into the market. On what grounds then had the noble earl assumed that the price of gold was to continue at an average of 47. Is. per oz.? Their lordships were called upon to fix upon what the price of gold was to be six months hence, when they could not tell what its price was at this moment, and much less what changes might take place in the course of six months. He did not contend that it was not highly desirable to return to the ancient standard. But if the question were, whether the Bank should resume cashpayments two years hence at 3l. 17s. 6d., or whether the intermediate plan should be adopted, in order to contract the issues of Bank paper, he should prefer the resumption two years hence at 31. 17s. 6d., taking other securities respecting the issues of Bank paper. The noble earl had argued, that the Bank by reducing its paper issues would reduce the price of gold; since, by diminishing the quantity of paper, its value, like that of all other commodities, must be increased, and since the increase of the value of paper must reduce the relative value of gold. He was of the same opinion. But the noble earl was so young a disciple in this school that he did not know the symptoms which presented themselves to his observation. The noble earl had said there was no evidence before their lordships respecting an overissue; but he (the earl of Lauderdale) on the contrary, would prove, that there was distinct evidence in the report on their table that there was no over-issue. In 1813 and 1814, when the depreciation was said to be greatest, silver was in like manner depreciated, so that paper had not varied from the price of gold more than silver had varied from it. Paper and silver retained their relative value unchanged. In the year 1813, he had himself published a statement of the correspondent prices which gold and silver bore to each other, from an average of the

prices in those countries where a metallic circulation existed. They were from 15 to 1, to 50 to 1. In 1814, the Bank note resumed its value. Gold fell to 31. 18s. 6d., and the state of the exchanges became favourable. From that period there was no proof that paper had resumed its value. After this time, it was true, the Bank accumulated gold; and in the month of March, 1817, the silver coin was issued. Gold coin was then thrown into circulation. The Bank ordered gold coin to be paid, but they could not persuade men to take it. Gold and silver were flowing in from every quarter. The Bank collected more treasure than it had ever had in its possession before. A director had given evidence before the committee, that their treasure was then greater than at any former period, in proportion to its circulation; but he came back next day to correct his evidence, having found that the proportion had been greater at two former periods, but the treasure then in possession of the Bank was the greatest it had had at any time. In January, 1817, when the issues were 27,000,000l., could not the Bank with safety have resumed cash-payments? Their lordships saw that it had more treasure than at any former period; that it had gold flowing in upon it from all quarters; and that it had the general aversion to take gold in its favour: could any man doubt that the Bank of England could then have resumed cashpayments? There were There were very nearly 2,000,000l. more in circulation of Bankpaper at that period than now. In March, 1817, the new silver coinage was put in circulation. Mr. Haldimand, a Bank director, who had not understood this subject, had stated, in his evidence, that the exchanges were ever since unfavourable to us. He (the earl of Lauderdale) derived the greatest confirmation of his doctrine from the exchanges having ever since been unfavourable, and from the price of gold having risen. But what perhaps was more extraordinary, was, that there never was more variation in the issues of Bank paper, than within that interval. It varied from thirty millions to twenty-five, and yet the exchanges continued uniformly against us. With these facts undeniably before the noble earl, how could he conclude that the mere contraction of issues would give the Bank a command over the exchanges? It did strike him, that the reverse of that state of things which existed throughout the

year 1816 and the beginning of 1817, was attributable to those regulations of the Mint, by which the silver coinage of the country was depreciated 6 per cent. Let the House consider the operation of such an influence. Take the amount of Bank of England one-pound notes, at eight millions-that of the country banks at the same amount; that was 16 millions, the correct amount, he believed, of that species of notes in circulation. For these 16 millions, the silver coinage was a legal tender-in other words, one half of the circulating medium of the country was depending for its value on a silver coinage depreciated 6 per cent-a depreciation bearing almost an exact proportion to the adverse rate of the exchanges. The exchanges had become unfavourable, and gold had risen the very month after the issue of the silver coinage. He therefore affirmed that since the Mint regulations, the exchanges had been nominally unfavourable, when calculated in gold, and yet that the real exchanges had been uniformly favourable when calculated in silver, the only metallic coin in circulation. Mr. Baring acknowledged that it was a singular coincidence, that the issue of the silver, and the unfavourable turn in the exchanges, happened at the same time. He (the earl of Lauderdale) asked him if he thought it possible that the silver coinage should go out of the country; and his answer was, that it was perfectly impossible. In fact, silver bullion had been imported with profit for three years. In confirmation of that fact, they had not only the evidence of Mr. Fletcher and Mr. Page, who stated, that they had received silver in dollars and various other shapes; but they had the evidence of Mr. Goldsmid, the bank broker, that there had been a great influx of silver from South America, from the West Indies, from Gibraltar, and from several other places. There was but one conclusion that could be drawn from these facts-that the exchanges were really favourable to us. The noble earl was therefore incorrect when he argued upon the unfavourable state of the exchanges. They, on his (the earl of Lauderdale's) side of the House, admitted, that they were nominally unfavourable, but contended that they were really favourable since the depreciation of the silver coinage. In the beginning of 1818, the bank paper in circulation was 29,000,000l.: gold was then 47.

Three months afterwards the quantity