An unfavom•able rate of exchange, implying that mo ney is of more value abroad than at home, fiJrnis a limit of bounty on the export of merchandise. A slight ine quality is thus in general coirected. wit•out the adoption of any other measure than a partial sl•ipment of goods, the nattn.c and amount of which may be suf•I) left to the of merchants. On the rise becoming grc ater. and exceeding the expellee of the iv•yance ol specie, billion is bought up and exported. A col Itinu«1 and far ther advance of the exchange, leads to the exportation of the current coin : a prattle e no penaitie., las e been found adequate to pre vet t. Prrting with a portion of our coin, how ever ungraei(us 1.31 exrdicnt, is, 111 ordinary times, an infallible one, since; it tench, to bring down exchange in two ways, by paying a part of our debt, and by enhancing the value ol our remaining coin. It was thus that we corrected, in the end of 1795, the inequality of exchange caused by the double burden of subsidies and col n-payments. In the still more serious difficulties of 1799 and 1800, this severe remedy was only partially applied ; a proportion of our bullion and coin went abroad, but paper supplying- its place, the cure was not radical, and our bank-notes remained at a depre ciation. No improvement took place eluting succeeding years ; and it was our misfortune to meet the accumulated demands of 1808 with a deficiency in our coin, and a de gradation in our paper. The progress of the evil was consequently rapid, bullion rising 15 per cent. above its coinage value so early as the spring of 1 tiO9. /..k•d'R List,) and bank-notes falling cuircntly to a discount be fore the end of the year. All the expedients applicable to such a state of things, export of gocds, transmission of bullion, smuggling out of coin, were put in practice by the keen and adventurous classes of society, who make it their business to result to such means. But their efforts were unavailing ; the heavy demrnds from abroad, and a nonconvertible currency at home, baffled all ordi nary corrections. It may he worth N:11iIC to (onsiar, what would have been the course of things, had a simi lar revolution in the exchange occurred at a time wit:. the Bank was liable to pay in sin cic. Whether etc 5t.!11 of evil would has c been grc..t•r or smal:er, :ts progress and character, there can be no doubt, would have been altogether diferent. The state of the exchange pr clueing heavy demands on the Bank, for guineas t. l e melted and exported, that establithment would I ;ve forthwith had recourse to the \sa II-known rime t,y c: contracting its issues. Thu claims of goveinn citt, I ow ever urgent, must have bet n resisted. and t' modation of discounts almost wl v 1 ftc,s1 trade. The conseque nee s would has c bee n • . as eie ble relaxation of our exertions in Spain, .t general !la in the value Of commodities, an embarrassment almost universal among our traders, leading, in innumerable cases, to a temporary suspension of payments, and in ma ny to bankruptcy. All this would have taken place so eall• as 1309; the deficient harvest of that year would have aggravated our distress; and a defalcation in the public similar in its cause to that which has just occurred, but greater iu extent, would have been in evitable. Our exchange, however, could hardly have fallen below 10 of 12 per cent.; and the correcting powers of trade, if impeded by Bonaparte, would have experienced no incumbrance from the state of our own currency. Such would have been our situation, had we encountered the whole of our calamity in the outset, and sought for palliation in the substitution of paper for coin. But as things have been ordered, the substi tution of paper has both retarded the approach of the evil, and concealed from us its real character. The exchange had been deranged during eighteen months, before the mercantile embarrassments became serious ; the Bank, instead of narrowing, consented to increase its issues; the foreign expellees of government under w ent no diminution ; nor has there been am- general fall in the value of commodities. On the other hand, the exchange continues, in this its fourth year of depres sion, so low as 20 or 25 per cent. ; the list of mercantile failures appears to suffer no reduction ; and the effect of any measure of relief that may be adopted by gm ern ment must necessarily be remote. It is difficult, there fore, to pronounce, whether the continued use of paper money has lessened or aggravated the pressure resulting from political and commercial causes ; the stroke was less sudden, but the wound is perhaps deeper. It is foreign to our plan to enter into political calculations, but there is one idea too important to be omitted: Had the Bank been subject to cash payments, the ruinous consequences of stopping the American trade must have been so soon perceived, that our orders in council would have speedily been recalled, or, more probably, would never have been issued.
After this narrative of the progrebs of our paper cur rency, it remains for us to direct our attention to the measures proposed to remedy its depression. In Fe bruary 1810, a Committee of -the House of Commons was moved for by Air Horner, to " enquire into the cause or the high price of gold bullion, and to take into consi deration the state of the circulating- medium of exchan ges." A committee was accordingly named, without
much interference, it has been said, on the part of mi nisters, and w as occupied dining two months in the ex amination of evidence. The persons examined were Oddly bullion dealers, merchants, bankers, and bank directors. The leading members in the committee, next to Air Homier, arc.: understood to have been Alr IIuski,son and Mr Henry Thornton. It is the custom, in pal liamentary committees, after hearing evidence, to adopt certain resolutions explanatory ()I' the sense of the committee, and of the substance of the report about to be framed. It. was only in this stage of the business, lye understand, that r Perceval began to apprehend a decision contrary to the iews of the Bank and of go vernment. Coming personally to the committee, which he had hitherto icry little attended, and collecting those of the members whose ideas were coincident with his own, he endea% our«I, it is said, to negativ c the propo sition, that banl.-paper V. US 1111de rtit00(1 tI) be depreciated, hut in vain ; the nrajoi ity of the committee having made up their minds to an opposite conclusion. The report accordingly went on ; but so complicated was the labour, that, notwithstanding the time already bestowed, and the familiarity of the subject to the gentlemen whose names we have mentioned, above a month was required for its completion. It begins with a statement of the extraordi nary rise of bullion in our market, and of the endeavours of the committee- to ascertain what cause, in the opinion of mercantile men, had led to this irregularity. To the notion entertained by several witnesses, that it was owing to a rise of gold on the continent, the committee could by no means subscribe. The sudden rise in our foreign exchange formed the next topic of enquiry ; and here, as in the other point, the committee differ from the opi nions of practical men, the majority of whom attributed it to the foreign expellees of government, and to the excess of our imports in 1809 above our exports. Two merchants, however, if they did not go so far as the committee, in declaring a depreciation of our bank notes, were of opinion, that their non-convertibility into cash had been materially instrumental in preventing a re-establishment of the rate of exchange. The com mittee, in arguing that a considerable part of the ine quality of the exchange must be owing to a fall in our paper currency, enter into a very instructive explanation of the distinction between real and nominal exchange ; but they are less successful in an attempt to calculate the relative amount or our exports and imports for the year 1309.
The third subject of investigation, the enquiry into the ruins of the bank in respect to their issues, gate rise to some anxious answers. The bank directors appear to have become by this time suspicious of the intentions of the committee, and fought hard to ward of (Evidence, p. 79 and 89.) some of their probing questions. The point on which they were chiefly at variance, was, whether the amount of their issues ought or ought not to be regulated by a reference to the price of bullion, and the condition of the foreign exchange. The committee contend for the affirmative, while the bank assert, that the validity of the bills presented to them for discolint, should form almost the only subject of consideration. The bank also oppose the idea, that the irregular state of the exchange is owing, in any degree, to a degradation of their paper ; an allegation which leads the committee into a series of arguments, to show that depreciation has been known to exist in cases where the currency was, like that of the Bank of England, of undoubted charac ter as to ultimate solvency. The early part of the history of the bank of England itself, the case of the Scotch banks in 1763, and the more recent example of the bank of Ireland in 1809, arc all adduced in support of this position. The committee then conclude this part of the Report, with a mixture of praise and censure on the bank directors. Their conduct, in not attending to the price of bullion and state of exchange, is said to involve " great practical errors ;" while their moderation in " limiting the anfount of their issues, is declared to en title them to a continuance of the confidence so long re posed in them by the public." The fourth and last divi sion of the Bullion Report, regards the progressive in crease of our paper currency. After exhibiting a list of the annual quantity of bank of England notes in cir culation since 1798, and commenting on the bank ad vances to government, as well as to the mercantile body for discounts, the committee are led into an enquiry into the circulation of country banks. Here, from the scan uness of materials, the greatest caution was necessary ; and from the want of it the committee have Edict' into levy serious mistakes. They sum up the by declaring the existence of an excess in our paper cur rency ; by ascribing this excess to the absence of the salutary check of cash payments ; by lamenting the evils attendant on currency ; by dissuading the adoption of any indirect schemes to limit our paper cir culation ; and by recommending an act of parliament to resume cash payments within the space of two years.