If these notes on an average circulate for three years, the highest aggregate amount to which they can have reached is 29,232,870l. Your Committee are led to conclude, from the information of Mr. Lloyd, that the whole amount of notes stamped, which still remain in such a state as to be circulated, can never have been at once in circulation. He says, a banker may have 50,000 notes lying by him; his having paid the duty, and having the notes ready, by no means proves that they are in circulation. Sometimes there may be a very large amount locked up by him, at other times they may be almost all in circulation. In time of alarm, he takes care to have them as much at home as possible; in time of prosperity and general confidence, he has no hesitation in issuing them on satisfactory security."

Mr. Lloyd expressed an opinion, that the issue of paper by the country banks might be from 40 to 50 millions; but your Committee are rather led to infer, from the general tenor of the information before them, that the amount of this branch of the paper circulation, throughout Great Britain, has never exceeded from 20 to 25 millions.

Whatever may have been the amount, it appears undoubtedly to have been liable to great fluctuations, as may indeed be inferred from the account of the stamps before alluded to, but with more certainty from accounts furnished by the three chartered banks of Scotland, representing the proportions which the quarterly averages bear to each other, of the respective circulation of each bank, at three corresponding periods; the scales by which the circulation of these banks is thus shown, establish the degree of the proportionate variations in each respectively; but it is to be observed that those scales, being constructed upon different data, afford no means of comparing with one another the actual amount of their respective issues.

Last Quarter, Third Quarter, Last Quarter,

As a very large part of the currency of Scotland is furnished by those banks, it must be inferred from the preceding scales, that whatever was the amount at the close of 1813, not less than onethird had been withdrawn from circulation in 1816, since which period an equal amount has been re-issued.

A fluctuation, corresponding with this in point of time, and at least, equal in degree, appears to have taken place in the paper issued by the country banks in England. The number of these

Mr. Lloyd stated, that the circulation of the country banks was at its highest in 1813 and 1814, but was considerably reduced in 1816, and the beginning of 1817; and being asked, as to the amount outstanding at the latter period, when compared with the former, he answered, "I can hardly say; I should think it was reduced nearly one-half."

Your Committee were furnished, by Mr. Stuckey, with the following scale of the circulation of a considerable country bank, for the last four years:

and further information on the same subject will be found in the Evidence of Mr. John Smith, a Member of the House, Mr. Samuel Gurney, and Mr. Gilchrist.

Whatever may have been the diminution in the amount of the circulation of country banks in 1816 and 1817, it was not in any degree caused by a diminution of the issues of the Bank of England. The circulation of country paper is liable to be affected by want of confidence, generally brought on by extensive failures in some of those establishments, and the result of which is, that other country banks, however solvent, participate more or less in the general discredit, and are obliged to restrict their issues, from a regard to their own security. In the opinion of Mr. Tooke, "A like effect is sometimes produced, and in a much greater degree, from the discredit of their customers, to whom they are in the habit of advancing money; most of their customers being holders of articles which are liable to be affected by a general depression of price."

Although there may be reason to infer from the opinion of the witnesses most conversant with the management of country banks, and to whose evidence Your Committee beg leave to refer, that a reduction in the amount of the notes issued by the Bank of England would speedily and necessarily be followed by a proportionate reduction of the country bank paper; still it must be obvious, that, independently of that cause, the latter is liable to a sudden and highly inconvenient contraction, under such circumstances of distrust and difficulty as occurred in 1816. The effects of this contraction, unless obviated by a corresponding increase in the issues of the Bank of England, the credit of which is fortunately unas

sailable by the influence of similar circumstances, must have a tendency, by diminishing the amount of the paper currency, to raise the value of the whole.

This, in the opinion of your Committee, was one of the effects produced by the rapid contraction of our currency in 1816 and 1817; and to it may be ascribed, in part, the fall in the price of Gold and the favorable state of the foreign exchanges, during that interval.

Such contraction is an evil, to which the system of country banks, resting upon individual credit, may be occasionally liable; but your Committee are inclined to hope, that it will not be likely either to prevail to the same extent, or to endure for so long a period, when the fluctuations, to which an inconvertible paper currency is exposed, shall be checked, by the operation of the plan which they recommend for the gradual resumption of Cash Payments.

Whether it may be practicable further to provide against inconvenience to the Public and the loss to Individuals, which arise from the occasional insolvency of country banks, and to make such provision, without an interference with the rights of property, and the transactions of the community founded on commercial credit, are questions of great difficulty; respecting which your Committee could not, without further evidence and considerable delay, have enabled themselves to submit an opinion to the House.

Your Committee have forborne from entering into any reasoning upon the effect produced upon the value of our currency, by yariations in the numerical amount of the Notes issued by the Bank of England. So many circumstances contribute to affect that value; such, for instance, as the varying state of commercial credit and confidence-the fluctuations in the amount of country bank paper -the different degrees of rapidity with which the same amount of currency circulates at different periods,-that Your Committee are of opinion, that no satisfactory conclusions can be drawn from a mere reference to the numerical amount of the issues of the Bank of England, outstanding at any given time.

May 6th, 1819.

RESPECTING THE

BANK OF ENGLAND

RESUMING CASH PAYMENTS.

Communicated by The Lords, 12th May, 1819.

Ordered, by The House of Commons, to be Printed, 12th May, 1819.

LONDON:

1819...

FIRST REPORT,

&c. &c.

By the Lords Committees appointed a Secret Committee to enquire into the State of the BANK OF ENGLAND, with reference to the Expediency of the Resumption of Cash Payments at the period now fixed by Law, and into such other matters as are connected therewith; and to report such information relative thereto as may be disclosed without injury to the public interest, with their observations:

Ordered to report,

That, in the prosecution of the enquiries directed by the House, the attention of the Committee has been drawn to a circumstance which they think it material to submit to the consideration of the House.

The state in which the Bank found itself in the years 1816 and 1817, appears to have induced the Directors, in the latter year, to signify by two successive notices (pursuant to the powers reserved to them by Act of Parliament,) their intention to pay in Cash all Notes of dates antecedent to the 1st of January 1817.

The effect of this measure has been to produce a considerable drain of the Treasure previously collected by the Bank, without any real advance being made by such partial payments towards the desirable object which the Bank seems to have had in view.