These are causes with which every writer and reader upon the currency is familiarly acquainted. Of the effects of one and all of them, I need not observe here, that we have had severe experience of late years. I hold it to be most important to bear this fact in mind; because, knowing, as we do from experience, how frequently one or other of them occurs, we are bound to take such recurrence into consideration in our calculations of the future, and set off the difficulties thus introduced as so many natural drawbacks upon the advantages we should otherwise be in a condition to enjoy in security.

There are two other objections to the rule in question as the sole mode of regulating the currency, to which a prominent place is due. The first lies in the fact, that the foreign exchanges represent not the whole but a part only of the commercial transactions of the country. If from the value of all our exports, the portion destined for the colonies be deducted, there will be found, I apprehend, a residue, however considerable in itself, yet so small when compared with the amount from which it has been taken, as to render extremely problematical the operation of any rule which shall take the course and effect of the business described, by the sum of that residue, as a representative of the total commerce of the country. Our colonial trade is not included in the foreign exchanges. India, Canada, the West Indies, and Australia, pay for what they take from us by bills and remittances which are never seen upon the latter mart. The colonial and Australian joint-stock Banks, mediums of monetary agency which date their existence only a few years back, indicate the channels through which that rich stream of traffic flows, and inform us from time to time of the profit it yields, These institutions were unknown and undreamed of when Mr. Thornton first told the Bank directors that the foreign exchanges were the true guides by which they were bound to regulate their issues. No Prussian league for the promotion of continental, and the exclusion of British manufactures, had as yet been called into life; we had then the carrying trade of the world, and business at almost every port; we have now nothing but complaints amongst our merchants, of which the mournful and unvarying burden is, that the Continent is gradually shutting her markets against our goods, and that our transactions are daily diminishing with them in value. And yet this is the partial condition of things by which we are seeking to regulate our currency - taking results produced by one division of an extended and broadly separated whole, as the measure and guide of a rule of action which shall govern every relation and dependency of that whole. And governed unquestionably the whole is by it, but severely and unfairly, because the data or criteria furnished for the formation of the rule proceed not from the whole, but only a part of it1.

1 Politicians tell us, that two and two do not always make four in matters of finance. Something of the same sort of discrepancy is observable between certain doctrines propounded in Banking, and the effects produced when they come to be enforced. The foreign exchanges is one case in point; another is the control which it is said the Bank of England always possesses over the currency. Mr. Jones Loyd, following Mr. Norman, affords some striking illustrations of this doctrine. It appears that the Bank of England circulation was,

Mr. Loyd gives no less than seven more tabular statements, all exhibiting a similar action, and then observes, "These facts are The second objection is, that even supposing the rule unexceptionably right in principle, a quality of which, under the present relations of the case, I deny it the possession, the Bank has not the power to observe it in practice. The truth of this assertion is not to be denied. The Bank may and often does seek to contract its circulation by selling stock or exchequer bills, and receiving her own notes for them; but whenever she does this, and suddenly tightens the money-market, she is powerless with regard to her own depositors, who rush in, and claiming their balances, disperse them at a profit over the money market, and thus defeat the intended action of the directors.

"How is it possible," asks Mr. Jones Loyd, and the question is too cogent to be resisted; "How is it possible that the proper relation between the paper issues and the bullion can be steadily maintained whilst the Bank is liable to be compelled to issue upon her deposit accounts, upon the discount of commercial bills, and for the supply of the public wants of Government? The consequence of uniting irreconcileable with the doctrine which maintains that the Bank of England has uncontrolled dominion over the circulation of the country; and unless it can be disproved, it is unreasonable to attribute the derangement of the currency wholly to her." (Remarks, etc. pp. 71 - 76.) these, which are strictly Banking considerations, with a power of regulating the amount of the currency, which is a duty of a very different character, must be embarrassment to the party in whom these conflicting functions are united, and ultimately an abuse of the power which is entrusted to her. The public, looking to her as a great Banking company, and estimating the duties incumbent upon her by reference to her character in that respect, hold her responsible for relieving commercial distress, and upholding public credit. She finds that it is extremely difficult as well as unpopular to refuse the demands that are made upon her; and, therefore, easily convinces herself that it is impossible. She yields to the force of these demands, and, not distinguishing between an advance of capital to merchants, and an additional supply of currency to the general mass of circulating medium, she applies to the satisfaction of them, not her Banking resources only, but also her power over the currency."