LI B RARY 
 
 OF THE 
 
 U NIVLR.SITY 
 
 Of ILLINOIS 
 
 v.33
 
 L'' 
 
 Strictures 
 
 /W» 4^^/ /&£^^s c*C?&£ /tr/*y6St'^>*e <*&& ^sl*'-?*l^/' 
 /#£*//?* /j^A/ZA^ THE EVIDENCE 
 
 TAKEN BEFORE THE COMMITTEE OF SECRECY 
 OF THE HOUSE OF COMMONS 
 
 BANK OF ENGLAND CHARTER, 
 
 BY SCOTUS. 
 
 LONDON : 
 
 RELFE AND UNWIN, 17, CORNHILL, 
 
 AND WILLIAM TAIT, EDINBURGH. 
 
 MDCCCXXXIII.
 
 LONDON: 
 
 J. UNWIN, WHITE LION COURT, CORNIIILL.
 
 STRICTURES. 
 
 Had the committee been desirous of misleading - and bewild- 
 ering- the public mind, instead of enlightening it, on the im- 
 portant subject submitted to their consideration, they could 
 hardly have devised a more effectual method of doing so, 
 than by the publication of these Minutes of Evidence. They 
 may safely, however, be exculpated from any such design, 
 as it is obvious, from the very constitution of the committee, 
 that such a result was inevitable, in spite of their utmost 
 efforts to the contrary. Not only was the committee far too 
 numerous to conduct such an inquiry with any beneficial 
 effect, but they seem to have come to no understanding 
 amongst themselves as to the method in which the investiga- 
 tion was to be carried on. Had the committee consisted of 
 from six to a dozen, at most, of the most influential members, 
 — and as two-thirds of them are as mere cyphers as ever 
 stood on the right hand in operations of decimals, their ab- 
 sence would have detracted nothing from the value of the 
 committee ; and had they met and talked over the matters 
 to be inquired into amongst themselves, and come to some un- 
 derstanding, both as to the principal points on which evidence 
 
 B 2
 
 was more particularly required, and the method in which the 
 inquiry was to be conducted, before examining a single wit- 
 ness, there can be little doubt that their labours would have 
 been much more beneficial to the public, as well as satisfac- 
 tory to themselves. However, it becomes us not to carp at 
 this emanation from the defunct collective wisdom, as it is 
 our last gift from the boroughmongers' parliament ; and in a 
 reformed parliament there is little likelihood of there being 
 so many cyphers, or so many useless reports. We shall rather 
 treat it, therefore, with some of that respect and consideration 
 which legacies in general receive, than with the strict justice 
 its intrinsic merits demand ; and, certainly, if its value were 
 at all commensurate with its size, few would be entitled to a 
 larger share of our attention and respect. 
 
 Those who have even cursorily examined the Minutes of 
 Evidence will readily allow that it is no easy task to wade 
 through such a farrago of absurdity, repetition, and contra- 
 diction. Though we imposed the task on ourselves as a 
 penance, we have no intention of dragging those who honour 
 our pages with a perusal through the same mass of abomina- 
 tions. • We merely purpose to submit a few brief strictures 
 on some of the most important points investigated in the 
 evidence. 
 
 Huge and heterogeneous as the mass of evidence is, all 
 that is really valuable, or pertinent to the subject of inquiry, 
 will be found to resolve itself under one or other of the two 
 following general divisions : first, an exposition of the present 
 constitution of the Bank of England, and of the system on 
 which it conducts its operations ; and, secondly, what alter- 
 ations, if any, are necessary and expedient in the present 
 system of banking in England. 
 
 On the former point, which is matter of fact, not only is 
 the information highly interesting and important, but it is 
 nearly as ample as could have been desired. — No thanks to 
 the committee for this, however, as the whole might have 
 been obtained much more simply by an order of the House.
 
 On the latter point, ■which is matter of opinion, on the con- 
 trary, not only is the greater part of the evidence of little 
 value, but it is worse than worthless — it is positively mis- 
 chievous. No one who will take the trouble of analyzing 
 the list of witnesses whom the committee were pleased to 
 examine, will wonder at this, or indeed could reasonably ex- 
 pect any other result. Of the twenty-two witnesses examined, 
 live are now, or were recently, directors of the Bank of En- 
 gland — in other words, servants of the Bank, sworn to pro- 
 mote the interest of the bank-proprietors to the utmost of 
 their power, and paid for so doing ; four private bankers in 
 London, having a deep interest in the continuance of the 
 present system, under which they at least have flourished, 
 however much the great body of the public may have suffer- 
 ed ; six country bankers, who have also a powerful and direct 
 interest in upholding the present system, because they are 
 perfectly aware that if the monopoly of the Bank of England 
 were abolished, instead of one powerful bank to contend with 
 they would soon have many. Fifteen of the witnesses have 
 thus a direct interest in the renewal of the Bank monopoly, 
 while, of the remaining seven witnesses, only three, being 
 connected with a joint stock bank in Manchester, have any 
 interest in the abrogation of the exclusive privileges of the 
 Bank of England ; and of the other four, neutrals as they 
 may be called, one is an Exchange broker, the drift of whose 
 evidence it is difficult to discover, though it is certainly 
 calculated — we do not say intended — to set the committee on 
 a wrong scent in regard to some of the most important points 
 of the inquiry ; one bill-broker, whose business so nearly 
 approaches to that of a London private banker, and who has 
 almost as great an interest in the continuance of the present 
 system, that he might have been classed amongst them ; 
 one stock-broker, whose evidence will not make any one 
 much the wiser ; and one able and philosophical merchant, 
 whose evidence is not only above all suspicion, but is entitled 
 to the highest consideration. His opinions are, in our
 
 6 
 
 humble apprehension, as theoretically wrong as, if acted on, 
 they would be practically injurious. As there were little 
 honour to be gained in hunting rats, or fishing for minnows, 
 the contradictory statements and opinions of the other wit- 
 nesses may be safely left to refute themselves ; but Mr. 
 Tooke, having earned for himself a just reputation as an 
 authority in these matters, the statements which have the 
 sanction of his name are entitled to a more minute ex- 
 amination than they would otherwise receive. While we 
 subject his opinions and statements to that rigid and fearless 
 examination which every inquirer after, and lover of truth, 
 if he would attain the object of his pursuit, must pursue in 
 regard to the opinion of others, as well as in his turn expect 
 his own to be subjected to, we beg to disclaim any, even 
 the most distant, intention of treating him otherwise than 
 with that respect which his talents are so well entitled to 
 command. 
 
 From the foregoing analysis of the list of witnesses exa- 
 mined by the committee, our readers will scarcely wonder 
 that we have designated the Minutes of Evidence as a crude 
 mass of absurdity, repetition, and contradiction. It would 
 puzzle any one to discover on what principle the committee 
 proceeded in examining the witnesses. Let us suppose that 
 London bridge had had a monopoly of the right of way across 
 the Thames ; that it had been the only bridge at all suited to 
 the public wants ; that instead of other four stone bridges 
 there had been some fifty or sixty small wooden bridges, at 
 once weak, dangerous, and inconvenient ; that a year seldom 
 passed without one or more of these crazy, rickety, wooden 
 bridges being swept away, to the great destruction and con- 
 stant danger of the lives and property of the public. — Let us 
 now suppose that the London bridge monopoly was near ex- 
 piring, and that a committee of the collective wisdom had 
 been appointed, to consider and report whether or not the 
 monopoly should be renewed — what would be thought of such 
 a committee if it had spent months in the examination of
 
 several of the London bridge corporation directors, of the 
 proprietors or lessees of the private wooden bridges, and of 
 the watermen at the various stairs ; and after collecting a 
 mass of evidence, the greater part of which was not only 
 worthless, but being that of parties having their very existence 
 at stake in the continuance of the London bridge monopoly, 
 was painfully mischievous and absurd — they were to consum- 
 mate their labours by a report in terms such as these : Behold 
 how industrious we have been ; read and meditate on the 
 mass of information, de omnibus rebus et quibusdam aliis, we 
 have provided for you ; but while your admiration is excited 
 by our extraordinary diligence, be cautious of forming a hasty 
 judgment, for if " (but) on no one of them is it so complete 
 as to justify us in forming a decided opinion," surely you 
 would never be so presumptuous as to form an opinion for 
 yourselves. Though this would doubtless appear somewhat 
 ridiculous, yet it would come infinitely short of the absurdity 
 and ridicule which attach to the labours of the committee on 
 the Bank of England charter. 
 
 In considering the first general division of the subject, or 
 the exposition of the present constitution of the Bank of 
 England, and of the system on which it conducts its opera- 
 tions, our attention is required, first, to the nature of the 
 monopoly of the Bank of England. 
 
 The exclusive privileges of the Bank of England, it is well 
 known, were conferred on it in 1708, fourteen years after its 
 establishment, by the act 7 Anne, cap. 7 ; by which it is pro- 
 vided, for securing the credit of the Bank of England, " That 
 during the continuance of the said corporation of the governor 
 and company of the Bank of England, it shall not be lawful 
 for any body politic or corporate whatsoever, erected or to be 
 erected, (other than the said governor and company of the 
 Bank of England,) or for any other person whatsoever, united 
 or to be united in covenants or partnership exceeding the 
 number of six persons, in that part of Great Britain called 
 England, to borrow, owe, or take up any sum or sums of
 
 8 
 
 money on their bills or notes payable at demand, or at any 
 less time than six months from the borrowing thereof." These 
 privileges have been slightly modified since, and the following 
 questions and answers by Mr. Norman, one of the directors 
 of the Bank of England, will show exactly what these privi- 
 leges now are : — " (2579) As you are aware of the object for 
 which this committee is assembled, you have no doubt turned 
 your attention to the question of the importance which it may 
 be of to the Bank of England, and to the public in general, 
 that the exclusive privileges now enjoyed by the Bank should 
 be wholly or in part continued beyond the period at which 
 they will expire, — will you have the goodness to state wherein 
 those exclusive privileges now consist ? — I rather think that 
 they consist, first, in the regulation that no firm with more 
 than six partners can issue notes payable on demand in Lon- 
 don, or within sixty -five miles of it; and that no firm in the 
 country, with more than six partners, can draw bills on Lon- 
 don, or make notes payable there, for a less sum than £50; 
 I think those are the only privileges the Bank possesses at 
 present. (2581) Does the Bank possess any exclusive pri- 
 vileges by act of parliament, with respect to their notes being 
 received by the government in payment of revenue ? — Upon 
 consideration, I believe so." 
 
 Such are the exclusive privileges of the Bank of England, 
 and it is evident, from the very words of the act itself, that 
 they were conferred on it solely with a view to the aggrand- 
 izement of the Bank, and with a total disregard of the inte- 
 rests of the public. Had the words of the act not been so 
 explicit as to remove every shadow of doubt on that point, 
 a moment's consideration of the nature of the exclusive pri- 
 vileges, will satisfy any one that they could not be intended 
 for the benefit of the public, for in that case they would have 
 been the very reverse of what they are — restrictions would 
 then have been imposed preventing the establishment of weak 
 banks. Instead of which the act in question effectually pre- 
 vented the establishment of strong banks, which might have
 
 9 
 
 any chance of coming into competition with, or injuring, the 
 Bank of England, however great and extensive the injuries 
 inflicted on the public might be by the establishment of weak 
 banks. 
 
 In order to prove that the exclusive privileges of the Bank 
 have been exceedingly injurious to the public, no better or 
 stronger evidence could be desired than that of the governor 
 of the Bank of England himself, though given, of course, for 
 a totally different purpose. In answer to a question regard- 
 ing the demand for gold during the crisis in the end of the 
 year 1825, Mr. Palmer says, (273) " I consider the demand 
 was almost entirely to uphold the small note circulation. 
 (274) Will you explain why you are of that opinion ? — Be- 
 cause the holders of small notes are the lower orders of the 
 people, whose fears are more extensively acted upon in times 
 of distrust, and there having been no exchange for the one- 
 pound note but the sovereign, the demand upon the bank 
 became inevitable." Passing over the ungracious hit at 
 what the governor, who is evidently a pillar of the Corinth- 
 ian order in his own estimation, is pleased to call the " lower 
 orders," — and as we poor authors generally inhabit garrets, 
 and so in one sense may be said to belong to the higher 
 orders, we cannot perhaps object to it on the score of per- 
 sonality, — it may be remarked, that as country bankers alone 
 issued one-pound notes at that period, and as the exclusive 
 privileges of the Bank of England necessarily rendered coun- 
 try banks so weak that the country could not place confidence 
 in them, it follows that the exclusive privileges of the Bank 
 of England were the cause of the crisis, or panic, or what- 
 ever you please to call it, of 1825, and of the greater part of 
 the misery and ruin which ensued. The process of reasoning 
 by which this conclusion is arrived at is so plain, obvious, and 
 unimpeachable, that we are satisfied no one but a Bank of 
 England proprietor will attempt to dispute it. Why did the 
 lower orders demand gold for the one-pound notes ? — because
 
 10 
 
 they distrusted the country banks. Why did they distrust 
 the country banks? — because they were weak; so weak that 
 ninety commissions of bankrupt issued against country banks 
 in the course of three years (1824, 1825, and 1826). Why 
 were they weak? — because the exclusive privileges of the 
 Bank of England prevented the establishment of any other 
 than weak banks. The exclusive privileges of the Bank of 
 England are thus condemned by the evidence of their ablest 
 champion, the governor of the Bank himself. It is, no doubt, 
 very convenient for the governor to attend only to the imme- 
 diate cause of the panic in 1825, and to try to make the one- 
 pound notes the scape goat for all the delinquencies of the 
 Bank; just as it would be convenient for a murderer to 
 make the pistol with which he, had committed his foul crime 
 the cause of the death of his victim. It is alleged, that some 
 of the aspirants to fashion, ornaments of the higher orders, 
 in their own opinion too no doubt, affect being nigh-sighted ; 
 and, for aught we know, some would-be-fashionables, may 
 esteem it as infallible a mark of belonging to the higher or- 
 ders to affect intellectual nigh-sightedness, or the inability of 
 tracing effects beyond their immediate causes. Be that as it 
 may, however, the exclusive privileges of the Bank of Eng- 
 land are not more repugnant to common sense and right 
 reason in their nature, than in their practical operation they 
 are proved, in the clearest and most satisfactory manner, and 
 by the most unexceptionable evidence, to be grossly injurious 
 to the public. The Bank monopoly standing self-condemned, 
 it is for parliament to pronounce sentence suited to its de- 
 linquencies. Considering the wide-spread ruin and misery 
 which have overwhelmed hundreds of thousands of individuals 
 during the last century by the failure of country bankers, 
 owing to the monopoly of the Bank of England preventing 
 the establishment of strong banks, we say advisedly, and after 
 mature consideration of the subject, that if the bank were to 
 receive retributive justice, so far from its charter being re-
 
 11 
 
 newed, it would be recalled, the corporation itself dissolved, 
 and the proud temple in which it has carried on its unhallowed 
 doings, for nearly a century and a half, razed to the ground. 
 
 Secondly- We must next direct our attention to the ano- 
 malous situation of the Bank in regard to its capital. 
 
 On examining the account, No. 13 of the Appendix to the 
 Report, it will be seen that the Bank debit themselves with 
 £14,553,000 " for the capital," while they credit themselves 
 with £14,686,000 as the " permanent debt due from govern- 
 ment." Mr. Palmer is asked, (No. 44) " What is the cause 
 of the difference in the sum of Bank capital due to proprie- 
 tors, £14,553,000, and the permanent debt due to (by) go- 
 vernment, £14,686,000?— It is a sum of £133,000, which 
 the government owe more than the amount of the capital 
 stock of the Bank proprietors ; it arises out of some settle- 
 ment of a very old date, which I cannot personally explain, 
 but which the accountant can answer." Not only, then, is 
 the whole capital of the Bank, but £133,000 more, lent to 
 government ; and lent in such a way that, though the govern- 
 ment has the power of repaying the money at the expiry of 
 the charter, the Bank has not the right even to ask, far less 
 to enforce, repayment. When the charter was last renewed, 
 it was provided, " By the 39 & 40 Geo. III. c. 28, the said 
 charter was extended or renewed until the expiration of 
 twelve months' notice, to be given after the 1st of August, 
 1833 ; and until payment, by the public to the Bank, of the 
 demands therein mentioned." Now even if the government 
 were to repay the money, it could only be done by borrowing 
 it from other parties, a great part of it having been spent a 
 century ago. The capital of the Bank is, therefore, neither 
 more nor less than the national credit. How exceedingly 
 absurd is it, however, that any body or corporation, pubtic 
 or private, should be allowed to traffic with the credit of the 
 nation for its own private advantage. Yet such is the pre- 
 dicament in which the Bank has long stood, and still stands. 
 Not content with trafficking with the national credit for its
 
 12 
 
 own profit, the governor of the Bank, in his memorandum 
 appended to his evidence, saddles the government with the 
 whole blame of the Bank's mismanagement. He says, " what- 
 ever faults were committed were more the acts of the govern- 
 ment than the Bank, by forcing upon the latter exchequer 
 bills, in opposition to the repeated remonstrances of the direc- 
 tors of the Bank." Here is Bank gratitude with a vengeance ! 
 The government get all the blame, while the Bank graciously 
 condescends to pocket all the profit, of the connexion betwixt 
 them. To those who are deeply read in human nature this 
 will not appear very wonderful, because it almost invariably 
 happens that when unjust privileges are conferred on any 
 body of men, they become arrogant and insolent, and scruple 
 not to take advantage of the first opportunity that presents 
 itself of kicking those who were so foolish as to bestow the 
 unjust privileges on them. This comes, too, of illicit con- 
 nexion. When there is any talk of breaking off the connexion, 
 however dishonourable it may have been to both parties and 
 injurious to one of them, the frail fair one has generally a 
 volley of abuse and vituperation ready to pour forth, if it 
 should be even distantly and delicately hinted that she is not 
 perfection personified. The Bank now says she remonstrated 
 against the naughty doings of the government ; but did she 
 repulse the offers with disdain, or refuse to put the profits of 
 the transaction in her pocket ? Not at all ; that was an effort 
 her virtue was not equal to. She no doubt found it conve- 
 nient, like many of her frail sisters, to affect a little " coy 
 reluctant amorous delay," though she was in truth " nothing 
 loth ;" but we defy her to point out one occasion on which 
 her virtue triumphed over her cupidity, or in which she suc- 
 cessfully repulsed the importunities of the minister of the 
 day. The object of her remonstrances, then, could only be 
 to enhance the consideration for which she granted her fa- 
 vours ; and it must be confessed that she appears to have 
 few equals in the art of disposing of her favours to the best 
 advantage.
 
 13 
 
 But besides trafficking with the credit of the nation for its 
 own private profit, the Bank, by lending its capital to govern- 
 ment in the manner pointed out, has tied up its hands in such 
 a way that it can only effect the most important and indispen- 
 sable of its operations, that of providing an adequate supply 
 of the precious metals, by great contractions of the currency, 
 occasioning, as a matter of course, the ruin of thousands. 
 Mr. Burt is asked, (No. 4595) " Were the government to 
 establish a national bank, would it require any capital at all 
 to conduct it I — That would depend on whether it paid its 
 notes in gold or not." The reason why a national bank would 
 require a capital if it paid its notes in gold is not stated ; but 
 it must be obvious to every one that the reason is, that with- 
 out such a capital it would have no means of procuring a 
 supply of gold. Yet this is exactly the situation of the Bank 
 of England at the present moment, as appears from the fol- 
 lowing evidence of Mr. Norman, one of the Bank directors. 
 (No. 2821) " The real capital of the Bank, then, consists 
 merely in what is called its rest ? — Certainly, the working 
 capital is merely the rest ; but there is also dead stock to a 
 considerable extent. (2822) And all the other funds employ- 
 ed by the Bank are funds belonging to others, which it holds 
 under different heads of deposit, and paper issue? — Yes." 
 And, it might have been added, the whole of which it is 
 liable to be called on to pay at demand. Now that the paltry 
 sum of between two and three millions, constituting what is 
 called the " rest," is utterly inadequate to enable the Bank 
 to procure a sufficient supply of the precious metals, is so 
 self-evident that it were idle to attempt to prove it. Indeed, 
 the iuconveniencies of the present anomalous situation of the 
 Bank, in this respect are admitted to the fullest extent in 
 the following extract from the evidence of the governor. 
 (No. 808) " There is no order that could be made which 
 would enable the Bank to obtain a permanent increase to its 
 stock of gold, otherwise than through a reduction in the 
 general prices of the country, unless the Bank were possessed
 
 14 
 
 of a stock of silver bullion which they might exchange for 
 gold." Now, with great submission, we maintain, that the 
 possession of an adequate capital, directly under their own 
 control, would enable the Bank to procure a sufficient supply 
 of gold quite as well as it does enable other capitalists to 
 do so. 
 
 If the inconveniences attending this state of things affected 
 only, or even chiefly, the Bank of England itself, it would be 
 unworthy of any more particular notice ; but as the Bank 
 contrives in every case to make the public the principal suf- 
 ferers, and to protect itself, it becomes necessary to expose 
 the vicious system of proceeding to every eye, " as to be 
 hated it needs but to be seen." Let us hear what account 
 Mr. Palmer, the governor of the Bank — who, from the reluct- 
 ant hauteur with which his evidence is given, evidently stated 
 nothing which he could avoid that could militate against the 
 Bank, — gives of the direful effects of such a system on the 
 public. (No. 678) " What is the process by which the Bank 
 would calculate upon rectifying the exchange, by means of a 
 reduction of its issues? — The first operation is to increase the 
 value of money ; with the increased value of money there is 
 less facility obtained by the commercial public in the discount 
 of their paper; that naturally tends to limit transactions, and 
 to the reduction of prices ; the reduction of prices will so far 
 alter our situation with foreign countries, that it will be no 
 longer an object to import, but the advantage will rather be 
 upon the export, the gold and silver will then come back into 
 the country, and rectify the contraction that previously exist- 
 ed. (679) Then the object of reducing the circulation is the 
 reduction of prices ? — It is a natural consequence of an un- 
 favourable exchange. (680) And that reduction is the means 
 of bringing back the gold, and placing the Bank in a position 
 of security? — Precisely so." Hear this, ye poor ruined ma- 
 nufacturers ! You no doubt imagined, when you were forced 
 to sell your goods at a ruinous sacrifice, owing to the scarcity 
 of money, occasioned by the contraction of the circulation,
 
 15 
 
 that it was some great and unavoidable necessity to which 
 you succumbed, and had probably little idea of the high des- 
 tiny which you fulfilled, that of being victims offered on the 
 altar of the great Moloch of Threadneedle-street. Surely 
 the satisfaction of having been the means of placing " the 
 Bank in a position of security" cannot fail to reconcile you 
 to, or rather to make you glory in, the martyrdom which you 
 suffered. Read and meditate on this, ye half-starved artizans, 
 whose pale emaciated cheeks bespeak perpetual toil and wages 
 depressed below starvation point! Ye, too, have had the 
 high honour of contributing, by your miserable privations, to 
 " place the Bank in a position of security," in spite of its 
 carrying on its business without a capital. Up, then, with 
 your greasy caps in the air, and exclaim, " Great is the Bank 
 of England ! may she live for ever in the uninterrupted en- 
 joyment of her exclusive privileges, and may we still be 
 allowed to enjoy the great honour of being starved, that she 
 may be " placed in a position of security !" 
 
 We are somewhat surprised to observe that the English 
 country bankers view what they consider the overwhelming- 
 power of the Bank of England with considerable alarm. Mr. 
 Burt, who is connected with a joint stock bank at Manches- 
 ter, is asked — (No. 4594) " If the Bank of England has all 
 its capital lent to government, has it any means of overwhelm- 
 ing other banks with capital which it has no power to use?" 
 To which he replies, " It gets credit in consequence of its 
 large capital." Now, as credit is generally, and certainly 
 ought to be in all cases, measured by the means which 
 the party getting it has of meeting the engagements which 
 it enables him to enter into ; and as the Bank of England, 
 from its anomalous situation in regard to its capital, has in 
 reality the least means of meeting its engagements of any 
 bank in existence, in proportion to the extent of its liabili- 
 ties, its credit, and consequently its power, is altogether a 
 delusion. So far from the country banks being at the mercy 
 of the Bank of England, they might crush it whenever they
 
 chose to combine amongst themselves for that purpose. The 
 sovereignty of the Bank of England is founded on what 
 all governments are acknowledged to be founded — public 
 opinion. Let public opinion be founded on ignorance, and 
 there a despotism will spring up ; but with the dispersion of 
 the ignorance follows inevitably the downfall of the despot- 
 ism. So the Bank^f England, having hitherto been able to 
 maintain gross ignorance in the public mind regarding its 
 power, has been able to rule with despotic sway in the com- 
 mercial world of this country for the better part of a century 
 and a half; but the facts contained in these Minutes of Evi- 
 dence are sufficient to satisfy the most sceptical of the delu- 
 siveness of the power which had hitherto been attributed to 
 it, and the downfall of its tyranny is as inevitably near at. 
 hand. It is impossible to believe that it can be otherwise 
 without denying the truth of the philosophical maxim, that 
 like causes produce like effects. 
 
 Third. The third point for consideration under this general 
 division of the subject, is the circulation. This naturally 
 divides itself into two parts: first, the amount of the circu- 
 lation ; and, secondly, the securities on which the circulation 
 is based. 
 
 1st. The amount of the circulation. 
 
 From the account No. 5, of the Appendix to the Report 
 it will be seen, that the amount of the circulation at 7th of 
 August, 1832, is stated to be £18,819,000, and the deposits 
 of the same date to be £11,431,000; making together the 
 sum of £30,250,000. And on examining the account No. 
 12 of the Appendix to the Report, it will be found, that the 
 amount paid by the Bank as an exemption from stamping 
 bank-notes and bills, for the year ending 5th of April, 1832, 
 upon £20,000,000 sterling, is £70,000. The following ques- 
 tion, and answer by the governor of the Bank, will explain 
 the principle upon which the Bank compounds for the stamp 
 duties on its circulation. (525) " Upon what principle does 
 the Bank of England pay stamp duties upon its circulation ?
 
 17 
 
 —Seven shillings per cent upon the average of three years." 
 Country banks also compound at the same rate. It is quite 
 evident from these two accounts taken together, then, that 
 the Bank directors do not consider the deposits as any part 
 of the circulation. It must be confessed, however, that the 
 reason for so doing is fur from obvious, and that to an ordi- 
 nary mortal it appears something very like a distinction with- 
 out a difference. Indeed, we suspect it is a discovery which 
 would not have been easily made by any less gifted than the 
 eminent individuals who congregate in the Bank parlour; 
 whose heads, it may be, are so full of genius that there is 
 scarcely any room for that useful, but perhaps somewhat 
 vulgar, endowment called common sense. 
 
 We have no intention of usurping the functions of his 
 majesty's attorney-general, by discussing the question of the 
 amount of the circulation as between the government and the 
 Bank of England. It strikes us, however, that, considering 
 the peculiar nature of the Bank of England circulation, — dif- 
 fering essentially from that of every other bank in this respect, 
 that every note which it issues, though deposited in its own 
 coffers again, yields it a profit, without deduction, (the Bank 
 allowing no interest on deposits,) until it is cancelled and 
 paid, — the learned gentleman might drive the Bank directors 
 between the horns of a dilemma, and perhaps recover such a 
 sum as, in these days of declining revenue and increased ex- 
 penditure, might be worth the while of an impoverished ex- 
 chequer to look after. This is a matter, however, which 
 belongs exclusively to the attorney-general to determine up- 
 on, and we shall, therefore, concede that the amount of the 
 circulation of Bank of England notes is correctly estimated, 
 by the exclusion of deposits, as a mere fiscal arrangement 
 between the government and the Bank. 
 
 But the Bank directors are not content with excluding the 
 deposits, in estimating the amount of their circulation as be- 
 tween the government and them, but apply the same rule in 
 estimating its amount as regards the public. This, however, 
 
 c
 
 18 
 
 is a device which, though it may impose by its speciousness 
 on those who will not take the trouble of examining it nar- 
 rowly, can deceive no one who scrutinizes it closely, as its 
 flimsiness will then be pervious to every eye. The intention 
 of it obviously is to exculpate the Bank from the charge of 
 causing any great fluctuations in the currency. When any 
 such charge is made they refer triumphantly to this part of 
 their liabilities, which they dignify exclusively with the title 
 of circulation, and by contriving to keep it always nearly at 
 the same amount, they vainly imagine they do all that is in- 
 cumbent on them to prove their utter innocence. They shut 
 their own eyes to the great fluctuations in the amount of their 
 other liabilities, and suppose that others cannot see them 
 either ; resembling children who put their hands before their 
 eyes, and, because they do not see others, sillily think that 
 others cannot see them. 
 
 On referring again to the account No. 5 of the Appendix 
 to the Report, we find the securities at 7th of August, 1832, 
 stated thus : 
 
 Securities— Public £20,828,000 f , K Q76 QQ0 
 
 \ 25, J 
 
 • 7,] 
 
 Together 33,130,000 
 
 Private 5,148,000 
 
 Bullion 7,154,000 
 
 Now on the 29th of February, 1832, little more 
 than five months previously, the circulation is 
 stated to amount to £ 18,051,7 10 
 
 And the deposits at 8,937,170 
 
 26,988,880 
 
 While the securities at the same date are stated thus : 
 
 Securities— Public £ 18,497,448 } 24 3g3 4gQ 
 
 Private 5,836,042) 
 
 Bullion 5,293,150 
 
 29,626,640
 
 19 
 
 Let any one compare these two accounts, and he will find 
 that there is an increase of upwards of three millions and a 
 half in the amount of the securities and bullion held by the 
 Bank at 7th of August, 1832, over those held on the 29th 
 of February, 1832, while there is an increase of scarcely 
 800,000/. on the amount of what the Bank directors are 
 pleased to call the circulation at 7th of August, 1832, over 
 that on 29th of February, 1832. Now as the amount of the 
 securities and bullion held by the Bank shows the amount of 
 bank notes issued at any time, we apprehend that no man of 
 common sense — none, in fact, but the men of genius of the 
 Bank parlour — will contend, that money must not have been 
 much more plentiful in August last than it was in February. 
 It is true a great part of the increased issues found their 
 way to the Bank coffers in the shape of deposits, but that 
 only proves that the increased issues were unnecessary and 
 uncalled for ; not that they were not made, or that by being 
 continued, as it is understood they have been since to a very 
 considerable amount, they are not likely to lead to disastrous 
 results, both to the country and to the Bank itself. 
 
 As the Bank of England gives no credit — and those who 
 give no credit should scorn to take it, and as it has all its 
 capital lent to government, by deducting the rest from the 
 amount of securities and bullion, the amount of bank notes in 
 circulation will be obtained ; or, if the directors quarrel with 
 the word circulation, they surely will not deny that it is the 
 amount of bank notes which the public have it in their power 
 to demand payment of from the Bank ; or the amount of bank 
 notes for the use of which the public pay interest to the Bank. 
 Now this, it is contended, so far as the public are concerned, 
 is the only criterion by which to judge of the scarcity or 
 plenty of money, — in other words, of the amount of the 
 circulation. 
 
 To show the utter absurdity of this specious fallacy, or 
 distinction without a difference, attempted to be established 
 by these ingenious gentlemen, the Bank directors, with which 
 
 c 2
 
 20 
 
 they hoped to blind the eyes of the public as effectually as 
 they had obscured their own vision by placing a bandage 
 before their eyes, we shall endeavour to illustrate the matter 
 by a familiar example. Let us suppose a person sells stock 
 to the amount of 500,000 /. sterling, in payment of which he 
 receives Bank of England notes, and that he deposits the 
 whole in the Bank of England. According to the Bank 
 directors, in this case, the 500,000 /. is taken out of the 
 circulation. On the other hand, if the money is deposited 
 with Coutts and Co., or any other private banker, according 
 to the rule established by the Bank directors, it continues a 
 part of the circulation. Now in both cases the depositor is 
 entitled to sign a cheque for the amount the next day, and 
 draw the whole out. Again, let it be supposed that instead 
 of paying it in to his account, either with the Bank of En- 
 gland or with a private banker, being what is called a sure 
 man, he puts the notes into his strong box at his banker's, 
 who know not whether he has placed 5000/. or 500,000/. in 
 it ; in this case, which is by no means so very uncommon as 
 some persoes may imagine, the money, according to the Bank 
 directors, continues a part of the circulation ; though it is in 
 reality, for all purposes of use, so long as it continues there, 
 in the same state as if the notes had never been engraved. 
 Ten such capitalists, by combining, and each placing a similar 
 sum in his strong box, might take 5,000,000/. out of the cir- 
 culation, which would thus be inconveniently, nay ruinously, 
 contracted ; while the Solomons of the Bank parlour could 
 point to what they call the circulation, and prove that it 
 had rather increased than diminished. 
 
 We must proceed now to advert shortly to the amount of 
 the circulation compared with the amount of the bullion held 
 by the Bank, and the amount of its capital. In scrutinizing 
 this point closely, we discover little foundation for the high 
 eulogium on the Bank contained in the Report. " Of the 
 ample means of the Bank of England to meet all its engage- 
 ments, and of the high credit which it has always possessed,
 
 21 
 
 and which it continues to deserve, no man who reads the evi- 
 dence taken before this committee can for a moment doubt." 
 That the Bank is solvent, and able to meet all its engage- 
 ments, provided the government is able to meet its engage- 
 ments to the Bank without the assistance of the Bank, — a 
 condition, however, of which we are far from being certain, — ■ 
 no one can deny; but that after paying all its liabilities, and 
 repaying the Bank proprietors their original subscriptions, 
 and defraying the expenses of winding up their affairs, there 
 would be sixpence in the pound over and above, is, we fear, 
 nearly as undeniable. In fact, from its peculiar situation, 
 both in regard to its capital and in regard to several of its 
 investments — amongst others the dead weight, it has difficul- 
 ties, which no other bank has, to contend with in a final 
 arrangement or winding up of its affairs, should such a thing 
 become necessary, and which it will find, we fear, to be 
 nearly insurmountable. In regard to the amount of bullion 
 held by the Bank of England in proportion to its liabilities, 
 these Minutes of Evidence contain proof of the stability of 
 the Bank of France, which not only place its credit far be- 
 yond suspicion, but place that of the Bank of England, by 
 contrast, if not in a precarious state, certainly in any thing 
 but a favourable one. In Mr. Rothschild's evidence the 
 following question and answer are worthy of the serious con- 
 sideration of those who are inclined to vaunt of the immense 
 resources of the Bank of England. (No. 4910) " Do you 
 know what amount of specie is kept by the Bank of France 
 in proportion to its liabilities 1 — I believe that the Bank of 
 France has two hundred and fifty millions in silver; I think 
 they have outstanding a third part of this sum in bank notes, 
 — that is, supposing they have six millions sterling in specie 
 in their coffers, they have two millions sterling of paper in 
 circulation." Now when it is considered that the Bank of 
 England had, on the 29th of February last, little more than 
 five millions of bullion in its coffers, while its circulation, 
 even according to the Bank directors' own admission, amount-
 
 ed to above eighteen millions, — while according to the com- 
 mon sense view of the matter it amounted to little short of 
 twenty-seven millions, — it must be confessed that the com- 
 parison is any thing but advantageous to the Bank of England. 
 The Bank of France has sixty shillings in the pound in its 
 coffers in specie to meet its circulation, while the Bank of 
 England had, on the 29th of February, 1832, according to 
 the Bank directors themselves, only about six shillings in the 
 pound ; and according to others, not quite four shillings in the 
 pound ; yet the " ample means" of the Bank of England are 
 vaunted in no measured terms. 
 
 Again, if we compare the amount of the circulation and 
 capital of the Bank of England with the amount of the cir- 
 culation and capital of the Scotch banks, we shall find that 
 the comparison is nearly as disadvantageous to the Bank 
 of England. The five principal joint stock banks in Scot- 
 land, all of which have their head offices in Edinburgh, have 
 amongst them capital to the amount of 4,600,000?. 
 
 The Royal Bank having a capital of £2,000,000 
 
 The Bank of Scotland 1,000,000 
 
 The British Linen Company 500,000 
 
 The Commercial Banking Company 600,000 
 The National Bank ■ 500,000 
 
 4,600,000 
 
 These are the paid up capitals, not the mere nominal capi- 
 tals ; of which the last alone has a nominal capital of five 
 millions, but of which there is only 10 per cent, paid up. 
 We may very safely assume, that all the other banks in Scot- 
 land, joint stock and private together, have an additional 
 aggregate capital of 1,400,000/. at least; in fact, we are 
 satisfied this is greatly under the mark. However, that 
 there may be no reason to accuse us of exaggeration, we 
 shall take it at this amount. The aggregate amount of the 
 capitals of all the Scotch banks will then be 6,000,000/. 
 Now in addition to their capital they all have sinking funds,
 
 23 
 
 or undivided profits, to a large amount; some of them, it is 
 understood, to no less an amount than 50 per cent, of their 
 capital. In assuming the average of these funds at 25 per 
 cent, we are satisfied that we err greatly on the safe side, and 
 that they considerably exceed that amount. Of capital and 
 undivided profits together, then, there is 7,500,000/. while 
 the circulation of the whole Scotch banks is understood not 
 to exceed 3,000,000/. The Scotch banks have thus fifty 
 shillings in the pound of capital, and undivided profits — the 
 whole of which are directly under their own control, and can 
 be converted into cash whenever they choose, and to any 
 extent they may require, — to answer for their circulation. 
 This too, be it observed, is independent of the securities on 
 which their notes are issued ; for neither the Scotch banks, 
 nor the Bank of France, issue their notes without securities 
 any more than the Bank of England does. Need any one 
 wonder that the Scotch banks have enjoyed a confidence, 
 even in the most troublous times, to which the Bank of Eng- 
 land, and all its crazy ricketty sisters in England, who are so 
 subject to attacks of the falling sickness, have long been strang- 
 ers. Frightful as the mass of misery is which has resulted 
 from the vicious system of banking in England, our wonder is 
 rather, that more evil has not been produced, than that it has 
 been so great ; for if the wit of man had been tasked to its 
 utmost to discover the worst and most injurious system, it is 
 impossible to believe that it could have hit on any thing to 
 exceed it. 
 
 2ndly, The nature of the securities on which the circula- 
 tion is based is the next point to be considered ; and as in this 
 consists what may be considered the radical defect of the 
 Bank of England, our readers' serious attention is requested 
 to it. 
 
 Tt will be seen from the debtor and creditor account of the 
 Bank of England, (No. 13 of the Appendix to the Report,) 
 that the securities held by the Bank at 29th of February, 
 1832, were—
 
 24 
 
 Advances on government securities; viz. exche- 
 quer bills on the growing produce of the con- 
 solidated fund, in the quarter ending 5th of 
 April, 1832 £3,428,340"! 
 
 Ditto, 5th of July, 1832 697,000 I . . . , 
 
 Exchequer hills on supplies, 1825- . 7,600 [ 4 « ld4 ' y4U 
 
 Ditto, for 10,500,000/. for 1825 • • 2000J 
 
 By the advances to the trustees appointed by the 
 act 3 Geo. IV. c. 51, towards the purchase of 
 an annuity of 583,740/. for 44 years, from 
 5th of April, 1 823 10,897,880 
 
 By other credits ; viz. exchequer bills purchas- 
 ed £2,700,0001 . aA ftn 
 
 Stock purchased 764,600/ d > 4b4 ^ uu 
 
 Amount of advances on government securities »• 18,497,420 
 
 While the other advances directly to the public amounted 
 only to the sum of 5,702,260/. on securities; 2,951,970/. 
 were on bills and notes discounted; city bonds, 500,000/. 
 loans on mortgage, 1,452,100/.; London Dock Company, 
 227,500/.; on security and various articles, 570,090/.; and 
 the further sum of 5,293,150/. on coin and bullion. From 
 this latter sum, however, the rest, or surplus in favour of the 
 Bank of England, falls to be deducted, being at that date 
 2,637,760/., which subtracted from 5,293,150/. leaves- 
 Advances on coin and bullion £2,655,390 
 
 Advances on private securities 5,702,260 
 
 Amount of the whole advances to the public di- 
 rectly on securities and bullion 8,357,650 
 
 Amount of advances on government securities • • 18,497,420 
 
 Amount of Bank of England notes in circulation 
 at 29th of February, 1832, on government and 
 private securities of every description 26,855,070 
 
 It hence appears, that on the 29th of February, 1832, out 
 of nearly twenty-seven millions of bank notes in circulation, 
 or issued to the public, very nearly eighteen millions and a 
 half were advanced on government securities; upwards of 
 two millions and a half indirectly to the public on city bonds, 
 mortgages, &c; and only the insignificant sum of 5,607,360/,
 
 25 
 
 directly to the public in discounts and in bullion. Yet this the 
 governor of the Bank considers the perfection of the present 
 system, as it enables them to keep the circulation of bank notes 
 always nearly at the same amount, Now from the very 
 nature of money, which is merely an instrument of exchange, 
 this is rather an evil than a good ; because at one period 
 twenty millions may be too little, and at another period fif- 
 teen millions may be too much, for all the purposes of com- 
 merce. This vaunted advantage, then, vanishes into thin 
 air, and places the worthy governor in the predicament of the 
 lover, who doats on his mistress's squint as the perfection of 
 beauty, while it is a deformity to every other eye. Let the 
 Bank directors profess what anxiety they may in regard to 
 the public accommodation, in regulating the amount of their 
 issues, it is to be feared they will get little credit for being- 
 guided by any other consideration than the amount of profit 
 which they can realize with safety. In the eyes of worldly 
 men, indeed, they would be esteemed fools if they acted other- 
 wise. Hence, whatever they may profess to the contrary, 
 it is generally believed that the inquiry amongst the Bank 
 directors is, not how many notes are required by the trading 
 community for the purposes of commerce, but how many notes 
 do they require to keep in circulation to enable them to pay 
 the usual dividend. 
 
 Let us examine the subject, however, a little more closely, 
 and somewhat more in detail, for the more we inquire into it 
 the more clearly will its absurdity be seen. That we may 
 not be accused of misrepresentation we shall endeavour to 
 describe it as nearly as possible in the very words of the Bank 
 directors themselves. The governor states — (No. 1S7) " By 
 what means does the Bank of England keep its notes in cir- 
 culation I — By the securities they hold or by the bullion they 
 possess. (188) How do they provide for the continual issue 
 of paper? — By purchase in the market when any part of that 
 which they may hold is redeemed or paid off. (85) What is 
 the reason why you think it necessary to keep the securities
 
 at tbe same amount? — Because the public are thereby enabled, 
 without any forced action on the part of the Bank, to act for 
 themselves in returning notes for bullion for exportation, 
 when the exchanges are unfavourable. If the exchanges 
 continue favourable for any great length of time, then the 
 influx of treasure will command an increased issue of paper, 
 and which may derange the proportions ; but it does not fol- 
 low that the Bank ought upon that account immediately to 
 extend its issues upon securities. When, however, it is 
 clearly ascertained to be desirable that part of the excess of 
 bullion so received should be returned to the continent, then 
 it may be necessary for the Bank to re-assume its proportion 
 by transferring part of the bullion into securities, still pre- 
 serving the proportions of one-third and two-thirds." 
 
 Such is the great champion of the bank's own account of the 
 manner in which the present system works ; and that he re- 
 presented every thing in the most favourable light for the 
 Bank is obvious from this, that the proprietors were so well 
 satisfied with his exertions, that, if our memory does not fail 
 us, it was proposed, not only to raise a statue of gold to him, 
 but, if rumour may be relied on, to let him wear the Bank 
 crown, — we beg pardon, Bank directors know better than 
 to make the head the distinguishing part, they fix on a more 
 honourable part to distinguish themselves by — no other in- 
 deed than the seat of honour itself, — we should have said, to 
 let him occupy the bank chair for life. On those whose eyes 
 are not blinded, like those of the bank proprietors, by the 
 thick and impervious film of self-inlerest, the foregoing ac- 
 count will, we doubt not, have a very different effect. It 
 will appear to them that the fable of the poor wretch who 
 was doomed to roll a stone to the top of a mountain, which 
 he had no sooner done than it rolled down again, is verified 
 by the directors of the Bank of England, who first contract 
 their issues that gold may flow in, and then immediately 
 extend them that it may flow out again. One would think 
 that the more natural and direct mode of getting rid of their
 
 27 
 
 surplus bullion would be to export it themselves. This, how- 
 ever, would perhaps be a profitless mode of acting, and as 
 they are never guilty of forgetting the main chance, they 
 extend their issues by increasing their securities, and of 
 course their own revenue at the same time, till the circula- 
 tion is in excess, and prices rise, the exchanges fall, and gold 
 is exported ; then they give the tourniquet a double screw, 
 and suddenly contract the circulation ; by which, it is true, 
 some thousands of poor traders are ruined, who, having en- 
 tered into engagements when money was plentiful, are un- 
 able to meet them when it is scarce and not to be had ; but 
 which is also " the means of bringing back the gold," and 
 placing the Bank " in a position of security." 
 
 Let us now turn from the description given by the gover- 
 nor, of the manner in which the present system works, to the 
 reasons which he advances in support of its continuance. 
 " The reasons which appear to me to exist against the regu- 
 lation of the amount of issues through commercial discounts 
 in London, arise from the magnitude of the deposits in the 
 possession of the bankers of London, and other individuals, 
 seeking employment, with which the Bank ought not, in my 
 opinion, to interfere." Now while we should perhaps be 
 thankful to get any thing in the shape of a reason from so 
 great a personage as a bank director, and while we admit 
 that the very rarity of such a thing should induce us to treat 
 their reasons with more than usual respect, — for the bank 
 directors, though often pressed for reasons, seem to be of 
 honest Jack FalstafTs opinion, that " though reasons were 
 as plenty as blackberries (bank-notes?) they will not give a 
 reason on compulsion, not they !" — still, it must be confessed, 
 that this is rather carrying the joke too far. Ladies are said 
 to have a plenary indulgence for all sins against spelling and 
 grammar, and not impossibly bank directors may have a simi- 
 lar indulgence in regard to sound reasoning. At all events, 
 it is reasoning in a circle with a vengeance ! They first cre- 
 ate the evil of which they complain, by issuing immense
 
 quantities of bank notes on government securities, which 
 must inevitably be deposited somewhere ; and then they argue 
 that it would not do for them to interfere, because " of the 
 magnitude of the deposits in the possession of the bankers of 
 London." 
 
 The governor adds, that " if the plan hitherto acted upon 
 answers the public objects, I can see no benefit in a change." 
 It is an old observation, that there is much virtue in an " if;" 
 but others have as good a right to the benefit of this wonderful 
 little word as the governor, and are entitled to say, that " if 
 the plan hitherto acted upon does not answer the public ob- 
 jects, there will be much benefit in a change." Now it is 
 contended, that the bank directors are bound to prove, and 
 are not entitled to assume, that the plan hitherto acted upon 
 has answered the public objects. Had it answered the pub- 
 lic objects, it may be asked, would it not have met with the 
 public approbation? and would not the renewal of the charter 
 in that case have been desired by the public, in place of being 
 viewed with fear and alarm by the great majority of them? 
 Surely the bank directors will not maintain that they, and 
 not the public, are the judges of its having answered the 
 public objects. "Where then are the petitions in favour of 
 the renewal of the charter? We have not heard of the ex- 
 istence of more than one solitary petition of the kind, and 
 that the petition of the proprietors of Bank of England stock, 
 whose objects there is little doubt that the plan hitherto 
 acted upon has answered far beyond their most sanguine ex- 
 pectations. Even this petition, however, has never found its 
 way to the table of the House of Commons, but, though sign- 
 ed and ready for presentation nearly a twelvemonth ago, has 
 been permitted to lie in inglorious obscurity in one of the 
 bank drawers. Anything approaching to a proof of the pre- 
 sent system having answered the public objects, the bank 
 directors do not so much as attempt to bring forward ; and 
 for good and sufficient reasons, for they might as well attempt 
 to prove that it would " answer the public objects" to exclude
 
 29 
 
 the light of the sun, and to burn tallow candles by day as well 
 as by night. There" can be little doubt that if they had been 
 directors of the " tallow candle company," having the exclu- 
 sive privilege of manufacturing candles, they would have 
 attempted to prove, and would no doubt have proved to their 
 own satisfaction, the benefit of their monopoly, by some pal- 
 try, contemptible process of — it is difficult to know what 
 exactly to call it, as it cannot be dignified with the name of 
 reasoning, or even sophistry, (for your sophist is generally 
 possessed of some ingenuity, a sin which the worthy directors 
 have not to answer for,) — twaddle is the only word which 
 seems at all appropriate, as that by which they deceive them- 
 selves, in supposing that the exclusive privileges of the Bank 
 of England are beneficial to the public. 
 
 Having disposed of the statements and arguments of the 
 bank champion, we hope to our readers' satisfaction, we must 
 now proceed to examine and combat those of Mr. Tooke, who 
 we are sorry to find lends the sanction of his great authority 
 to the continuance of the present system. The following ex- 
 tracts will put our readers in full possession of Mr. Tooke's 
 opinions on this point, in his own words : (3960) " Do you 
 conceive that, throughout the whole of this kingdom, it would 
 be possible for the directors of the Bank of England to afford 
 that accommodation to the public, with the same degree of 
 profit and the same degree of judgment, with which it is now 
 afforded by persons perfectly well acquainted with the situa- 
 tion and habits of the country, and the proper mode of ap- 
 plying it to purposes the most productive of advantage to 
 themselves, and consequently to the country ? — I should object 
 upon principle to an issue of paper money, whether in the 
 country or in the metropolis, through the medium of discounts 
 or accommodation to individuals; and for this reason, that 
 the demand for accommodation in the way of discount or loan 
 by individuals, is very often, if not generally, in exactly an 
 inverse ratio to the demands of the circulation ; so that the 
 time when there is the greatest inducement among the cus-
 
 tomers of country banks or of the Bank of England to borrow, 
 is very often precisely that period at which it is most essen- 
 tial to contract the circulation ; therefore there is very often 
 an excess of issue through the medium of private credit, 
 which would not occur if the issues were regulated upon the 
 principle of substitution of paper for what otherwise would 
 have been the circulation of gold. I believe the question 
 assumes, that the accommodation in the way of loan, to per- 
 sons in the country having sufficient security, and proposing 
 a beneficial employment of the capital, would not be afforded 
 unless it was through the medium of the issue of paper money 
 by the country bankers. Now I conceive that the functions 
 of a banker in the distribution of capital, that is, in accom- 
 modating individuals who require advances upon adequate 
 securities, may be afforded out of his deposits, upon banking 
 principles, distinct from the issue of paper money. (3960) 
 Could he afford the same degree of accommodation if his 
 circulation were taken from him, that he can under present 
 circumstances 1 — I do not see why he might not ; the loan is 
 ultimately out of capital. If by an issue of paper he lends 
 more than he could do without an issue of paper, he lends 
 only that capital which would otherwise have been lent 
 through some other channel to some other person, perhaps 
 equally or more deserving." It is evident from this extract 
 that Mr. Tooke misunderstands the nature of paper money 
 altogether. Paper money, it is universally admitted, is not 
 capital, it is only credit ; which answers the purposes of capi- 
 tal no doubt, but is not itself capital, any more than gas-light, 
 which is no bad substitute for day-light to a certain extent, 
 is sun-light. The reserve, which the banker, issuing his own 
 notes, keeps to answer his notes outstanding, is no doubt 
 capital ; and to this extent a loan of paper money may perhaps 
 be said to be a loan of capital. Suppose a banker, for in- 
 stance, issues notes to the amount of 100,000 /. and reserves 
 10,000/. in gold to answer for these notes, the extent of 
 capital which he lends is 10,000/. while the credit which he
 
 31 
 
 lends is 90,000/. Will Mr. Tooke hazard the assertion that 
 the 20,000,000/. or rather the 30,000,000/. of Bank of Eng- 
 land notes in circulation are a loan of capital — the Bank 
 having a real working capital of little more than 2,500,000/. 
 its capital stock of 14,(?8G,000/. having been all lent to the 
 government, and spent by the government, a considerable 
 part of it upwards of a century ago ? We suspect he will 
 not ; but will admit that, as against the circulation of the 
 Bank of England it proves nothing ; and it assuredly proves 
 as little against that of the country bankers. Let us hear 
 what the country bankers themselves say on the subject. 
 Mr. Stuckey says, (1182) " Do you think that banks having 
 a circulation are able to afford greater facilities than banks 
 having no circulation of their own? — Most certainly." Mr. 
 Beckett is of the same opinion: (1299) " Do you think the 
 bankers of Leeds, if they had not been issuers of notes gene- 
 rally, would have given the same extent of accommodation 
 to the trade of Leeds as they have done ? — I think not." Mr. 
 Forster also coincides in this opinion : (1573) " If the circu- 
 lation had been taken away you would have given less assist- 
 ance to the trade of your district? — Certainly." Mr. Wilkins 
 puts the matter in a still clearer light in the following extract : 
 (1614) " The capital created by the one-pound notes enabled 
 the banker with more facility to give accommodation ; it would 
 not be worth my while to increase my capital by drawing 
 money out from the funds, or from mortgages, to lend it to 
 those persons at five per cent, incurring a heavy risk." He 
 adds, (1791) " Would not your ceasing to issue any notes at 
 all still more contract your power to give accommodation ? — 
 It certainly would to that extent." By " to that extent," 
 we presume, Mr. Wilkins means, to the extent of their cir- 
 culation. Mr. Tooke must undoubtedly be highly enamoured 
 of his own theory, if he can resist the united opinions of so 
 many bankers practically acquainted with the subject, in a 
 manner which he can certainly lay no pretensions to; and 
 not merely stating it as their opinion but as their practice.
 
 32 
 
 Supported by the opinions of so many persons practically 
 acquainted with the matter in its minutest details, we main- 
 tain, then, in opposition to Mr. Tooke, that so far from a 
 banker, by an issue of paper, lending- only that capital which 
 would otherwise have been lent through some other channel 
 to some other person perhaps equally or more deserving, he 
 in fact lends that credit which answers instead of capital, but 
 which, if he did not issue paper would not be in existence at 
 all, and could not therefore be lent, even though that most 
 deserving of mortal men, Mr. Thomas Tooke, merchant in 
 London, were willing to borrow it. It is no doubt true, that 
 if the country bankers attempted by issuing notes, not only to 
 lend more than they would do without an issue of paper, but 
 more than the wants of the country required, then their notes 
 would come back upon them for payment, and the issuers 
 would have to provide for the payment of these notes out of 
 their capitals, and to this extent it would be a loan of capital; 
 but that is quite a different matter, and only proves that 
 there is fortunately a check to the over issues of country 
 bankers, not that their issues properly regulated do not enable 
 them to " lend more than they could do without an issue of 
 paper." 
 
 We are aware that Mr. Tooke may endeavour still to 
 maintain that these notes only displace capital, which would 
 have been lent had these notes never existed. Now we are 
 not disposed to dispute that this is true to a certain extent, 
 but we contend that to prove his proposition, that paper 
 issues do not " add, at any given moment, to the previously 
 existing capital" of a country, he ought to show that 
 bank-notes not only displace but actually destroy an equal 
 amount of capital. As this would be going too far even for 
 Mr. Tooke, with all his ardour for a favourite theory, we are 
 not without hope that he will acknowledge, that if it does 
 not actually add to the previously existing capital, it at least 
 releases capital from unproductive employment, and leaves it 
 at liberty for productive employment, should an opportunity
 
 33 
 
 of employing it productively occur, by providing a substitute, 
 which, though not capital itself, answers all the purposes of 
 capital. Moonlight does not add to the amount of the light 
 of the sun at any given moment, but it were perfect drivel- 
 ling to maintain that it therefore does not give additional 
 light to the inhabitants of the earth. 
 
 Having shewn, we hope, to the satisfaction of our readers, 
 the fallacy of Mr. Tooke's position, that a banker issuing 
 paper money, — in other words, credit, — lends capital, we 
 must next examine the soundness of the other position, in 
 the foregoing extract, where he states his reason for objecting 
 to an issue of paper money through the medium of discounts. 
 The reason stated is, in substance, the same as that stated by 
 the governor of the bank, and already refuted. It is some- 
 what more ingeniously put by Mr. Tooke. He states it thus : 
 " and for this reason, that the demand for accommodation, in 
 the way of discount, or loan, by individuals, is very often, if 
 not generally, in exactly an inverse ratio to the demands of 
 the circulation ; so that, the time when there is the greatest 
 inducement among the customers of country banks, or of the 
 Bank of England, to borrow, is very often precisely that 
 period at which it is most essential to contract the circula- 
 tion." Now, we frankly admit, that this reason has some 
 appearance of solidity, because it is quite true that the de- 
 mand for accommodation will be in nearly an inverse ratio 
 to the demands of the circulation, so long as the present 
 absurd system of supplying the country with circulation, 
 chiefly by indirect means, through government securities, 
 exists ; but, it is contended, that it is no reason for the con- 
 tinuance of that system : on the contrary, it points out one of 
 the inconveniences attending the present vicious system in a 
 clear and forcible light. It shews that so long as the public 
 are denied direct access to the great stream of the circulation, 
 and are only permitted to approach a few of the smaller 
 tributaries, being compelled to depend on the reservoirs 
 established in Lombard-street, and other private bankers in 
 
 D
 
 London, for the principal part of their supply, so long will 
 the "demand be in an inverse ratio to the supply ;" but it does 
 not prove, certainly, that the public ought not to have direct 
 access to the great stream of circulation : it only proves, in 
 fact, the necessity of changing the present unnatural and 
 artificial system, unless Mr. Tooke is prepared to contend 
 that it would be inexpedient that the demand for accommo- 
 dation were in a direct ratio to the demands of the circula- 
 tion. Common sense would certainly, we apprehend, declare 
 in favour of the supply of circulation accommodating itself to 
 the demand ; at least we are not aware of any circumstance 
 attaching to money which should render it an exception 
 to the general rule. Theorists, unfortunately, however, 
 seldom try their theories by the vulgar test of common sense; 
 the more paradoxical they are, in general, the higher are 
 their attractions in the eyes of their fond framers. Certainly 
 if Mr. Tooke goes the length of maintaining that the present 
 artificial system, by which the demand for circulation is in 
 an inverse ratio to the supply, is preferable to the more 
 natural one, by which the demand would be in a direct ratio 
 to the supply, he places himself in somewhat as ridiculous a 
 predicament as an artificial leg- maker would do, who, meet- 
 ing one of those brave veterans who had lost a leg in the 
 service of his country, and had its place supplied by a wooden 
 one, should enter into a detailed eulogy of the wonderful 
 perfections of his artificial legs, and conclude by saying to 
 him, " My dear fellow, I must object, upon principle, to 
 your continuing to use these two legs ; they are quite incom- 
 patible, in my opinion ; and as I am not an ordinary mortal, 
 but a man of genius, and have written a learned treatise to 
 prove that artificial legs are far superior to natural flesh-and- 
 blood legs, I must insist on your getting your other leg, also, 
 amputated, that I may supply you with one of my artificial 
 legs." We question if the gallant veteran would deign to 
 return any other answer to such a salutation than by un- 
 screwing his wooden leg, and knocking the luckless leg-
 
 35 
 
 maker down. Who, we ask, would not applaud him for the 
 deed ? 
 
 Besides, this objection of Mr. Tooke's proves too much, 
 for it proves that paper money should not exist at all ; 
 because, assuredly, if the issues of paper money were " regu- 
 lated upon the principle of substitution of paper for what 
 otherwise would have been the circulation of gold" — that is, 
 if these sounding words have any meaning, of which we are 
 far from being certain, that for every note issued there 
 should be gold in reserve to answer for it — it is a principle on 
 which banking has never been conducted in this country ; 
 nor is it likely that it ever will be acted on, either here or 
 elsewhere, so long as bankers are men. We do not pretend 
 to say that it is impossible that some one may become so 
 exceedingly patriotic as to issue notes, not with the view of 
 making a profit, but with the laudable design of benefiting 
 his country, at a considerable loss to himself by *' regulating 
 his issues upon the principle of substitution of paper for 
 what, otherwise, would have been the circulation of gold ;" 
 but, certainly, it is so extremely improbable, that we shall 
 continue sceptical on the subject, till we actually see it done, 
 which, it is to be feared, will scarcely be till the commence- 
 ment of the millennium. In the mean time, we must take 
 bankers as we find them, — men who have a sharp eye 
 to the profits of their circulation, and who act upon the 
 principle which Mr. Wilkins, greatly to the credit both 
 of his honour and his honesty, avows, that though willing 
 to " lend the capital created by their notes," yet " it 
 would not be worth their while to increase their capital 
 by drawing money out from the funds to lend it, incurring a 
 heavy risk." 
 
 To prove that the present system is founded in the grossest 
 error, not only against the finely-formed theories of Mr. 
 Thomas Tooke, — not only against the Bank champions, who 
 issued from their strong-hold in Threadneedle-street, like 
 Jack the Giant-killer, not to excite our admiration, at their 
 
 D 2
 
 36 
 
 more than human prowess, and wonderful achievements, but 
 rather to excite " laughter holding both his sides," at their 
 feeble puny endeavours to prop a falling cause, nearly as 
 absurd as if rats were magnanimously to attempt to prop 
 a tottering house, — but against all the world, from the 
 very nature of things, let us shortly advert to the nature 
 of paper money. The advantages of paper money consist 
 chiefly in the three following particulars: — 1, In its cheap- 
 ness: 2, In its convenience: and 3, That those issuing it 
 have a direct and immediate interest in supplying those who 
 need it. The first advantage is universally acknowledged to 
 be very great, as it enables a country in which paper money 
 circulates to add at once to the amount of its productive 
 capital, by the substitution of a cheap circulating medium 
 for an expensive one. The second advantage of paper, — its 
 convenience, — is too generally acknowledged, and too ob- 
 vious, to require to be more than mentioned. The third 
 advantage arising from the issue of paper money, — that 
 of those issuing paper money having an interest in supplying 
 those who need it — or by whom there is a demand for it, is, 
 in our opinion, a much greater benefit than either of the 
 other two. Great as the two former advantages undoubtedly 
 are, we confess we should have some hesitation in the present 
 situation of this country, if they were the only advantages 
 attending the issues of paper money, in maintaining the pro- 
 priety of its continuance ; because, considering the immense 
 accumulation of capital in this country, the saving arising 
 from a paper circulation, instead of a metallic one, is scarcely 
 worth the taking into consideration. At least we cannot see 
 that the abstraction of thirty or forty millions from the capital 
 of a nation, possessing thousands of millions of property, 
 much of which, be it observed, too, is unproductively em- 
 ployed at present, and a considerable part of it not only 
 employed without a profit, but, like the Irishman's gain, with 
 a loss, would be attended with any very bad consequences. 
 The conveniences, too, of a paper circulation, are far from
 
 37 
 
 inconsiderable, though we are not advocates for the purchase 
 of mere conveniences at too dear a rate. Now, however 
 convenient it may be for a person to be able to carry a mil- 
 lion of money in his breeches pocket, instead of taking a 
 waggon with him to carry it from the Bank, still we think 
 the mere conveniences of paper money are greatly over- 
 rated, as means would undoubtedly be fallen on to obviate 
 the necessity of such a cumbrous and inconvenient mode of 
 proceeding, though a bank note had never been engraved. 
 It is said that the quarterly collections of the revenue could 
 not be made without a paper issue. We doubt this ex- 
 tremely, as in France, where as great a revenue is collected, 
 there is not a fourth part of the paper money in circulation 
 that there is in this country ; and we have yet to learn that 
 the quarterly collections are not made there, we do not say with 
 the same facility that they are made here, but with sufficient 
 facilityTor all the purposes of the state and the state creditor. 
 The third advantage of a paper circulation, though not so 
 obvious, perhaps, at first sight, as the other two, and there- 
 fore not so much insisted on, that those issuing paper money 
 should have an interest in supplying those who need it, is, in 
 our humble apprehension, by far the greatest. It is, indeed, 
 the only reason which, after long and deliberate reflection on 
 the subject, we can discover, why any individuals, or cor- 
 poration, public or private, should be permitted to usurp the 
 functions of the supreme power, by issuing money. It is 
 well known that capitalists, or those having money, have 
 often, if not generally, an interest, not only distinct from, 
 but in direct opposition to, that of those who require accom- 
 modation ; so that when the demand for money is greatest, 
 the supply is smallest; or, to use Mr. Took e's words, that 
 the supply is in an inverse ratio to the demand. And those 
 who are in the secret, know very well that the great fluctua- 
 tions Avhich are perpetually occurring in the value of funded 
 and other property, are produced by these capitalists draw- 
 ing out their money from investment, and putting it into their
 
 38 
 
 strong boxes, when prices are high, and waiting till this ab- 
 straction from the amount of money in circulation produces its 
 natural effect of reducing prices, when they again invest it, 
 and prices rise. And so long as capitalists are men, it were 
 ridiculous to expect that they would do otherwise than 
 endeavour to make the most of their advantage, in the pos- 
 session of large capitals, by producing fluctuations, which 
 they may take advantage of, to their own great profit. But 
 it is the interest of the public that there should be as few 
 sudden fluctuations in the value of commodities as possible, 
 and this can only be accomplished by making those who 
 supply the public with money have a direct interest in 
 accommodating the supply, as far as may be, to the demand. 
 Now, the evil of the present system is, that the Bank of 
 England does not adopt this as the rule, but as the excep- 
 tion. In a season of difficulty they are willing to deviate 
 from, what they consider, the right principles of banking, 
 and to afford direct accommodation to the public, through the 
 medium of discount, to a large amount ; but in this they only 
 verify the old proverb, of " shutting the door after the steed 
 is stolen," and deny the truth of the universally acknow- 
 ledged maxim, that " prevention is better than cure." They 
 cannot deny that it is necessary sometimes to resort to this 
 expedient. They did so in 1825, — for it is in evidence that 
 the discounts rose from 5,000,000/., their amount on the 3rd 
 November, to 15,000,000/., their amount on the 29th Decem- 
 ber. — (Palmer, 583, 4.) Neither can they deny that it would 
 be more dangerous to the Bank ; for the governor, when 
 asked, " Would there be any more danger to the Bank by 
 having its disposable money lent out upon discounts than 
 upon any other security?" answers, " Certainly not." Though 
 not more dangerous, we are satisfied it would be much less 
 profitable, to the Bank ; as they would be unable to keep 
 nearly so many of their notes in circulation as they do at 
 present, by the round-about indirect mode of supplying the 
 public with currency, or what they call " providing a requi-
 
 39 
 
 site supply of paper money for the average circulation of the 
 sphere in which it acts, and by upholding- public and private 
 credit when called upon." These are certainly 4< brave 
 words;" but if they mean anything except that the Bank has 
 to draw a certain sum from the public, by issues of paper 
 money, to be paid to the proprietors of Bank stock in the 
 shape of a dividend, we candidly confess that we have been 
 unable to find it out. Now, the natural effect of the system 
 presently acted on by the Bank of England is to make money 
 plentiful among those who have much already, and scarce 
 among those who have little ; so that those who do not need 
 money get more than they know what to do with, and those 
 who do need it, for the purposes of trade, cannot get so mucb, 
 as they require. That this is exactly the situation of this 
 country, at present, is sufficiently notorious, it being an 
 almost universal complaint among large capitalists that they 
 have more money than they can employ or invest profitably 
 and securely ; while among the industrious classes, or small 
 traders, the complaint is just as universal that money is 
 extremely scarce, and that they cannot get enough to enable 
 them to carry on their businesses. And it is quite obvious, 
 the reason is that the private bankers of London, on whom 
 the public so greatly depend for their supply of currency, 
 cannot afford to run the risk of accommodating the great 
 body of the trading community, because not being issuers of 
 paper money, their profits are too small to compensate for 
 such risks. It is true, those ornaments of the higher orders, 
 — the twenty-four Corinthian pillars which adorn the Bank 
 parlour, — may reckon the wants of the sober industrious 
 class of small traders utterly unworthy of a moment's regard, 
 because they are the " lower orders of the people;" but that 
 a popular government will longer turn a deaf ear to the loud 
 and general complaints of that class, in order to prop up one 
 of the most rotten, and unjust, and absurd monopolies, that 
 ever disgraced any country in the world, is too improbable for 
 any impartial person to believe, though a bank director may
 
 possibly " lay the flattering unction to his soul." Besides, 
 by the present system, the public pay nearly as much for a 
 paper currency as they would do for a metallic currency, not 
 only without any of the advantages of a metallic currency, 
 but with almost all its disadvantages. 
 
 To bring the disadvantages of the present system " home 
 to the businesses and bosoms" of our readers, it is only 
 necessary to refer them to the account given by Mr. Ward, 
 in his evidence of the proceedings of the Bank of England 
 for a year or two preceding the panic in 1825. If it does 
 not carry conviction to the mind of any disinterested person 
 of the radical defects of the present system, his mind must 
 be as impenetrable as the stone ornaments on the outside of 
 the Bank walls, or he must be as wilfully and obstinately 
 blind to the truth as the living ornaments who assemble 
 within them. (2015) " You have stated that the increase of 
 bank notes which took place between 1822 and 1825, would 
 have an obvious tendency to derange the exchanges 1 — It 
 was stated by the governor of the Bank, that, in fact, it was 
 the speculation of 1828 and 1824 that had the effect of 
 
 deranging the exchanges Do you recollect that when 
 
 his majesty's government, in 1822, decided upon the plan of 
 putting an additional four millions of bank notes into circula- 
 tion, it was then stated by Mr. Huskisson, that one of the 
 chief objects his majesty's government had in that operation 
 was to revive speculation, which was then dormant, upon 
 which revival his majesty's government placed their main 
 hope of restoring the prosperity of the country ; and do you 
 not consider that the increase that was occasioned would 
 have a natural tendency to revive and to increase specula- 
 tion? — I recollect distinctly many of the circumstances 
 referred to, though perhaps not in the order in which they 
 have been stated. Government, at that time, had received 
 many complaints relating to the agricultural distress and the 
 depression of prices ; and 1 think the price of wheat was, at 
 one time, as low as 37s. ; the average for the year was as low as
 
 41 
 
 43s. My own opinion is, that whatever circumstances were 
 in operation, one of the most unfavourable circumstances 
 that occasioned the low prices, was the very low state of 
 the aggregate currency of the country. I stated, in my for- 
 mer examination, that the amount of country notes, which 
 had been at twenty millions, had become reduced in one 
 year to sixteen millions, and had been then reduced to eleven 
 millions, and, by the year 1820, it had been reduced to 
 seven millions sterling ; the consequence was, that not only 
 prices were low, but a disinclination to transact business, and 
 a great deal of positive evil existed, and I think the agricul- 
 turists had a clear right to complain of that circumstance ; 
 I think government had a clear right to try to restore the 
 prices in some degree, to relieve them from that depression, 
 and I do not know any other means by which it could be 
 done, than by giving them at least as good a currency, as 
 full a currency, as was legitimate in connexion with the 
 laws relative to currency. When the season of 1822 arrived, 
 I think it was a very wise measure to try to stimulate prices. 
 I believe that moderate speculation itself is a good rather than 
 an evil, but that the difficulty is in regulating the degree. If 
 persons, when one speculation is set a going, carry it to a 
 preposterous extent, they must take the consequences of it ; 
 but I do consider it beneficial to the country that there 
 should be a certain degree of enterprize, and there was a 
 great want of what I should call a legitimate degree of 
 enterprize at that period, and a depression of prices, in con- 
 sequence of which I think the parties were entitled to ask 
 for relief. I am saying this always with regard to the legiti- 
 mate bounds prescribed for currency. As long as we could 
 administer an increase of notes with the exchanges greatly 
 in favour of the country, by a sufficient supply of gold, I think 
 the country had a right to obtain that action upon the prices 
 that a sufficient currency would give them, and that they had 
 a great insufficiency previously." (2018) "You have stated 
 that the bank notes which have been referred to, were issued
 
 42 
 
 to relieve the distress of the country? — That was one object, 
 but it was in connexion with good currency ; we were pro- 
 moting a good currency by it." (2019) " You have stated 
 also, that the prices were in this manner raised, and that 
 they did advance 25 per cent, and you are not certain that 
 they did not advance 50 per cent. ? — Yes." (2020) " Part 
 of these issues of bank notes you found to be inconsistent 
 with the safety of the currency, and they were drawn in ? — 
 The exchanges had become unfavourable, and it was neces- 
 sary then to effect a reduction." Government and the bank 
 directors, it would appear from the foregoing extract, had 
 laid their heads together, and, by way of relieving the dis- 
 tresses of the country, they determined to " call the spirit 
 speculation from the vasty deep ;" and the spirit, it would 
 further appear, came obedient to their call, but they unfor- 
 tunately only verified the old saying, that it is easier to 
 raise the devil than to lay him, for he seems to have been 
 both a potent and an active spirit, and by no means inclined 
 to betake himself to the deep again when ordered. He con- 
 trived, at all events, in a wonderfully short period, to relieve 
 the bank directors of that great amount of gold which 
 seems to have weighed as heavily on their minds, as if it had 
 been placed on their shoulders in place of lying snug in their 
 cellars. Had the government instructed the bank directors 
 to add half the amount to the circulation in the direct mode, 
 through the medium of discounts, it would, in all probability, 
 have done more good than the four millions which were 
 thrown into circulation through the indirect means of the 
 purchase of government securities, while it might have 
 been attended with none of its evils and inconvenience. It 
 would have acted immediately and directly as a relief where 
 relief was required, instead of inundating the country with 
 useless circulation, which, no doubt, ultimately afforded 
 relief to those who needed it by inciting the country bankers, 
 whose issues are immediately available to the industrious 
 classes, greatly to extend their issues ; but, then, both these
 
 43 
 
 modes —the indirect supply by the Bank of England, and the 
 direct supply by the country bankers, produced a flood of 
 currency, bringing with it as wide-spread a destruction of 
 property and as extended misery and ruin in the commercial 
 world, as a flood in the natural world so frequently does. 
 The two modes of supply are evidently inconsistent, and so 
 long as they are continued will inevitably, at times, produce 
 the same lamentable results. Mr. Tooke contends that the 
 artificial system of supply is the better; while we contend for 
 the natural mode of supply as the only one which will 
 answer the purpose. The bank directors again, looking only 
 to that by which they can make most profit, insist, contrary 
 to all reason and common sense, that the present system is 
 the best. Mr. Tooke thinks that if we amputated our 
 remaining flesh-and-blood leg, and got two wooden legs, we 
 could move about with greater ease and agility, and run 
 the race of prosperity in competition with other nations, so 
 as to outstrip all our competitors ; while we insist that if we 
 throw away our wooden leg, as not only useless, but as 
 retarding our progress most materially, we should soon get 
 a new flesh-and-blood leg in its stead, which would enable us 
 to proceed steadily and surely on the road to wealth and 
 prosperity, and in the course of time to leave all other nations 
 at an immense distance behind us. The bank directors 
 stand out stoutly for things as they are. " Whatever is, is 
 right," is their motto. Reason and consistency, are, it is 
 true, against them ; but what are reason and consistency in 
 the eyes of bank directors, when weighed against bank 
 profits, but " trifles light as air." Which of the three is most 
 consonant to reason, may be safely left to the common sense 
 of the public to determine. That the continuance of the 
 present system is impossible, because inconsistent with the 
 public interest, and that the adoption of Mr. Tooke's system 
 is as impossible from its very absurdity, we cannot entertain 
 a doubt. 
 
 But the bank directors endeavour to frighten us with the
 
 44 
 
 bug-bear of the foreign exchanges. They say they are the 
 only body issuing paper, who have a knowledge of the state 
 of the foreign exchanges. Now as by a knowledge of the 
 state of the exchanges, they mean no more than that the 
 exchanges are favourable when there is "no demand for 
 bullion, for exportation," and unfavourable where there is 
 such a demand ; surely the bank directors will not contend, 
 that if there were two or three other joint stock banks in 
 London, with large capitals, having as a matter of course, 
 a considerable reserve of bullion, these banks would not be 
 subjected to a share of the demand for bullion for exportation, 
 when the exchanges were unfavourable ; and would thus 
 have as certain a knowledge of the state of the exchanges, as 
 the Bank by their own admission now have. This is just 
 another specimen of that puerile mode of reasoning in a 
 circle which bank directors seem to delight in so much. 
 There seems to be a fatality attending all their atttempts 
 at any thing like reasoning, in defence of their unjust mono- 
 poly, which can scarcely be accounted for on any other than 
 the ancient maxim, " quem deus vult perdere prius demen- 
 tat;" by "dementat" being understood "deprives of the 
 power of reasoning." 
 
 While we consider this as a sufficient answer to the bank 
 directors, whom we consider ourselves at perfect liberty to 
 knock down with their own weapons; we are far from agree- 
 ing with them in the view which they take of the foreign 
 exchanges. So far, indeed, from considering their ideas on 
 that subject correct, we esteem them, we shall not say wil- 
 fully, but certainly grossly erroneous and incorrect. The 
 governor is asked, (No. 127) " You stated in your former 
 answer, that you regulate your issues with reference to the 
 par of exchange. What do you mean by the par of exchange I 
 — I do not know how the par of exchange is to be defined by 
 figures ; an exchange below par, is the demand for gold 
 upon the currency of the country ; you may have that 
 demand for gold at a very high exchange, as well as a very
 
 45 
 
 low exchange." Mr. Rothschild confirms this view, and 
 says, " there is no par of exchange." We cannot help 
 thinking, that there is an attempt at mystification here, not 
 very creditable to either of these witnesses ; that though 
 what they state, may be strictly and literally true in one 
 sense, still it is not the whole truth ; and that it requires a 
 stretch of charity, of which however, we willingly give them 
 the benefit, to believe that they did not wish to mystify and 
 mislead the committee on a very important point. Admitting 
 that it is literally true, that there is no par of exchange in one 
 sense, every person conversant with exchange business, 
 knows that there is, what is called the par of exchange, 
 which is a sufficient approximation to it, for all the purposes 
 of business: admitting further, that in a certain sense "an 
 exchange below par, is the demand for gold upon the cur- 
 rency of the country ; and that you may have that demand 
 for gold at a very high exchange, as well as a very low 
 exchange ;" still to establish the conclusion which the 
 governor was evidently driving at, that the Bank of England 
 was the only body which had, or could have accurate know- 
 ledge of the state of the foreign exchanges, he ought to have 
 shewn that there is as frequently a demand for gold at a 
 high exchange as at a low exchange, and that it is not an 
 exception to the general rule. Now although it is quite 
 true that so long as gold is a commodity, its value in differ- 
 ent countries, will, like that of all other commodities, vary 
 considerably at different periods ; and that a sudden demand 
 for it abroad, will raise its price for a time, as a sudden de- 
 mand for corn, or wine, or oil, will raise their prices for a 
 time, so that there will be occasionally a demand for gold for 
 exportation, though the exchanges are, what is usually 
 called, greatly in favour of the country: as on the other 
 hand, no doubt, circumstances might occur to lessen the 
 demand for gold abroad so much, for a time, that even 
 although the exchanges were, what is called against this 
 country gold might flow into it : we contend that these are
 
 46 
 
 exceptions which only prove the rule, and that in nine cases 
 out of ten, when the exchanges are high, (how in fact, can 
 the exchanges be said to be high, if there is no par,) gold 
 will flow in ; and that in ninety-nine cases perhaps in a 
 hundred, when the exchanges are low, or what is called 
 below par, gold will be exported. To attempt to deduce 
 from these premises, that there is no par of exchange for 
 ordinary purposes, and that the bank directors ought not to 
 regulate their issues by anticipating the actual demand for 
 gold, — by contracting their circulation when the exchanges 
 fall to what is called par, or that other banks could not 
 regulate their issues by the state of the foreign exchanges, 
 is the purest drivelling that ever was heard of. On the 
 other hand, we contend, that as other banks may have as 
 accurate knowledge of the state of the foreign exchanges 
 as the Bank of England, they are just as able to regulate 
 their issues by them as it is ; indeed we might contend that 
 they are much more able to do so, because having their 
 capitals under their own immediate controul, they can not 
 only procure a sufficient supply of gold with their capitals, 
 but also operate directly on the exchanges themselves, and 
 bring them round much sooner than the slow, indirect, and 
 ruinous mode of proceeding, resorted to by the Bank of 
 England, that of a general reduction of the prices of the 
 country ; for it is well known that the Bank of England is 
 frequently counter-worked by large capitalists, operating 
 directly on the exchanges, when they have an interest in 
 the still further reduction of prices. 
 
 In every view of the case, then, which can be taken, 
 we see nothing but gross injury to the public in the 
 present constitution of the Bank of England, and of the 
 system on which it conducts its operations. The exclu- 
 sive privileges of the Bank of England, are in their nature 
 in direct opposition to the interests of the public : their 
 carrying on business without capital, while the possession of 
 a large capital is absolutely necessary to allow of their doing
 
 47 
 
 so, without producing unceasing fluctuations in the circula- 
 tion, is also the cause, of great and general injury to the 
 public ; and their mode of supplying the public with cur- 
 rency, too, being somewhat similar to that of supplying a 
 town with water, by inundating the whole country in which 
 it is situated, is radically wrong, and produces incalculable 
 evil to the public interest. The whole together forming an 
 aggregate of unmixed and unmitigated evil, which it is impos- 
 sible to believe can be longer submitted to. 
 
 We come, now, to consider very shortly the second general 
 division of the subject, or the alterations which are necessary 
 and expedient in the present system of banking in England. 
 The modes of proceeding seem to be chiefly the three follow- 
 ing : — 1st, To continue the present system with some 
 slight modifications ; 2nd, To establish a national bank ; 
 and 3rd, To abrogate the present exclusive privileges of the 
 Bank of England, and to permit the establishment of other 
 banks of issue, consisting of an unlimited number of part- 
 ners, either without any restrictions, or with such restrictions 
 as may be deemed necessary for securing the interest of 
 the public. We shall make a few observations on each in 
 its order. 
 
 1st, The continuance of the present system with some 
 slight modifications. That this is the view advocated by the 
 great majority of the witnesses examined by the committee 
 will not be wondered at from the analysis of the list of wit- 
 nesses already given. The witnesses are by no means atone, 
 however, as to the modifications which should be adopted; 
 so far from agreeing, in fact, they are opposed to each other 
 in their views, as much as light is opposed to darkness ; not 
 only are they opposed to each other, but, occasionally, their 
 own opinions in one case are opposed to their opinions in 
 another quite as much. As might be expected, the bank 
 directors are of opinion that the substitution of Bank of 
 England paper for all other paper money is the only panacea 
 for all the evils of the currency* Our readers will, perhaps,
 
 48 
 
 be somewhat sceptical that we are serious in stating such an 
 absurdity; we ask them to take nothing on our word, but 
 beg to present them with the opinions of these worthies in 
 their own words: (440) "Would you think it an advisable 
 mode for the country, that the whole circulation of the 
 country should consist of Bank of England paper? — I think it 
 is, but not without the concurrence of the country bankers." — 
 Palmer. (2699) "I think, speaking generally, the paper 
 system of the country would be more easily and better 
 managed, if there was only one issuer." — Norman. " My 
 own private opinion is, that the issues of country bankers 
 ought not to be payable in gold at all, I think they should be 
 payable only in the notes of the Bank of England, the great 
 issuing body." — Norman. " L think we are very well as we 
 are ; I think we have plenty of bankers." — Harman. This, 
 we presume, is quite enough not only to convince our readers 
 of the accuracy of our representation of the opinions of the 
 bank directors, but to satisfy the strongest stomach that the 
 paid servants of the Bank never, for one moment, lose sight 
 of the interests of the establishment. Every one knows what 
 they mean by the paper system of the country being more 
 easily and better managed if there was only one issuer; large 
 profits, with small risks, ordinary dividends of ten per cent, 
 and bonuses, occasionally, of from ten to twenty per cent., 
 these constitute the beau ideal of bank management, the per- 
 fection of paper currency, in the eyes of bank directors. We 
 must forbear from drawing more largely on the patience and 
 goodnature of our readers by quoting any more of such 
 nauseating stuff, lest they should have reason to complain 
 that they had got more than enough, and should accuse us of 
 administering an emetic. 
 
 The London private bankers all chime in with the same 
 tune, or, at least, join lustily in the chorus. "The exclusive 
 privileges of the Bank of England are decidedly advan- 
 tageous to the bankers of London," sings treble Glyn. 
 " With regard to myself, as a London banker, I do not con-
 
 49 
 
 ceive that the law respecting- the Bank of England could be 
 upon a better plan than it is at present," bawls tenor Trotter. 
 " Would not a competition with banks of issue in the metro- 
 polis interfere materially with the business of private ban- 
 kers ? — Very materially, I conceive," sings counter-tenor 
 Loyd. " Expedient to make country bank notes payable in 
 Bank of England notes only, and not in coin or bullion. I 
 should think more joint-stock banks of issue established in 
 the metropolis would be decidedly mischievous; I see no 
 benefit to be derived from the multiplication of banks of 
 issue, and a considerable chance of evil," roars bass Grote. 
 Mr. Gurney beareth his pure testimony to the same 
 truth : " Effect of the exclusive privileges of the Bank 
 of England has been beneficial." " I am against any change 
 in the circulating medium in the metropolis." J\ would have 
 been obliging, esteemed friend, if thou hadst condescended 
 to inform us to whom the exclusive privileges of the Bank of 
 England are beneficial. If thou merely meantst that they 
 are beneficial to London bankers and bill-brokers, verily thou 
 hast said no more than the truth ; but, if thou meantst that 
 they are beneficial to the public in general, we doubt thou 
 hast been deceived by the spirit of self-interest, when it 
 moved thee to speak on this point. The evidence of these 
 individuals can go for nothing, because it proves no more 
 than what the advocates of the most grinding monopoly in 
 existence might prove, that the monopoly is beneficial to 
 those in whose favour it is granted, and to the few indivi- 
 duals connected with them. For instance, the benefits of a 
 monopoly of water, or any other of the merest necessaries of 
 life, might be proved, in the same way, to be " beneficial ;" 
 for, no doubt, the directors of the water company and the 
 keepers of the reservoirs might very safely bear testimony to 
 the great benefits it confers on them, and mjght even go the 
 length of saying, like Mr. Grote, that they could not see the 
 benefit to be derived from the multiplication of water com- 
 panies, but rather a considerable chance of evil.
 
 50 
 
 We come now to consider the evidence of the country 
 bankers on this point, and as they stand in rather a different, 
 predicament from that of the Bank proprietors, and London 
 bankers and brokers, because the Bank monopoly is beneficial 
 to the country bankers only, in so far as it prevents, to a 
 considerable extent, the interference of joint stock banks, 
 with their businesses, and is the reverse of beneficial, in so 
 far as the Bank of England itself interferes with their in- 
 terests. These conflicting- interests produce amusing and 
 ludicrous contradictions in the evidence of some of the 
 country bankers. At one time, white is black ; at another 
 time, white is white. Now, though we do not ask the public 
 to take our word for it, that white is not black, surely we 
 may safely ask them to admit that if white is black, then 
 white cannot be white, at the same time, as some of the 
 country bankers, in their direful shifts, are driven to main- 
 tain. Mr. Stuckey states, (1214) "With regard to banks of 
 issue in London, where the foreign exchanges, &c. are regu- 
 lated, competition would be dangerous." Here, it will be 
 observed, white is black. But the same gentleman states, 
 almost immediately afterwards, (1233) " I can see no good 
 reason, on any principle of banking, for being deprived of the 
 circulation; and at a late meeting of country bankers, the 
 following resolution was unanimously passed : * That it ap- 
 pears to this committee highly inexpedient that the circulation 
 of the country should be confined solely to the Bank of 
 England, and that they will exert themselves to prevent a 
 measure so highly detrimental to the agricultural, commercial, 
 and manufacturing interest.'" Here, then, we see that 
 white is white again, and that by the unanimous resolution of 
 the representatives of the whole country bankers. Now, we, 
 who have no interest in the matter, cannot see how what is 
 good and beneficial for the country should be dangerous and 
 detrimental for London. We have already shewn the utter 
 absurdity of the bugbear about the foreign exchanges ; and 
 as no other reason is stated why a circulation which is bene-
 
 51 
 
 ficial in the country should be injurious to London, we are 
 entitled to take it for granted there is no other. Let us hear 
 the country bankers' reasons in support of their own circula- 
 tion: — Mr. Wilkins, whose clear and upright evidence we 
 have already quoted, with just commendation, in another 
 part of our pages, states, on this point, (1799) " Does not the 
 country banker constantly afford accommodation where he 
 knows his security to be good ; where the Bank of England, 
 from being tied down to certain forms of proceeding, would 
 not be able to give the same accommodation ? — Yes. (1800) 
 Therefore, if by any arrangement the Bank of England wer 
 able entirely to drive out the country bankers, would there 
 not be a considerable class of industry, to which the accom- 
 modation of the Bank of England could never reach? — 
 Certainly." He had previously stated, (1791) " Would not 
 your ceasing to issue any notes at all still more contract your 
 power to give accommodation? — It certainly would to that 
 extent." Now, we contend, that these evils, so clearly stated, 
 against the exclusive circulation of the Bank of England in 
 the country, are just as clear and conclusive against it in 
 London. We admit the London private bankers do away 
 with one of the inconveniences, — that of the Bank of England 
 being tied down to certain forms of proceeding ; but so long 
 as the London private bankers do not issue notes, the other 
 objection remains, — that their power of giving accommodation 
 is greatly contracted. And what, we ask, are the public the 
 better of the London bankers being at liberty to afford accom- 
 modation, if they have not the power, or only a very limited 
 power, of doing so? Is it not, indeed, a perfect mockery 
 to tell the commercial public of London, that the London 
 bankers are intimately acquainted with all their wants, and 
 are as willing to supply their wants, while, in the same breath, 
 they are told that it is only the means of supplying their wants 
 that are wanting? These it is impossible to grant, because it 
 would interfere with the exclusive privileges of the Bank 
 
 E 2
 
 52 
 
 of England. We consider it unnecessary to add any thing 
 further on this part of the subject. Before quitting it, how- 
 ever, we lay before our readers the following evidence, by 
 Mr. Attwood of Birmingham, and have little doubt it will be 
 found abundantly amusing, and, perhaps, not a little instruc- 
 tive, if attentively examined. — (5571) " Do you consider that 
 the restriction which exists against any bank having a larger 
 number of partners than six, being permitted to draw bills 
 under 50/. upon London, or to issue notes payable in London, 
 is disadvantageous to the public I — Unquestionably not in the 
 slightest degree. (5572) Do you think it advantageous? — 
 I think the whole system of joint stock banks erroneous and 
 very dangerous ; and, therefore, the more it is limited, in my 
 opinion, the better for the country, and the better, ultimately, 
 for the parties concerned. The joint stock banks are exceed- 
 ingly injurious to the private bankers of Birmingham. The 
 branch bank I am not prepared to say is injurious. My 
 opinion is, that country bank notes are the most important, 
 and the most useful, instruments of circulation that exist." 
 This requires no comment. 
 
 In contrast with these opinions, we must now attend to 
 those of the witnesses who are connected with joint stock 
 banks, and certainly light itself is not farther removed from 
 darkness than are the opinions of the one, contrasted with 
 those of the others, which we have already quoted. 
 Mr. Dyer says, (4188) " I consider that it is unnecessary 
 that a great part of our industry should be necessitated to use 
 a description of currency, or circulating medium, which 
 forces us to pay a commission for its use. 1 think if the 
 system were put upon that footing that we could issue our 
 own notes, and making those secure, the community would 
 be equally well supplied, and much better supplied, without 
 being subject to that tax. (4174) Had we been left to do 
 our business in our own way, — had we had no impediment to 
 contend with, but that of a fair competition, — we should have
 
 53 
 
 thought it most impolitic, under any circumstances, to give 
 three shillings a year, for example, for the right to use a 5/. 
 Bank of England note, when we could print them for a half- 
 penny, and give them as much circulation as the Bank could. 
 (4357) Would a bank that issued its own notes be able to 
 give more accommodation to trade than a bank that uses 
 the notes of another bank 1 — No doubt of that, because it 
 would be dependent on that other for its own supply of 
 notes." He adds, " The profit of a banker issuing notes, 
 which he makes by issuing notes, enables him to give more 
 accommodation to trade than a private banker not issuing 
 notes." These views are confirmed by Mr. Smith, who 
 states, (4400) " I think the Bank of England, if disposed, 
 cannot regulate the currency to suit the public wants of trade 
 and commerce. Being bankers to the state, its principal 
 issues are distinct from those wants; having no means of 
 getting out their paper than by lending it to government, 
 or buying Exchequer bills, it continues to issue without 
 check, till its excessive issues are checked by a demand for 
 gold." It will, no doubt, be contended that these being the 
 opinions of individuals who have a great interest in the abro- 
 gation of the present privileges of the Bank of England, as 
 partners of rival joint stock banks, are entitled to no weight . 
 and we do not deny that they are not entitled to any more 
 weight than the arguments themselves have. But we contend 
 that the arguments are not without weight, because they are the 
 self-same arguments brought forward by the country bankers 
 generally, in defence of their particular circulation; and 
 if they have weight in one case, they are surely as well entitled 
 to it in another, unless the country bankers will assert that 
 what weighs heavy in one scale, should have no weight at all 
 in another scale. Mr. Smith points clearly to the radical 
 defect of the present system, when he states that the principal 
 issues of the Bank of England are distinct from the wants of 
 trade and commerce. 
 
 We should reckon it a complete waste of our readers' time
 
 54 
 
 to enter into a minute examination of the various modifications 
 of the present system proposed by the witnesses interested in 
 its continuance. We may observe, however, that the witnesses 
 are all at variance on the subject. Several, for instance, 
 maintaining 1 , that periodical publications of the accounts of 
 the Bank of England would be a cure for all the evils of 
 which it is admitted to have been the fertile parent; while 
 as many contend, on the other hand, that publication of the 
 bank accounts would be attended with the worst conse- 
 quences. Objecting as we do, on principle, to the whole 
 system as radically wrong, we consider these differences of 
 opinion as unworthy of a moment's consideration. Having 
 struck at the root of the tree, it would be useless to waste 
 time in endeavouring to lop off a few of the branches. 
 "We have endeavoured to show that the tree itself is barren, 
 nay rotten, and only cumbereth the ground; and ought, 
 therefore, to be hewn down, and thrown root and branch into 
 the fire. 
 
 Secondly ; the establishment of a national bank. It is un- 
 necessary to discuss this subject at any great length, as the 
 opinions of the witnesses are so nearly unanimous against the 
 establishment of such a bank, and as our own opinion coin- 
 cides with theirs, though for very different reasons from those 
 stated by them. We conceive that the establishment of a 
 national bank would not remedy the radical defect of the 
 present system, but, on the contrary, that it would, if any 
 thing could, aggravate it. It would in fact, we are greatly 
 afraid, be an attempt at realizing Mr. Tooke's Utopian plan 
 of cutting off our remaining flesh and blood leg and having 
 two artificial legs. 
 
 There is a good deal of stress laid, by some of the witnesses, 
 on the objection, that a national bank would be more liable to 
 be perverted to purposes of jobbing than a commercial com- 
 pany like the present. No impartial person, however, is likely 
 to concur in that view. Because, we ask, what are the direc- 
 tors of the Bank of England but merchants — that is, buyers
 
 55 
 
 and sellers to get a profit, — in other words, jobbers in silk, and 
 sugar, and soap, and oil, and tallow, and every thing clean 
 and unclean, by which they can turn a penny — aye, and some 
 of them in stock too, if they are not sadly belied ; at least, if 
 our memory does not deceive us egregiously, it is not three 
 years since one of their number died somewhat suddenly and 
 mysteriously, whose bankruptcy excited fully more attention 
 in the arena where the bulls and bears do fight their battles, 
 with such various success, than on the Royal Exchange. 
 That they do not job in bank stock we are willing to admit — 
 nay, we can scarcely bring ourselves to believe that there is 
 one individual in existence, so lost to every principle of honour 
 and to every sense of decency, as to take advantage of his 
 official knowledge as a director, either in that or in any other 
 banking company, for his own private profit, and in direct 
 violation of his oath of office. If there be such an individual 
 in existence, which common charity forbids us to believe, 
 assuredly there does not a more despicable reptile crawl on 
 the face of the earth. While we willingly admit, then, that 
 the directors of the Bank of England are free from even the 
 most distant appearance of being guilty of jobbing in bank 
 stock, we cannot agree with those who accord them high praise 
 for so doing ; in our estimation they have only done their duty, 
 and could not have acted otherwise than they have done with- 
 out disgracing themselves. 
 
 Besides the objection that the establishment of a national 
 bank of issue would be liable to all the abuses of the present 
 system, there is the farther objection, that it would be liable 
 to be affected by political discredit. Now this is of itself so 
 grand and fundamental an objection, that, even if it were the 
 only objection to a national bank, we should reckon it fatal ; 
 because it is universally admitted by all the witnesses* and 
 must indeed be obvious to every person who has the slightest 
 acquaintance with the operations of banking, that this is an 
 evil for which there is no remedy. Political discredit it is 
 impossible to provide against. Keeping this fact in view, and
 
 looking at the circumstances in which this country is now 
 placed, he must be not only sanguine, not only bold, but fool- 
 hardy, who can persuade himself that political discredits are 
 not likely to occur pretty frequently in the course of the next 
 few years ; and that, consequently, if we had a national bank, 
 there would be a regular succession of panics, carrying wide- 
 spread ruin and misery in their train. And be it remembered 
 this would be the effect of these political discredits whether 
 the national bank issued paper or not. Tf it issued paper, 
 gold would be demanded for the paper and hoarded ; if it did 
 not issue paper, the gold which it threw into circulation would 
 be arrested in its progress and hoarded. 
 
 Thirdly ; the abolition of the exclusive privileges of the 
 Bank of England, and the establishment of other banks of 
 issue consisting of an unlimited number of partners, either 
 without any restriction whatever, or under such restrictions 
 as may be deemed necessary for the interests of the public. 
 
 In the opinion of the bank directors, and others interested 
 in upholding the Bank of England monopoly, the throwing 
 open of the trade of banking would be attended with far 
 greater and more numerous evils than the opening of Pan- 
 dora's fabled box. They could not well deny that the restric- 
 tions now existing on that branch of trade are in their very 
 nature calculated to injure the public, unless they were pre- 
 pared to contend that weak banks are beneficial. This is too 
 palpably absurd for even a bank director to attempt, so they 
 endeavour to frighten the public by pointing to the bugbear 
 of the foreign exchanges, and hint darkly and mysteriously at 
 the innumerable mischiefs which would result from any de- 
 rangement in them from competition among banks of issue. 
 When this phantom of their own imagination is closely exa- 
 mined, and brought to the light of reason, its formidable 
 appearance vanishes, and it turns out as harmless as a white 
 sheet stuck on a long pole — which had acquired no small 
 renown as a ghost, and had frightened many an old woman 
 out of the remaining half of her wits — does when looked on
 
 57 
 
 in broad daylight. In support of their favourite views they 
 refer to Scotland, where, the governor states, (562) " the 
 banking business is governed by large public bodies, and I 
 think their action is prejudicial ; I think they tend more to 
 excess than the action of private bankers." What the gover- 
 nor means by these profound " thoughts" of his, on the action 
 of Scotch banks, when he says he " thinks they tend to ex- 
 cess," we are far from being sure that we exactly know. If 
 he means by " tending to excess," that the Scotch banks 
 do not keep so large a reserve of gold, to answer for their 
 notes in circulation, as the Bank of England, and perhaps the 
 English country bankers do, we are not inclined to question 
 the accuracy of his statement. So far, however, from con- 
 sidering that an evil, it is contended that it is a benefit ; be- 
 cause the Scotch thereby get the full benefit of their cheap 
 currency, and which they have found from long experience 
 to be as safe as it is economical. If, on the other hand, by 
 " tending to excess," the governor means, that the Scotch 
 banks make advances which they are not warranted in making, 
 with the view of increasing their issues to excess, let him 
 only try if one of them will advance him or any other person 
 their notes without adequate security, and he will find him- 
 self miserably disappointed. Though the Scotch, by their 
 system of banking, have the advantage of a paper currency 
 which is at once cheap and safe, where an expensive one could 
 not be afforded, the governor deceives himself if he supposes 
 the roads in Scotland are strewn with bank-notes, and that 
 any person may have them for the taking, or even for the 
 asking. We have no intention of becoming the eulogists of 
 the Scotch joint stock banks, as they are able enough to do 
 justice to themselves; and we are still less disposed to main- 
 tain that they are free from those imperfections which more 
 or less attach to all human institutions ; all we contend for in 
 their favour is, that they are not propped up by gross injus- 
 tice and a shameful violation of common sense, as the mono- 
 poly of the Bank of England is. Besides, the Scotch banks
 
 are not all joint stock companies, many of the most useful 
 and respectable of the number being private bankers ; but 
 then even the private bankers in Scotland are strong, not 
 being limited to the talismanic number of six partners, as 
 they are in England. If, finally, the governor means, by 
 " tending to excess," that the Scotch banks run from one ex- 
 treme to another, after the example of the banks in England, 
 — that money is at one time plentiful and in excess, and at 
 another time scarce and not to be had, — we willingly admit that 
 such may have been the case, but the cause of these fluctu- 
 ations is not in the Scotch system of banking, but in the cir- 
 culation of Scotland being so closely connected with that of 
 England, that fluctuations in the former are the necessary 
 result of fluctuations in the latter. They may be said, in 
 fact, to be parts of the same whole. The circulation of the 
 Scotch banks is understood to be about three millions, while 
 that of the Bank of England, and English country bankers, 
 is about thirty millions. Now what reasonable man, consi- 
 dering the close and intimate connexion which subsists be- 
 tween the two countries, could expect that a hurricane might 
 agitate the circulation of the one to its centre, while the smooth 
 surface of the other should not be disturbed by a single wave. 
 The governor's profound thoughts on the evils of Scotch 
 banking, therefore, are as groundless as the system, which he 
 considers the perfection of reason, is inconsistent with the 
 first principles of common sense and justice. Well may his 
 thoughts be called profound ! they are in truth too profound, 
 for they happen to have no foundation at all. 
 
 Driven from their untenable position — that the abolition of 
 the monopoly of the Bank of England would be attended 
 with injury to the public — some of the witnesses endeavour 
 to prop the falling system, by exciting our pity and com- 
 miseration, on behalf of the private bankers of London, and 
 country bankers of England, whose interests, it is alleged, 
 will be seriously affected by any change in the present sys- 
 tem, as well as put to great inconveniences in the details of
 
 59 
 
 their businesses. Now, this argument will have great weight 
 with those who think that the interest and convenience of a 
 thousand or two individuals ought to be consulted, in prefer- 
 ence to those of between ten and twelve millions. In such 
 sentiments we cannot concur ; but, on the contrary, avow, 
 that unless the London and English country banks subserve 
 the interests of the public, they ought not to be suffered to 
 exist, but should be remorselessly swept away as nuisances, 
 and numbered among the things that have been. But we 
 maintain that though there can be no doubt that the establish- 
 ment of joint stock banks of issue in London will most ma- 
 terially interfere with the business of the London private 
 bankers, as at present conducted ; yet, when Ave consider the 
 manner in which their business is at present conducted, 
 a change will be as beneficial to them as to the public ; while 
 the inconveniences in the details of their businesses, of which 
 they appear so apprehensive, we can assure them are quite 
 visionary. It will enable them to become much more re- 
 spectable, as well as more useful members of society. It is 
 true they act their present characters remarkably well, — they 
 strut, swagger, and look big, and who but themselves on 
 Cornhill, Cheapside, or 'Change, — and endeavour to per- 
 suade those whose money they condescend to keep for them, 
 that they are rather under an obligation to them for keeping 
 it than otherwise; but though they may succeed in persuad- 
 ing, or rather deceiving, themselves on that point, they may 
 depend on it, no " good customer," who has a considerable 
 balance constantly in his favour with them does not know on 
 whose side the obligation lies. Now, if the monopoly of the 
 Bank of England were abolished, they would have it in their 
 power to get rid of their present ambiguous character — half 
 beggar, half broker — depending for their means of supplying 
 the wants of their customers, partly on the eleemosynary 
 deposits of their friends, on which, so long as they do not 
 isvsue notes, they cannot afford to allow any interest, and 
 partly on accommodation, or advances from the Bank of
 
 60 
 
 England ; and become, in good earnest, what they now only 
 profess to be, bankers, in the proper sense of the word. 
 What, for instance, would there be, then, to hinder two or 
 three of the present companies coalescing, and forming them- 
 selves into a strong private banking company, with a capital 
 of a million or upwards, issuing their own notes, and allowing 
 a moderate rate of interest on their deposits, which the profit 
 of issuing notes would admit of their doing. They could then 
 look their best customers boldly in the face, snap their fingers 
 at the ancient woman in Threadneedle-street, whose favours 
 they would turn from in disgust, and refer her to her ancient 
 paramour in Downing-street. Again, though there can be 
 as little doubt that the repeal of the Bank of England mono- 
 poly will lead to the establishment of strong banks of issue 
 throughout the whole of England, and sweep away nearly 
 the whole of the present weak banks ; still, as their days are 
 numbered, at any rate, and as they will have it in their power 
 to strengthen themselves, which is the only chance they have 
 of escaping annihilation, the change will be greatly to their 
 advantage. In their present weak, tottering state, it is im- 
 possible they can be submitted to much longer. The tide of 
 public opinion runs too high not to overwhelm them, if they 
 attempt to stem it ; it will be only wisdom in them, then, to 
 make a virtue of necessity, and swim with it. In denouncing 
 these weak banks as nuisances, we admit they are not them- 
 selves to blame, but the monstrous monopoly of the Bank 
 of England. 
 
 It is contended, however, that although the establishment 
 of strong banks of issue were to produce pure and unmixed 
 evil to the London private bankers, and English country 
 bankers, it is a sacrifice which the interests of the public abso- 
 lutely require. The advantages to the public of the repeal of 
 the Bank monopoly, and the consequent establishment of 
 strong banks of issue, whether joint stock or private compa- 
 nies, may be briefly summed up as follows: — 1st, The univer- 
 sal confidence, on the part of the public, in them, from their
 
 61 
 
 acknowledged strength and stability, both from the possession 
 of large capitals, and from the great stake which the public, 
 either as proprietors themselves, or friends of proprietors, 
 would have in their prosperity. A run, even in times of 
 great difficulty, would then be nearly as infrequent in England 
 as it is now in Scotland. 2nd, The power which their capitals 
 would give them of procuring a supply of the precious metals, 
 when requisite, without producing those ruinous fluctuations 
 in prices which the Bank of England, by the admission of the 
 directors, acknowledge to be the only mode in which, under 
 the present system, a supply can be obtained. 3rd, The 
 supply of circulation could then be made to regulate itself 
 according to the demand. Money would not, then, as it is 
 now, be abundant in the hands of a few large capitalists, and 
 scarce in those of the comparatively poor, but industrious, 
 classes. Now, it is to be kept in mind, that for one large 
 capitalist, there are ten thousand small capitalists ; and that 
 the prosperity of a country depends much more on small 
 capitalists, possessed of from 500/. to 5000/. which they must 
 employ in trade, or productively, in order to gain a livelihood, 
 than on large capitalists, a great part of whose money is 
 generally unproductively employed. Besides these, there 
 are many other advantages, which it is unnecessary to par- 
 ticularise, these being, it is hoped, sufficient. The public 
 would then have a circulating medium, at once cheap, safe, 
 and sufficient for all the wants of the country. 
 
 We were inclined, on first consideration of the subject, to 
 have advocated the imposition of certain restrictions calculated 
 to protect the public against weak banks ; but on more mature 
 reflection, have come to the conclusion, that any such are 
 unnecessary, and might be inexpedient in particular cases. 
 We consider it very desirable, however, that government 
 should encourage the establishment of strong banks of issue, 
 by granting charters, with limited responsibility, to two or 
 three companies possessed of suitable capitals, say not less 
 than two millions if in London, and one million if elsewhere
 
 #2 
 
 in England. The strong would soon destroy the weak, if 
 already in existence, by either driving them out of the field 
 altogether, or compelling them to strengthen themselves, and 
 prevent their establishment where they are not already esta- 
 blished. At all events the public would then have the power 
 of choosing between the strong and the weak, and if they 
 preferred the weak, and suffered by so doing, they could not 
 blame the law as they can do at present, but themselves alone, 
 for the consequences of their preference. 
 
 Great as the injuries are which the defective system of 
 banking in England has produced, we disclaim most distinctly 
 and unequivocally all participation in sentiment with those 
 who are of opinion that it is the sole cause of the present 
 distressed state of the country ; or that the repeal of the bank 
 monopoly would act as a charm, and cure all the evils under 
 which the country now labours. The causes of the present 
 distresses are unfortunately so numerous and so obvious, that 
 he who runs may read. Some of them, it is greatly to be 
 feared, are irremediable. It is sufficient that the defective 
 system of banking in England is one of the principal causes 
 of these distresses, and that it aggravates all the others, to 
 justify the public in demanding a change. 
 
 We had intended to have made a few observations on the 
 important subject of a small-note circulation, but as our re- 
 marks have already extended far beyond the limits we had 
 originally assigned to ourselves, we must defer them for the 
 present. 
 
 In conclusion, we would strongly impress on the public 
 the necessity of the most strenuous exertions on their part, 
 if they would free themselves from the iron thraldom of the 
 Bank of England. Let them remember, that an active pigmy 
 can accomplish more than a sleeping giant; that the bank 
 directors, feeble pigmies though they be, make up in ac- 
 tivity what they want in strength ; and that it may fare with 
 the public, as it whilom did with Holofernes, to be slain by 
 a feeble woman, unless they awake from their sleep. Arouse
 
 63 
 
 ye then from your lethargy, and the victory will be as easy 
 as it will be certain. In the spirit-stirring language of the 
 poet we take our leave of you ; 
 
 " Awake ! arise ! or be for ever fallen !" 
 
 THE END. 
 
 LONDON s 
 
 i. I'NWIN, WHITE HON CODBT,
 
 Just Published, Price 2s. 
 
 THE LIFE AND ADVENTURES 
 
 OLD LADY OF THREADNEEDLE STREET. 
 
 WRITTEN BY HERSELF. 
 
 " Those who wish to learn some of the secrets of the Bant of England, will 
 find them in this veiy entertaining and well-written pamphlet. It is one of 
 the best things we have met with for some time, and contains some keen satire, 
 as well as good information." — United Kingdom. 
 
 " On so dry a subject as the financial arrangements of the Bank of England, 
 it requires no common talent to render amusing ; yet this very difficult task 
 has been performed by the author of this clever piece of soi disant autobiography. 
 * * * * It is remarkably well written, and will in all probability survive 
 many of its ephemeral competitors of more pretension." — National Omnibus. 
 
 LONDON : 
 RELFE AND UNWIN, 17, CORNHILL.