"As applicable to this point, we cannot forbear from quoting an observation which occurs in the evidence of Mr. Ward, and which puts the true principle of a paper-currency with peculiar clearness and force: 'Individually, as a director of the Bank, I do not presume to alter the King's currency, but I endeavour always to bring the paper as nearly as possible to what the currency would be if no Bank existed, and the currency were all gold.' (Qn. 144, No. 2080.) Who, then, we may ask, has ' presumed to alter the King's currency' during the last year, when we find, by the accounts before us, that 'had it been all gold' the decrease would have been 6,800,000l.; whilst, being a paper circulation, and 'a Bank existing,' the decrease has been only 600,000?"

The next blow inflicted upon the directors is not less mortal.

"The amount of the securities was to be kept fixed, under ordinary circumstances; but there might possibly be extraordinary circumstances in which a forcible and more rapid contraction of liabilities (than that which the simple action of the public upon the Bank would produce) would be requisite. Such was the rule; what has been the practice?

"The security given against the foreign credit has no doubt been written off from this account, and therefore the amount of securities under a natural state of things, without reference to the foreign credit, would stand higher than they are represented in this account by 2,500,000l.

"This increase, it must be further observed, has taken place during a period, when, if such a contingency can ever occur, those 'extraordinary circumstances' were in course of occurrence, which would render necessary a forcible and more rapid contraction of liabilities."

Searching through the circumstances in detail of these repeated faults, and never ending deviations from system, Mr. Loyd touches incidentally upon another of those contradictions in doctrine and practice which illustrate so curiously the history of the progress of opinions relating to the currency amongst our Bank directors of late years.

"The obligation on the part of the Bank to uphold public and private credit when called upon, is a subject which requires very serious consideration. This extraneous support to credit will be most required in periods of commercial pressure, and under those circumstances which are the necessary and direct results of a contraction of the circulation. The Bank seems thus called upon to act in a circle; a decrease of bullion requires a decrease of issues; decreased issues produce commercial pressure, in consequence of which public and private credit is shaken; and then arises the obligation of the Bank to interpose for its support. This interposition must necessarily assume the form of an increase of discounts, and hence a second class of securities, which, in a period of pressure, instead of being diminished must be increased."

"The directors in 1819, considered the repayment of a large portion of the advances made by the Bank to the Government, as essentially necessary preparatory to the resumption of cash payments. The reason for this demand, assigned by the directors, and acquiesced in by the Legislature, was, that over the notes issued in the form of advances to the Government, they had not practically the same control as they have over notes issued in commercial discount. 'An issue of bank paper upon Government security is beyond the control of the Bank; an issue upon commercial bills is always within the power of the Bank.' {Mr. Dorrien. the Governor's, Evidence, p. 32.) This view was sanctioned by Mr. Haldimand, a younger director than Mr. Dorrien, and who, in his evidence, maintained very different and more enlightened opinions upon the general question of the management of a paper circulation. He states, 'I have no hesitation in saying, that had the Bank the control over the whole of its issues, or in other words, were the whole, or nearly the whole of its paper issued upon commercial discounts, by diminishing such issues, it might pay its notes in specie within the most limited period, and with the most perfect safety to itself.' (p. 43. Q. 31.)

"These opinions, emanating from the Bank directors, were adopted and sanctioned by the Parliamentary Committees before which they were given.

"Let us now contrast with them the evidence given by the directors of the same concern thirteen years afterwards.

"Mr. Horsley Palmer's evidence: "'Do you not hold that the discount of private paper is one of the worst means which the Bank, as a Bank of issue, can adopt for regulating its notes? - Yes, provided they are adequately supplied with other marketable securities.' (Q. 173.) Again: 'It is not deemed to be desirable to attempt to regulate the amount of issues of the Bank in London through commercial discounts; but there are occasions and circumstances when the functions of the Bank, as a Bank for commercial discounts in the capital, have been and ever must be of the first importance to the country.' And at the close of the same answer it is stated that, 'to be compelled to limit the quantity or description of bills to be tendered for discount, either of these measures would be equally detrimental to the commerce of the country.' (See question and answer 477, p. 36.)

"Mr. Ward is asked in what way he would shorten the amount of currency, in preparation for an expected turn in the exchanges against the country.

"'I have always endeavoured that the Bank should be possessed of a certain number of securities coming into it, so that a discretion should be exercised as to whether we should issue it again. The dead weight - the annuities - bring in a considerable excess annually, and I should withhold the reissuing of those moneys; I should not make a forcible operation by disappointing any person of discount; (Q. 2088, p. 145.)

"Mr. Norman: "'Are you of opinion, supposing a large quantity of commercial paper could be obtained for discount in London, it would be desirable for the Bank of England to regulate its issues upon commercial paper solely, or would it be preferable to regulate them by exchequer-bills? - I certainly think that if the issues were to be regulated one way or the other, I should much prefer exchequer-bills. Under present circumstances I consider it quite impossible, without at times doing immense mercantile mischief, to regulate them by discounts. The usury laws alone are quite decisive on that point." (Q. 2429, p. 170.) And subsequently, in the course of reply to another question, he observes, 'I consider the attempt to reduce discounts in general, by rejecting the bills of any particular persons, as a plan likely to fail, and to be productive of great public inconvenience; and that it ought never to be adopted, except in cases of the very last necessity.' (Q. 2437.)