These were the official facts Mr. Palmer had to rebut, and he met them as follows:"The liabilities and assets of the Bank in October, 1833, upon an average of the three preceding months, were,

"On the 27th December, 1836, the bullion was 4,300,000l., showing a reduction of 6,600,000l. The circulation was then 17,300,000l. and the deposits, excluding those of a temporary character, (four and a half millions,) were 9,200,000l.; the diminution of the two taken together having been 6,300,000l."

Having got rid of four millions and a half in this statement in so many words, Mr. Palmer's boldness as a sophist, and his rashness as an advocate, will appear in the explanation he subjoined to justify this emission.

"It may here, perhaps, be as well to explain the nature of what are termed extra-deposits, in order to show that they are independent of the regular working of the Bank. They have consisted of money belonging either to government, or the East India company, altogether independent of their ordinary transactions. The first arose out of the contract for the West India loan, upon which a discount was allowed for prompt payment higher than the market rate of interest; and as the prompt payments thus made were not required for issue to the West India claimants for several months afterwards, it became necessary, in order to preserve the currency in the same state, as if the payments for the loan had not taken place, and to prevent its undue contraction, to re-issue the money to the public. This was done by contract with the money-dealers, so as to insure its return to the Bank, at the time of the adjustment being made with the claimants, by the commissioners. .

"The second case was that of the East India company realizing their commercial assets, to an extent far exceeding their ordinary wants for payment, upon the commencement of the accumulation, to the extent of 600,000l. or 700,000l., above their ordinary balances; and application was made to the Bank to ascertain whether it would undertake the risk of lending the money; paying to the company a given rate of interest . . .It never could be expected, that the Bank should be required to pay a rate of interest for notes, or bullion belonging to others, merely for the sake of keeping them unemployed; having at the same time no excess beyond the twenty-four and a half millions of securities, which the ordinary working deposits, and circulation, entitled that body to hold."

From this specimen of candid statement, and sound argument, I turn with satisfaction to Mr. Loyd's reply; and venture not to mar its effect, by adding a word by way of praise, or a single fact by way of corroboration.

"This mode of getting rid of a certain part of the deposits and securities, with the view of obtaining a table which shall exhibit a desired result, is not satisfactory, because it does not rest upon any distinctive principle. The deposits in the hands of the Bank, left there by different classes of the community, and arising out of different circumstances; may, no doubt, differ in respect to their probable permanency and variation of amount; but these are only differences of degree, and make no essential difference upon principle in their nature or character. They are all equally Banking deposits, liable to those variations in a greater or less degree which are incidental to such deposits.

"The course adopted by Mr. Palmer, is a mere arbitrary mode of making up an account to exhibit a desired result. There is no real distinction between these deposits, by which he can justify the plan of removing one class of them from the operation of a principle, to which he still holds the other classes to be subject; the fact is, that the principle is applicable only to the management of the currency; and is totally inapplicable to the management of Banking-deposits. By applying the principle to the aggregate result of the two classes of business, the Bank arrives at a rule, the possible consequences of which are of the most serious nature.

"The rule is, 'that the securities being kept equal, any diminution in the amount of specie may be met by a corresponding decrease in the aggregate amount of circulation and deposits.1 The possible consequence is, that a large diminution of specie may take place; and be met, not by a corresponding decrease of circulation, but solely by a decrease of deposits. Thus a heavy drain upon the treasure of the Bank, might take place under this rule, without any contraction of the currency by which that drain is to be checked, or the Bank to be protected.

"The rule now adopted by the Bank is incorrect, and cannot be safely relied upon, in the management of the currency. The rule ought to be, that the variations in the amount of circulation shall correspond to the variations of the amount of bullion; and the adherence of the Bank to this rule ought to be obvious upon the face of the published accounts. By this means, and by this means only, can we obtain 'a paper circulation varying in amount exactly as the circulation would have varied, had it been metallic.' "

Mr. Palmer further pleaded that the mischief had been produced by over issues upon the part of the joint-stock Banks; and to this, Mr. Loyd retorted with singular dexterity and effect; that the Bank of England had failed to give the warning due, and always expected under such circumstances.

Another passage disposes of the whole case.

"The following is a statement of the circulation and bullion of the Bank, as given in the monthly returns which are published in the gazette, from January, 1836, to February, 1837, inclusive.

"Upon an inspection of this table we can not fail to remark, "1. That the circulation is considerably higher at this moment than it was in January, 1836, although during this period the bullion has undergone a very large diminution.