This, as a principle of Banking, the Bullion Committee pronounced unsound, and totally repudiated. There were reasons adduced in support of the decision, no doubt - there is a reason to be given for everything now-a-days - notwithstanding which, as I happen to have a fancy for saying what I think, I must take occasion to observe that Adam Smith in my humble judgment was right; and that, not only fundamentally and wholly so, but that the more manufactures and commerce increase in a country limited like ours in space, and growing in population, the more indispensable will the rule in question be found, and the more energetically must it be acted upon, unless you would break down her manufacturing and mercantile interests, and irrevocably pauperize her multitudinous inhabitants.

It is wise, no doubt, to guard against overtrading; but there is perhaps even more wisdom in avoiding the opposite extreme. There is, and always must be, a tendency to over-trading in a community like ours. Many a bill has been, and is now, discounted for a bona fide transaction, which, nevertheless, was only the first step in a foreign venture, destined, because either im-maturely considered or injudiciously applied, to prove a complete and irredeemable failure. Such speculations are part and parcel of the nature of commerce, and are constantly pushed to the extreme in all countries. Let us allow all the weight the truth can fairly carry, and after all, that I apprehend will prove a much more salutary and safe policy, which leaves excesses of this kind to the natural course of things, which looks for ultimate protection and redress to the steady correction which the reactions they must inevitably generate will administer, and prefers to let things right themselves, rather than by interfering over much to check the progress of improvement, and that development of additional resources, which has been rendered indispensable by our advanced position, our increasing numbers, the luxuriant products of existing capital, and those high attainments whose generous nature knows no cold or stagnant medium between fruitful progression and withering decay.

On we must go; our rapid movement has given a momentum to our action which makes pause or halt incompatible with safety. The energies of the empire must be fed; they ought not to be over-stimulated, neither ought they to be forcibly depressed or pinched. The greater the scale of our operations, the quicker the velocity of our motion, and the more precious the magnitude of our undertakings, the more are genius, judgment, skill, originality, and invention required in our leaders and instructors. If rashness would be ruin, so would faint-heartedness. Fortitude, well-informed and gently-tempered, applying to the exigencies of the times those rules of wisdom which periods less agitated and critical have given birth to, avoiding particular sects and dogmatizers of all classes, and providing steam enough to keep the engine to the speed it has been proved capable of attaining with safety - these are the qualities our ministers of trade and finance should possess; to them the spirit of the country would respond. But while the Bank of England is a close monopoly, its constitution a composition of contrarieties, the management of its affairs an impenetrable mystery, and while all the legislative inquiries instituted respecting it are conducted in secresy and concluded with reserve, what can we expect but to be kept tossing, as we have been tossed for years, in the eddies of a whirlpool, the dangers of which are magnified by the frequency with which stranger after stranger is put to the helm, and every expedient is resorted to for the purpose of righting the vessel, but the plain and sensible one of returning to the tactics which our single-minded fathers found safe and successful.

The Bullion Committee has also been considered by some writers to have impugned the correctness of Adam Smith's conclusion respecting the efficiency of a demand for gold as the preventive of a derangement of prices from over issues. But if we supply those explanations and distinctions which all close reasoning, pro and con, legitimately admits, there will not, perhaps, be any such substantial difference discernible between the two authorities as has been presumed to exist.

Smith says, "Should the circulation of paper at any time exceed the value of the gold and silver of which it supplies the place, many people would immediately perceive that they had more of this paper than was necessary for transacting their business at home; and as they could not send it abroad, (bank-paper only passing current where it is issued,) they would immediately demand payment for it from the Banks. When this superfluous paper was converted into gold and silver, they would easily find a use for it by sending it abroad, but they could find none when it remained in the shape of paper; there would be, therefore, a run upon the Banks to the extent of this superfluous paper1."

The language of the Bullion Committee on the same point is as follows: - "It is important to observe, that under the former system, when the Bank was bound to answer its notes in specie upon demand, the state of the foreign exchanges and the price of gold did most materially influence its conduct in the issue of those notes, though it was not the practice of the directors systematically to watch either the one or the other. So long as gold was demandable for their paper, they were speedily apprized of a depression of the exchange and a rise in the price of gold, by a run upon them for that article. If at any time they incautiously exceeded the proper limit of their advances and issues, the paper was quickly brought back to them by those who were tempted to profit by the market price of gold or by the rate of exchange. In this manner the evil soon cured itself."

1 Wealth of Nations, book ii. chap. ii.

This is evidently nothing more than Smith's doctrine in other words; the same principles are setup, and upon the same reasoning, in both the extracts here given; and if one is correct so must the other be also. At the same time it is not to be denied, that we have had in this country reason to believe that an interval may occur, while the effects just stated are in a course of production, or rather, an interval may intervene before they begin to operate perceptibly, during which prices may be temporarily deranged. But the ultimate ratio is the same under all circumstances; and the most we can do for the Bullion Committee is to admit that it showed the precise way in which the effect is brought about: as this, - an over-issue affects prices, and prices being affected, the holder of superfluous notes finds that he has more of them than he wants, or than will exchange against commodities of the quantity and quality they used to do. He will therefore proceed to set things right by returning the notes again to the Banks from which they were issued; and thus the cause and effect are exactly what Smith described; and the only question to be raised, if that be worth a discussion, will turn upon the time the evil takes to work its own cure.