Mr. Loyd sets out by showing, with the greatest propriety, that there was a period - one so recent as the year 1819, - at which the directors of the Bank of England, did not profess to be aware of, or to be bound by the first rudiments of the knowledge proper and peculiar to men of their calling and business; and that the management of the circulation, during what he calls the suspension period, was not regulated by reference to any definite or established principles.

As Mr. Loyd is a good writer, as well as a good reasoner, I shall freely adopt his own language upon this and other occasions.

"Neither upon the subject of the measure by which the excess or deficiency of the amount of the circulation was to be determined; nor of the means by which the circulation when in excess, was to be restricted; nor of the mode by which the amount of the circulation affects the state of the exchanges; nor of the principle upon which a reduction of its issues was calculated to secure to the Bank its competency to discharge its notes in gold; does it appear that any clear and fixed views were entertained by those who at that time were entrusted with the management of the currency. A supposed obligation to meet the real wants of commerce, and to discount all commercial bills arising out of legitimate transactions, appears to have been considered as the principle upon which the amount of the circulation was to be regulated; whilst the single circumstance which, under such a system, could keep their issues within any reasonable bounds, viz. the accidental fact that the market rate of interest for bills of the description which were alone discountable at the Bank, did not materially or for any length of time exceed the Bank rate of discount, was wholly unobserved, and therefore unappreciated by them.

"A connexion was admitted to exist between the state of the exchanges and the amount of the circulation; but no definite idea was formed of the nature of this connexion, nor was it deemed that any practical rule could be deduced from it, for the guidance of the Bank in regulating the amount of its issues.

"The rate of interest seems to have been looked upon as a much better barometer for measuring the fluctuations of the circulation; whilst a reduction of its issues was held to be a measure of protection to the Bank, not so much on account of any influence it might exercise upon the state of the exchanges, and its consequent tendency to put an end to the inducement for demanding gold, as on account of its simple effect in reducing the absolute amount of notes which would be presented for gold. Indeed, the doctrine that the state of the exchanges is influenced by the amount of the circulation, was formally denied by a solemn resolution of the court of directors, passed March 25th, 1819, and laid before Parliament. * That this court cannot refrain from adverting to an opinion, strongly insisted on by some, that the Bank has only to reduce its issues to obtain a favourable turn in the exchanges, and a consequent influx of the precious metals; the court conceives it to be its duty to declare that it is unable to discover any solid foundation for such a sentiment.' "

"Having accumulated a considerable quantity of specie, the Bank thought that the most natural and effectual mode of preparing for a general resumption of cash payments, was to spread the accumulated store of specie throughout the country by the intermediate adoption of a partial resumption" Remarks, etc.

This is carrying the case home to the chimney corner of the Bank parlour, and upsetting the directors under their own table. But the severe critic, conscious of his own strength, is not content with a general summary, but calls the parties forth by name, and convicts them out of their own mouths. Mr. Harman, and Mr. Dorrien, both governors of the Bank, had been examined in 1819, on which occasion it appears - Mr. Harman is asked: "What is the indication of there being circulation enough in the country, neither too little nor too much, and what the regulator that determines that sufficiency? - If it is meant to allude to discounts, I should have only the old answer to give; undoubtedly good paper being sent into the Bank for discount, of which we must judge the best we can, that is the criterion; I take for granted that established houses of good character would not come to the Bank to pay five per cent. for money, if they did not want it.

"What regulates, in your opinion, the amount of circulating medium which is necessary for the purposes of the country; is it the amount of revenue and expenditure and the general amount of foreign trade in the country, or on what other circumstances does the amount of the circulating medium depend? - I should think decidedly what has been suggested, the amount required for the revenue, and the general expenditure, and also what is wanted for inland and foreign trade.

"Do you think that the increase of the issues of paper would not increase prices? - I think an undue increase of the issues of paper decidedly would increase prices.

"What do you mean by undue in that sentence? - The meaning of the word 'undue,' in that sentence is an over issue; if more paper is issued than the honest real wants of the public require, that certainly would have an unfavourable effect upon prices.

"Do you mean by that, more paper than private individuals may employ with profit to themselves? - More paper issued than private individuals may employ with just profit to themselves; if so large a sum of paper is issued as to induce men to speculate improperly, that I should say was an undue issue.

"State what you consider to be the criterion of a superabundant issue? - The criterion of a superabundant issue is when money will not produce a sufficient interest. I think, when in fact there is no demand for money, it will very soon discover itself in the money-market, whether there is a superabundance or not.