The currency inflated, and the remedy convertibility

Money no more active than other kinds of capital

If the assumption of the Committee be correct, then money is not capital

No meaning can be attached to the phrase "rapidity of circulation"

Quantity of money always in ratio to the exchanges

No difference in principle between bank-notes and other instruments of ex-

change.

Resolutions accompanying the report of the Committee rejected

Adoption of the counter resolutions of Mr. Vansittart

Lord Stanhope's bill...

High price of gold due to excess of issues by the Bank

No reduction in their amount would have increased their price, unless it had

increased their value

The great question, the proper manner of issue, never considered by the

Committee..

209

210

211

211

The report failed to establish a single principle in monetary science

Placed on still firmer foundations the greatest of all its errors.

"An Inquiry into the Nature and Effect of the Public Credit of Great Brit-

ain," 1802 . . . .

No distinction between business and fictitious paper as the basis of cur-

rency ..

Difference between real and fictitious bills shown by the different effects of

the currencies based upon them

"Thoughts on the Restriction of Specie Payments by the Bank of Eng-

land," 1803 (note)

215

the Bullion Report .

Of little value but in keeping alive the opposition to the Restriction Act (note) 215

WILLIAM HUSKISSON.

"Question concerning the Depreciation of our Currency : " a vindication of

Distinction between metallic and paper money .

The latter circulates not by its value, but by confidence or authority

Value no more a necessary attribute of money than of a foot-rule

Neither confidence nor authority can create values

A foot-rule not, like money, receivable in exchange for the articles it

measures

217

.

If paper money be depreciated, the metallic money in circulation will also

be depreciated in reference to bullion

Singular confusion into which Huskisson fell in reference to money

"The Principles of Political Economy and Taxation," 1817 .

Ricardo the central figure of the new school of Economists, as Smith of the

221

old . .

221

As wanting in ideas as Smith in method and in knowledge of affairs

Pushes Smith's doctrine, that value is not a necessary attribute of money,

The insignia of government cannot create values

It circulates by virtue of the insignia of government
Convertibility only useful in preventing an excess

Convertibility a very inadequate test of the propriety of issue

222

222

223

224

Prices controlled by the least favored, not by the most favored, producers 228

His assumptions wholly opposed to the fact

229

No bullion to be used, from the inconvenience of reaching it

Communication addressed by Lord Liverpool to the Bank

List of speculative enterprises brought upon the money market (note)
Extent of the speculative mania

Saved from suspension by the discovery of a package of notes

Action of the government

Evil of an excessive issue of paper money

The remedy an improvement of the country paper

239

Evil not caused by small notes

239

The Bank of England to give up its exclusive privileges, and establish

branch Banks

240

Country Banks to be allowed to increase the number of their partners

Lord Liverpool's plan adopted

Committee of the House of 1832 upon the extension of the Bank Charter
Matters to which its attention was directed.

Whether there should be one or several issuers of the currency

If only one, should that be the Bank of England?

What checks to be provided to secure a proper management of Banks
of Issue . .

No conclusions reported by the Committee.

Its labors consisted chiefly in the examination of experts,

Testimony of the experts opposed to every principle on which currency is

Its action corrected and neutralized by that of the joint-stock Banks

The latter the great issuers of the currency

254

254

Management of the Bank.

254

Evidence of J. Horsley Palmer, President, and other Directors

254

Its issues not based upon bills, but upon government securities

Discount of bills left to Banks and bankers

254

254

Rule of the Bank to hold coin and bullion equalling in amount one-

third its liabilities

255

The currency then even or full

255

Starting with this amount, all fluctuations left to take care of themselves 256

An outflow of bullion to be left to work its own cure

256

.

If excessive, the Bank might regulate its issues by reference to the

exchanges

256

If its assets were in bills, their payment would return its notes without

effort on its part

Mr. Palmer undertakes to account for the failure of the rule.

261

"The Causes and Consequences of the Pressure in the Money Market,"

It did not reduce its issues, for the reason that the demand was domestic,

not foreign

264

When the exchanges were even or favorable, it supplied all the currency

wanted

264

Hence the condition in which it was placed

266

Existence of joint-stock banks incompatible with that of the Bank of

England ..

Its reserves to have reference to domestic as well as to foreign trade.

Its issues the cause of an unfavorable state of the exchanges.

269

270

Made when they are even or favorable

270

A large amount of gold in the Bank evidence of a depressed condition of

production and trade . .

"Reflections Suggested by a Perusal of the Pamphlet of Mr. J. Horsley

Palmer," 1837 .

"The Bank acts in two capacities: as a manager of the circulation, and

as a body performing the ordinary functions of a banking con-

cern

These two functions wholly distinct.

274

274

275

As a manager of the currency, the rule stated by Mr. Palmer perfectly

correct

275

Wholly impracticable when applied to the regulation of its conduct as a

banking concern

275

As an issuer of currency, it can keep the amount of its securities uniform 275

Cannot, as a banking concern. . .

275

The amount of its circulation to be represented by a fixed amount of

securities, and by the bullion it holds.

275

.

By such means only can a currency be obtained varying in amount as it

would have varied had it been metallic .

276

The Bank to be separated into two departments

276

It now unites two wholly incompatible functions

277

It leaves the issue of currency to parties incompetent to their duties

Disturbing influence of joint-stock Banks. . .

277

277

Distinction between Banks of issue and Banks of deposit

The process of inflation and contraction

Remedy, the strengthening of the monopoly of the central issuer
Issue of circulation to be subject to the supervision of a Committee

Partial recovery of the Bank in 1837

Reserves reduced, 31st of August, 1839, to £2,424,000

278

279

279

279

279

279

280

Committee of the House appointed to consider the subject of Banks of Issue 281

Mr. Loyd (Lord Overstone) before the Committee

The value of bank-notes regulated by precisely the same laws which regu-

late the value of coin

The former the common medium of exchange, in all transactions, at all

times, and in all places, and that too in endless succession

Deposits, business worked; notes, the means by which they are worked. 283

Lord Overstone the real author of the act of 1844.

No difference in principle between the several forms of paper money

Had no conception of the nature of symbolic money.

His argument on bringing in the bill

A natural distinction between the notes and deposits of Banks

Notes affect the exchanges, deposits do not

Currencies of Ireland and Scotland.

Notes and deposits to be dealt with upon different principles

His argument a refinement upon Lord Overstone's distinction

Example of the United States against plurality of issue

Supported by Sir Charles Wood (Lord Halifax)

The issues of one legal-tender, receivable for the revenues, and supported by

all the specie of the Bank

. .

298

Those of the other have no support but its bills

299

No considerable amount of reserves needed by the former

To be held by the department whose issues have no extraordinary support

No immediate effect produced by the Act

Rise and progress of the railways of the kingdom

Vast sums invested in them in 1845 and 1846

299

299

300

300

300

The panic confined to the issues of the banking department

Parliament called together..

302

302

Speech of Sir Robert Peel.

The Act of 1844 failed to prevent a financial crisis

Secured the convertibility of the notes

The Bank held responsible for the suspensions of 1847, 1857, and 1866

The public, not itself, to determine the amount of its issues

Has no discretion but to discount all bills coming within its rules

The advantages assumed for the Act wholly imaginary

Committees of Parliament of 1848.

305

306

307

Lord Overstone again examined.

307

The Act "has verified every principle upon which it was established

Suspension of the Act approved by the officers of the Bank

The amount of circulating medium the effect, not the cause, of inflation