"In what manner? - It will be, if I may use the phrase, hawked about at a lower rate of interest than is usual.

"Do you think that the foreign exchanges are affected by any considerable increase or diminution in the amount of the issues of the Bank of England? - I cannot say that I have ever thought that they are.

"With a view to what immediate effect would the Bank reduce their issues? - To the consideration of their own security, and to make themselves as independent as possible, in order that if there should be a run upon them they should have the means of fulfilling their engagements. Putting, as the Committee invite me to do, the consideration of the public out of view, it would then be for the safety of the Bank exclusively that I should act, and therefore reduce the issues at all events, that we might fulfil our own engagements.

"Would it be with a view to facilitate the purchase of gold by the reduction of its price in the market? - That would not be my first object; an extravagant lowering of the amount of paper would very likely have the effect of lowering the price of gold, but inasmuch as we withdraw from circulation our paper, the means we already possess would be more equivalent."

Mr. Dorrien is asked, "Is the Committee to understand that the Bank of England regulate their discounts solely by a view to the nature of the transaction and the state of the parties, and not with any view to the state of foreign exchanges? - If a house which is in the constant habit of dealing in exchanges were to send in a large sum for discount, at a time that the exchanges were unfavourable to the country, it certainly would become a part of the consideration.

"Is that because such a state of exchange might affect the credit of the house? - No; with reference to the good of the country at large.

"Then the discounts of the Bank of England are influenced by a view to foreign exchanges, in a case where the applicants for discount are foreign merchants? - Where they are dealers in exchanges.

"Are the discounts of the Bank of England in all other cases regulated solely by a regard to the transaction and the character of the parties? - The various circumstances that bear upon the question, the solidity of the party, the amount of their account, and the nature of their business, are taken into consideration.

"In any other case than that you have stated, would regard be had to the state of the exchanges?

- I do not think that that is made a consideration in a general way."

"Do you conceive the effect of the repayment by Government of a portion of the Bank advances, would be the reduction of the issues of the Bank? - The Bank is always ready to lend on commercial paper that is legitimate in its origin, and is not carried to too great an extent by the parties who apply for discount. The issues of the Bank would be regulated according to the absolute wants of the country, but that must be learnt by experience." (Remarks, etc. pp. 6 - 9.)

Such having been the notions of the directors with respect to the currency in 1819, Mr. Loyd points to the curious and striking change of opinion upon the part of the Bank, and the corresponding modification of her system, in 1832; when Mr. Ward, then a director, said in his evidence:

"In the year 1819, when the Committee sat, there were some resolutions forwarded to the Committee from the Bank, stating some of the principles they had regarded; and it will be recollected that they distinctly denied the principle, that the exchanges were to be regarded in regulating the issues. Subsequently to that period, opinions became changed, and of course, in the working of the machinery, they found the merits of the case such as they really were; and a growing disposition manifested itself to heed, in a greater degree than they hitherto had done, the principle of exchange and bullion; but in 1827, I moved that that resolution should be rescinded, and from that moment I have considered it the practice of the Bank, and it was the practice, in a great degree, even previously to that." (p. 143. Q. 2074.)....."It was first considered a theoretical notion, but subsequently it was found, little by little, that the practice did agree with the theory." {Remarks, etc. p. 20.)

The great Bank champion, however, in 1832, was Mr. Horsley Palmer, then its governor; and it is due to him on account of his position, of the part he undertook to act, and the foes he drew down upon him, to let him stand out conspicuously in his own person, and wield his weapons according to the fashion he preferred.

Of this gentleman's public performances I desire to speak with respect, but without flattery. He is decidedly clever; but appears to be neither very scrupulous nor over-candid. In 1837, Col. Torrens, the well known writer upon Banking and Political Economy, addressed a letter to Lord Melbourne on the causes of the recent derangement in the money-market, etc. Soon after this, Mr. Horsley Palmer brought out his "Causes and Consequences of the Pressure upon the Money Market," in which he replied to the colonel, point by point, but declared that this was quite accidental, and had been done without his having seen, while he was writing, what had been written by his adversary on the other side ! Again, he propounded in J 832, without any qualification, and took credit to himself, while it was thought to be unexceptionable, for the celebrated safety-rule of management; but when it had failed in operation, and was proved to be no specific, he permitted, in silence, the imputation to rest upon the directors, whose mouth piece he had made himself, of having been aware that "the principle was not perfect, and that they knew its weak points."

Being asked the principle by which, in ordinary times, the Bank is guided in the regulation of their issues? he answers, "(excepting under special circumstances) it is to invest and retain in securities bearing interest, a given proportion of the deposits, and the value received for notes in circulation, the remainder being held in coin and bullion; the proportions which seem to be desirable, under existing circumstances, may be stated at about two-thirds, and one-third in bullion; the circulation of the country, so far as the same may depend upon the Bank, being subsequently regulated by the action of the foreign exchanges.