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influence its market price in this country, remark upon this point, that the evidence it would of course influence also, and laid before them has led them to enterindeed in the first instance, its price in tain much doubt of the alleged fact, the continental inarkets; and it was to be that a scarcity of gold bullion has been expected that those who ascribed the recently experienced in this country. bigh price here to a great demand That guineas have disappeared from the abroad, would have been prepared to circulation, there can be no question; state that there was a corresponding high but that does not prove a scarcity of bal. price abroad. Your committee did not lion, any more than the ligo price prores find that they grounded their inference that scarcity. If gold is rendered dear upon any such information; and so far by any other cause than scarcity, those as your committee have been enabled to who cannot purchase it without paying ascertain, it does not appear that during the high price, will be very apt to curthe period when the price of gold bullion clude that it is scarce. A very extensive was rising here, as valued in our paper, hoine dealer who was examined, and there was any corresponding rise in the who spoke very much of the scarcity of price of gold bullion in the market of the gold, acknowledged that he found no continent, as valued in their respective difficulty in getting any quantity he wantcurrencies.
ed, if he was willing to pay the price for With respect to the alleged demand it. And it appears to your committee, for gold upon the continent for the sup- that, though in the course of the last year ply of the French armies, your committee there have been large exportations of inust further observe, that, if the wants gold to the continent, there have been of the military chest have been latterly also very considerable importations of it much increased, the general supply of into this country froin South America, Europe with gold has been augmented by chiefly through the West Indies. all that quantity which this great com- It is important also to observe, that the mercial country has spared in conse- rise in the market price of silver in this quence of the substitution of another me country, which has nearly corresponded dium of circulation, And your com- to that of the market price of gold, cas. mittee cannot omit remarking, that not in any degree be ascribed to a scar. though the circumstances which might city of silver. The importations of sil. occasion such an increased demand may ver have of late years been unusually recently bave existed in greater force large, while the usual drain for India and than at former periods, yet in the former China has been stopped. wars and convulsions of the continent, Since the suspension of cash payments they must have existed in such a degree in 1797, it is certain, that, even if gold is as to produce some effect.
still our measure of value and standard The two most remarkable periods of prices, it has been exposed to a ver prior to the present, when the market cause of variation, from the possible er price of gold in this country has exceeded cess of that paper which is not conrert: our mint price, were in the reign of king ible into gold at will; and the limit of William, when the silver coin was very this new variation is as indefinite as the much worn below its standard, and in the excess to which that paper will be issued. early part of his present Majesty's reign, It may indeed be doubted, whether, since when the gold coin was very much worn the new systent of Bank of England page below its standard. In both those pe- ments has been fully established, gold riods, the excess of the market price of has in truth continued to be our measure gold above its mint price was found to be of value; and whetlier we bare any other owing to the bad state of the currency; standard of prices than that circulating and in both instances, the reformation medium, issued primarily by the Bauks of of the currency effectually lowered the England and in a secondary manner by market price of gold to the level of the the country banks, the variations of mint price. During the whole of the which in relative value may be as inde. years 1796 and 1797, in which there was finite as the possible excess of that circu. such a scarcity of gold, occasioned by the lating medium. But whether our pregreat demands of the country-bankers in segt measure of value, and standard of order to encrease their deposits, the mar- prices, be this paper currency thos variaket price of gold never rose above the ble in its relative value, or continues still mint price.
to be gold, but gold reudered more variaYour committee have still further to ble than it was before in consequence of
berug being interchangeable for a paper cur- two countries to the disadvantage of the rency which is not at will convertible former. into gold, it is, in either case, most desi- In this manner, a general rise of all jable for the public that our circulating prices, a rise in the market price of gold, medium should again be conformed, as and a fall of the foreign exchanges, will speedily as circumstances will permit, to be the effect of an excessive quantity of its real and legal standard, gold bullion. circulating medium in a country which
If the gold coin of the country were at has adopted a currency, not exportable any time to become very much worn and to other countries, or not convertible at lessened in weight, or if it should suffer will into a coin which is exportable.
debasement of its standard, it is evi- It appears to your committee to have dent that there would be a proportione been long settled and understood as a able rise of the market price of gold bul- principle, that the difference of exchange Jion above its mint price: for the mint resulting from the state of trade and pay. price is the sum in coin, which is equin ments between two countries is limited valent in intrinsic value to a given quan. by the expense of conveying and insuring tily, an ounce for example, of the metal the precious metals from one country to in butlion; and if the intrinsic value of the other: at least, that it cannot for any that sum of coin be lessened, it is equi- considerable length of time exceed that valent to a less quantity of bullion than limit. The real difference of exchange, before. The same rise of the market resulting from the state of trade and payprice of gold above its mint price will ments, never can fall lower than the take place if the local currency of this amount of such expence of carriage, inparticular country, being no longer con- cluding the insurance. The truth of this vertible into gold, should at any time be position is so plain, and it is so uniformly issued to excess. That excess cannot be agreed to by all the practical authorities, exported to other countries, and, not both commercial and political, that your being convertible into specie, it is not committee will assume it as indisputable. necessarily returned upon those who Your committee are disposed to think issued it, it remains in the channel of from the result of the whole evidence, circulation, and is gradually absorbed by contradictory as it is, that the circumincreasing the prices of all cominodities. stances of the trade of this country, in An increase in the quantity of the local the course of the last year, were such as currency of a particular country, will to occasion a real fall of our exchanges raise prices in that country exactly in the with the continent to a certain extent, same inanner as an increase in the gene- and perhaps at one period almost as low ral supply of precious
metals raises prices as the limit fixed by the expense of reall over the world. By means of the in. mitting gold from hence to the respective crease of quantity, the value of a given markets. And your committee is inportion of that circulating medium, in clined to this opinion, boch hy what is exchange for other commodities, is low. stated regarding the excess of imports ered; in other words, the money prices from the continent above the exports, of all other commodities are raised, and though that is the part of the subject that of bullion with the rest. In this which is left most in doubt: and also by manner, an excess of the local currency what is stated respecting the mode in of a particular country will occasion a which the payments in our trade bave rise of the market price of gold above its been latterly effected, an advance being mint price. It is no less evident, that, paid upon the imports from the continent in the event of the prices of commodities of Europe, and a long credit being given being raised in one country hy an auge upon the exports to other parts of the mentation of its circulating mediun, world. while po similar augmentation in the cir- Your committee, observing how enculating medium of a neighbouring coun- tirely the present depression of our extry has led to a similar rise of prices, the change with Europe is referred by many currencies of those two countries will no persons to a great excess of our imports longer continue to bear the same relative above our exports, hare called for an value to each other as before. The in. account of the actual value of those for trinsic value of a given portion of the the last five years; and Mr. Irving, the one currency being lessened, while that Inspector-general of Customs, has accore of the other remains unaltered, the ex- dingly furnished the most accurate esti. change will be computed between chose mate of buth that he has been enabled to
form. He has also endeavoured to fore and capital, remitted to proprietors in this ward the object of the committee, by country. The balance of trade in favour calculating how much should be deducted of this country, upon the face of the from the value of goods imported, on accouot thus made up, was account of articles in return for which In 180.5 about 6,616 0001, nothing is exported. These deductious
10,437,000/. consist of the produce of fisheries, and of 1807
5,866,0001. imports from the East and West Indies, 1808
12,481,000l. which are of the nature of rents, profits,
14,8S4,0001. The following is an Account of the official Value of our Imporls and Exports with tie Continent of Europe clone, in euch of the last five Years:
Balance in favour of
reckoned in Official Value.
1805 1806 1807 1808 1809
f £ 10,008,649 8,197,256 7,978,510 4,210,671 9,551,837
£ 15,465,430 19,216,386 12,689,590 11,280,490 23,722,615
5,450,781 5,019,130 4,716,080 7,069,819 14,170,758
The balances with Europe alone in becomes so low as to be likely to afford a favour of Great Britain, as exhibited in profit on the purchase and exportation of this imperfect statement, are not far these commodities, an actual exportation from corresponding with the general and nearly proportionate to the amount of more accurate balances before given. the bills drawn can scarcely fail to take The favourable balance of 1809 with place. It follows, that there cannot be, Europe alone, if computed according to for any long period, either a highly fathe actual value, would be much more vourable or unfavourable balance of considerable than the value of the same trade; for the balance no sooner affects year, in the foriner general statement. the price of bills, than the price of bills,
A favourable balance of trade on the by its re-action on the state of trade, face of the account of exports and im- promotes an equalization of cominlercial posts, presented annually to parliament, exports and imports. Your committee is a very probable consequence of large have here considered cash and bullion a drafts on government for foreign exper- forming a part of the general mass of exditure; an augmentation of exports, and ported or imported articles, and as trans * diminution of inports, being promoted, ferred according to the state both of the and even enforced, by the means of such supply and the demand; forming, how drafts. For is the supply of bills drawn ever, under certain circumstances, and abroad, either by the agents of govern- especially in the case of great fluctuations ment, or by individuals, is disproporti- in the general commerce, a peculiarly onate to the demand, the price of them commodious remittance. in foreign money falls, until it is so low as From the foregoing reasonings relative to invite purchasers; and the purchasers, to the state of the exchanges, your comwho are generally, foreigners, not wishing mittee find it difficult to resist an interto transfer their property permanently to ence that a portion at least of the great England, have a reference to the terms tall which the exchanges lately suffered, on which the bills on England will pur. niust have resulted not from the state of chase those British commodities which trade, but from a change in the relative are in demand, either in their own coun. value of our domestic currency. But try, or in intermediate places, with when this dcduction is joined with that which the account may be adjusted. which your coinmittee have stated, re. Thus, the price of the bills being regu- specting the change in the market price isted in some degrec hy that of British of gold, that inference appears to be funtaudities, and continuing to fall till it demonstrated,
· In consequence of the opinion which the course of the last year, risen as high your committee entertain, that, in the as 4l. 10s. or 41, 125. has that circumpresent artificial condition of the circu. stance been taken into consideration by lating mediuin of this country, it is most you, so as to have had any effect in dimi. important to watch the foreign exchanges nishing or enlarging the amount of the and the market price of gold, your com- outstanding demands? --It has not been mittee were desirous to learn, whether taken into consideration by me in that the directors of the Bank of England view." held the same opinion, and derived from Mr. Pearse, now governor of the bank, it a practical rule for the controul of their agreed with Mr. Whitmore in this circulation; and particularly whether, in account of the practice of the bank, and the course of the last year, the great de- expressed his full concurrence in the pression of the exchanges, and the great sanie opinion. rise in the price of gold, had suggested to Mr.' Pearse." In considering tliis the directors any suspicion of the cure subject, with reference to the manner in rency of the country being excessive. which bank-notes are issued, resulting
Mr. Whitmore, the late governor of from the applications made for discounts the bank, stated to the committee, that, to supply the necessary want of baukin regulating the general amount of the notes, by which their issue in amount is loans and discounts, he did " not advert so controuled that it can never amount to to the circumstance of the exchanges; it an excess, I cannot see how the amount appearing, opon a reference to the of bank-notes issued can operafe upon amount of our notes in circulation, and the price of bullion, or the state of the the course of exchange, that they fre- exchanges, and therefore I am individuquently have no connexion." He after- ally of opinion that the price of bullion, wards said, “My opinion is, I do not or the state of the exchanges, can never know whether it is that of the Bank, that be a reason for lessening the amount of the amount of our paper circulation has bank-notes to be issued, always underno reference at all to the state of the standing the controul which I have alexchange." And on a subsequent day, ready described. Mr. Whitnore stated, that " the present “ Is the governor of the bank of the unfavourable state of exchange has no same opinion which has now been ex. infidence upon the amount of their issues, pressed by the deputy governor? the bank having acted precisely in the Mr. Whitmore.--am so much of same way as they did before." "He was the same opinion, that I never think it likewise asked, Whether, in regulating necessary to advert to the price of gold, the amount of their circulation, the bank or the state of the exchange, on the days ever adverted to the difference between on which we make our advances. the market and mint price of gold? and “Do you advert to these two-circum. having desired to have time to consider stances with a view to regulate the gethat question, Mr. Whitinore, on a sub- neral amount of your advances? I do serpient day, answered it in the following not advert to it with a view to our geneterms, which suggested these further ral advances, conceiving it not to bear questions:
upon the question." “In taking into consideration the And Mr. Hurman, another bank di. amount of your notes out in circulation, rector, expressed his opinion in these and in limiting the extent of your dis- terins: “I must very inaterially alter my coants to merchants, do you advert to the opinions, before I can suppose that the difference, when such exists, between exchanges will be influenced by any mothe market and the mint price of golu?- difications of our paper currency.' We do advert to what, inasmuch as we do The committee cannot refrain from not discount at any time for those per- expressing it to be their opinion, after a sons who we know, or have good reason very deliberate consideration of this part 10 suppose, export the gold.
of the subject, that it is a great practical “Do you not advert to it any farther error to suppose that the exchanges with than by refusing discounts to such per- foreign countries, and the price of bule Bons-e do advert to it, inasmuch as lion, are not liable to be atl'ected by the whenever any director thinks it bears ainount of a paper currency, which is upon the question of our discounts, and issued without the condition of payment presses to bring forward the discussion. in specie at the will of the holder. That " The inarket price of gold having, in the exchanges will be lowered, and the price of bullion raised, by an issue of such in force. But your committee beg leave paper to excess, is not only established as to report it to the House as their most a principle by the most eminent authu. clear opinion, that so long as the suspeti rities upon commerce and finance, but sion of cash payments is permitted to its practical truth has been illustrated by subsist, the price of gold bullion and the the history of almost every state in, ina- general course of exchange with foreign dern times which has used a paper cure countries, taken for any considerable uerency; and in all those countries, this riod of tiine, forin the best general crieprinciple bas finally been resorted to by rion from which any inference can be their statesinen, as the best criterion to drawn as to the sufficiency or excess of pajudge by, whether such currency was or per currency in circulation; and that the was not excessive.
bank of England cannot safely regulate In the instances which are most fami• the amount of its issues, without baring liar in the history of foreign countries, the reference to the criterion presented by excess of paper has been usually accom- these two circupiscances. And upon a panied by another circunstance, which review of all the facts and reasonings has no place in our situation at preseni-- which have already been stated, your a want of confidence in the sufficiency comınittee are further of opinion, chat, of those funds upon which the paper had although the commercial state of this been issued. Where these two circun- country, and the political state of the stances, excess and want of confidence, continent, may have had some influence are conjoined, they will co-operate and on the high price of gold bullion and the produce their efíect much more rapidly unfavourable course of exchange with ihan when it is the result of the excess foreign countries, this price, and this de only of a paper of perfectly good credit; preciation, are also to be ascribed to the and in both cases, an effect of the same want of a permanent check, and a suitsort will be produced upon the foreign cient limitation of the paper currency in exchanges, and upon the price of bullion. this country. The most remarkable examples of the In connexion with the general subject former kind are to be found in the his. of this part of their report, the policy of Cory of the paper currencies of the Bri- the bank of England respecúng the tish Colonies in North America, in the amount of their circulation, your camearly part of the last century, and in that mittee have now to call the attention of of the assignats of the French Republic; the House to another topic, which was to which the committee have been ena- brought under their notice in the course bled to add another, scarcely less re- of their enquiry, and which, in their judg. markable, from the money speculations ment, demands the most serious consiof the Austrian government in the last deration. The bank directors, as well campaign. The present state of the cur. as some of the merchants who have been rency of Portugal affords, also, an in- examined, shewed a great anxiety 10 stance of the same kind.
state to your committee a doctrine, of the It was a necessary consequence of the truth of which they professed themselves suspension of cash payments, to exempt to be most thoroughly conrinced, that the bank from that drain of gold which, there can he no possible excess in the in former times, was sure to result from issue of Bank of England paper, so long an unfavourable exchange and a high as the advances in which it is issued are price of bullion. And the directors, re- made upon the principles which at preleased from all fears of such a drain, and sent guide the conduct of the directors; no longer feeling any inconvenience from that is, so long as the discount of mersuch a state of things, have not been cantile bills is confined to paper of un. prompted to restore the exchanges and doubted solidity, arising out of real conj. the price of gold to their proper level by mercial transactions, and payable to a reduction of their advarices and issues. short and fixed periods. That the disThe directors, in former times, did not counts should be made only upon bilis perhaps perceive and acknowledge the growing out of real commercial transacprinciple more distinctiy than those of tions, and falling due in a fixed and short the present day, but they felt the incon- period, are sound and well-established venience, and obeyed its impulse ; which principles. But that, while the bank is practically established a check and limi- restrained from paying in specie, there tation to the issue of paper. In the pre- need be vo other limit to the issue of their sent times, the inconvenience is not felt; paper than what is fixed by such rules of and the check, accordingly, is no longer discount, and that during the suspension