"2. That the circulation continued steadily to increase from January, 1836,up to May; and that even in September it was at the same amount at which it stood in May, although the drain of bullion was, by Mr. Palmer's acknowledgment, in full force from April to September.

"3. That there does not appear to have been any effectual reduction of circulation, subsequent to the rise of interest upon exchequer bills; although this measure was loudly called for as necessary to enable the Bank to realize its securities, and thus reduce its issues. We would ask any reflecting person to look first to the column of bullion, and mark its regular and rapid decrease; then to compare with this the column of circulation, terminating with a larger amount than that with which it commences; and having done so, to declare whether he discovers any evidence of the Bank having made the amount of its circulation to fluctuate as it would have done, had it been purely metallic; or whether he can perceive, during the drain of bullion which commenced in April, or during the months which immediately preceded that event, any signs of that steady and undeviating contraction of circulation on the part of the Bank, on which alone any just objection to the conduct of the joint-stock Banks can be founded? It is not a satisfactory reply to this question to say, 'that the diminution of bullion has been met by a diminished amount of deposits." If the joint-stock Banks see, by the published returns, that the circulation of the Bank is maintained at its full amount; they are warranted in concluding that there is no real call for a diminution of their issues, notwithstanding that some of the depositors in the Bank may have thought proper to draw from it a portion of their funds. Indeed, the Bank is not entitled to calculate at all upon the long-sightedness or prudence of the joint-stock Banks, hut ought to rely solely upon the influence which a steady and continuous course of contraction on her part, must exercise upon the proceedings of her subordinate rivals. This it is clear she has not done from January, 1836, to February, 1837; and, therefore, she appears to be without any sufficient ground for attributing the whole or the greater portion of the existing derangement to their misconduct. If they have done wrong, it appears to have been from the want of that controlling action on the part of the Bank of England, which she might have exerted, and has not."

From the date of these masterly expositions, the public attention was turned from all quarters with eager respect to Mr. Jones Loyd, as the oracle from whose lips the country was sure to learn the right rule of action in money matters, and the censor upon whose judgment a confident dependence was to be placed for a correction, at once impartial and severe, of the mistakes of the Bank of England. But in 1840 no inconsiderable portion of the currency reform party who had adopted Mr. Loyd as their leader and champion, was surprised to behold him step into the public arena of his own accord, and throw the mantle of his authority round the shoulders of the Bank directors. On the 12th of December. 1839, the directors of the chamber of commerce at Manchester, printed "A Report on the effects of the Administration of the Bank of England upon the Commercial and Manufacturing interests of the Country." To this document Mr. Loyd quickly volunteered a reply in the form of "A Letter to J. B. Smith, esq., President of the Chamber, etc." The character of this short and unexpected composition may be soon sketched. It contained passages excellently conceived and expressed; a philosophical vigour of thought and style superior to the ordinary flow of writing upon the same subject; much anxious flattery of Manchester and Manchester-men, and an emphatic deprecation of the growing license of unqualified attacks upon the Bank of England - the faults and errors of which were so lightly touched upon, that upon the whole the apology, to the eye of the general reader, had very much the air of a panegyric.

To me the letter appears to have this principal defect; it wants that frankness and completeness as to its object and effect which constitute the author's forte, and give so much satisfaction in some of the other productions of his pen. The Manchester merchants impugned the system of the Bank of England from 1835 to 1839, reviewing as they proceeded, the relations and consequences in which that system involved the commerce and manufactures of the country. Mr. Loyd, as we have just seen, has done the same thing himself upon another occasion. His vindication in this instance rests specifically upon the management of the currency in a single year - 1838 - and after showing that the measures of the Bank were clear from blame in that limited period, he covered the details of the larger portion of time over which the charge extends, with a suggestion of general principles, admirably enounced, and an impeachment of the country Bankers as large participators in the offence complained of. Thus, however significantly faults and omissions are indicated in the report, which render that document an inconclusive authority, the neglect to supply upon his side matter equally pertinent to the issue, subjects his own performance to the very charge of imperfection he was the first to bring forward; and affords the Bank an excuse - at least as far as "The Letter" goes - for claiming a verdict of not guilty upon the whole of the indictment, upon no better grounds than that the proof of extreme wrong has failed upon one out of several of the heavy pleas upon the record.

"The phenomenon," according to Mr. Loyd, "examined in the Manchester report - the fluctuations of prices and the alternations of commercial affairs - is not attributable to any one cause exclusively: it is the result of many concurring causes, dependant each upon different principles, which ought all to be carefully analysed and afterwards weighed against each other."