against four; in 1812, against seventeen; in 1813, against eighteen; in 1814, against twenty nine; in 1815, against twenty-six; in 1817, against thirty-seven; and during the late crisis, against no fewer than seventy-six. Even those numbers were undoubtedly below that of the failures, for in many cases of insolvency commissions of bankrupt had not issued. Any measure would be good which, by compelling these establishments to rest, in part, at least, on the necessity of circulating gold, would give solidity to themselves and security to the public; and the effect of the present measure would be, that the small note circulation would immediately be superseded by a metallic one. There were at least 17,000,000 of sovereigns in the country; the prohibition against small notes would forthwith bring them into circulation, whether they had been hoarded up in the coffers of the cautious from prudential considerations, or retained in the chests of country bankers, who would rather see their own notes circulating. Thus, in point of fact, it was far from being certain that a new importation of gold would be necessary even to fill the place of the four or five millions which would be abstracted from the paper circulation: the gold was already in the country, although seldom seen, because thrust aside by the small notes; for, of the twenty-five millions which had been coined since 1819, not more than eight millions had been exported.

By the official returns, the quantity exported was 7,269,000. No doubt considerable sums might have been exported without finding their way into the official accounts; and smuggling transac

tions might have carried some out of the country. But, making a most extravagant allowance for these additions, the amount exported will not exceed 10,000,000, leaving 15,000,000 still in the country, to which was to be added a million imported since last November, in consequence of the exchanges having again turned in our favour. Now, the average issue of small notes by the Bank of England, during the suspension of cash payments, had been 7,000,000; the small paper of the country banks could not be estimated at more than 6,000,000, although they had gone on increas ing their issues, while those of the Bank of England had been contracted. Thus, the paper to be removed amounted to 13,000,000, and there were 16,000,000 of sovereigns in the country to occupy its place. Where, then, lay the difficulty of effecting the object which the proposed measure had in view? Within the metropolis, and its immediate vicinity, there was nothing but a metallic currency. In Lancashire, in Liverpool, containing not fewer than 150,000 inhabitants, and Manchester, containing, perhaps, 200,000, no such thing as a small paper circulation was ever known; so that in a district, possessing not fewer than 2,000,000 of inhabitants, nothing was to be found but a metallic currency. Adding the contents of this district to that of the metropolis, there were 4,000,000 of people occupying districts, which contained two thirds of the entire wealth of the nation, in the daily practice of conducting all the ordinary transactions of life without the assistance of a paper currency, and yet these are pre cisely the places, in which the

ment of a metallic circulation would be expected to exist.

While the expulsion of the small notes would thus necessarily restore the securities and the stability 'of a metallic currency, it was chimerical to regard it as injurious to the country banker himself. The small-note circulation cannot be taken at more than five millions; and it never can be reasonably contended, that gradually to diminish that circulation, at the rate of a third part in each of three successive years, could be attended with any thing like a shock to the credit of firms, which, in the recent concussion, had displayed such unequivocal marks of stability. The number of country banks was about eight hundred; one hundred of these had failed; there still remained seven hundred; and the circulation of each of these would average about 8,000l. Could it then be supposed, that a stability which had stood the late tremendous shock, would be shaken or destroyed by a gradual curtailment of paper tothe extent annually of 2,000l. or 3,000l. for three successive years? When the difficulty was thus reduced when the means were so limited and humble, by which a mighty principle was to be established when, by an operation so minute, and a process almost insensible, the prodigious advantage could be attained of placing the pecuniary concerns of the country on the broad and imperishable basis of a metallic currency, it would be as imprudent to let slip the opportunity, as it would be unreasonable to deny the principle. The intended change was not to affect the paper circulation at large; it was not to trench upon the great mass of paper currency, which was confined VOL. LXVIII.

To those, who, without objecting to the principle of the measure, wished it to be postponed, it was answered, that, instead of coming too soon, it had come, if any thing, too late. If it had been adopted at an earlier period, for instance, in 1822, when government was foiled in a similar attempt to make the country bankers deposit security for their issues, it would have been happier for the country. At no time likely to arrive could there be a more favourable opportunity for effecting the object in view; for one result of the late panic had been, that a large proportion of the small notes of country bankers, independently of those of the hundred banks which had failed, had been withdrawn from circulation, and the prohibitory measure, therefore, would be less strongly felt. The advocates for delay were called on to recollect, that even the existing law would, at the latest, put their favourite notes to death in the year 1833: that was the remotest period to which their flimsy existence could be protracted. That extinction would exactly coincide with the expiration of the charter of the Bank of England; and no person, whose opinion was entitled to the smallest respect, could maintain, that it was desirable that these should be contemporaneous events; and not one of those who pleaded for delay had pretended that the circulation of the small paper of the country banks should extend beyond that period, nor could any man do so, unless he were hardy enough to maintain, that it should be made perpetual and unlimited [C]

in point of time. Delay, for whatever period, under whatever representations it might be granted, by whatever explanations or assurances it might be accompanied, and how ever it might be regarded in that House, would be viewed out of doors as the defeat of the whole measure, and a rejection of its principle. Moreover, who could answer that delay given for purposes of preparation would be so employed, and that it would not be used in taking serious and effectual steps to prevent the probability of a recurrence to cash payments, to render it impossible to resume the question, or, at least, to take it up on the same basis on which it now stands? The season, therefore, was as favourable, as the object itself was desirable. The alteration, indeed, would not directly and immediately put an end to our commercial embarrassments, which had principally arisen from the unwholesome and preternatural extension of commercial speculation; but it would have the effect of alleviating and preventing the recurrence of that distress, which, however it might begin with the higher, was sure, if not withstood in the outset, to find its way to the lower classes of society. It would be a step towards the fulfilment of the old benevolent wish, that every peasant should have a fowl in his pot; for the effect would be, that the labourer would find in his pocket a piece of gold, instead of a shred of (perhaps worthless) paper.

Mr. Brougham likewise supported the resolution, and strongly urged the inexpediency and the uselessness of any delay, when the work was already half done, in consequence of the general want of confidence having of itself greatlylimited the issues of the country bansk.

Mr. Baring moved as an amendment, "That it is the opinion of this House, that, in the present disturbed state of public and private credit, it is not expedient to enter into a consideration of the banking system of the country;" and, Mr. Canning having expressed a hope that the decision on the present motion would be regarded as decisive of the principle, as the sooner it was settled the better, the House divided: for the original motion, 232; for the amendment 39; majority 193. An amendment moved by Mr. Gurney to exclude the Bank of England from the operation of the resolution was likewise negatived by a majority of 66 to 9; and a similar amendment being again moved next day, on the bringing up of the report, on the mere allegation that, without small notes of the Bank of England, it would be impossible to fill up the vacuum occasioned by the withdrawal of the country paper, it was negatived without a division.

The overwhelming majority, by which the resolution was carried, promised that little opposition would be made to the progress of the bill for carrying it into effect, which was immediately brought in by the chancellor of the Exchequer; especially as many of those members who had voted against it, and even Mr. Baring himself, had declared, that, the principle having been once carried, it would be useless and unwise to offer any farther opposition. However much resistance sprung up in discussing the details; and, on more occasions than one, many of those, who had supported the general principle, found themselves ranged against ministers in regard to particular clauses which government pro

posed, or which, when proposed by others, they deemed it necessary to resist. In particular, the prophecies of the opponents of the measure, that its instant effect would be, to contract the circulation, already too much curtailed, seemed to be finding some degree of accomplishment. In many places the country bankers, whether from considerations of mere prudence, or from unnecessary precipitation, or, as was sometimes insinuated, to excite prejudice against the bill by creating an artificial deficiency, had proceeded to withdraw their small notes from circulation with a haste which did not give time for something else to occupy their room; and the consequence was, that, in different districts, much difficulty was encountered in carrying on the ordinary transactions of life. To remedy this inconvenience, the chancellor of the Exchequer, on the 20th of February, when the House was in a committee on the bill, moved, that the Bank of England, instead of being limited like the private banks, to small notes stamped before the 5th of February, should be empowered to issue one and two pound notes stamped at any time prior to the 10th of October, thus prolonging the period, in the case of the Bank, for eight months. He stated that it was not intended by this, that the Bank of England should continue to issue small notes, after that power had been withdrawn from other banks; it was not his object to give that incorporation the power of retaining their small notes in circulation a moment after the lapse of three years. The proposal amounted only to this, that, during the next three years, the small notes of country banks stamped previously

to the 5th of February, should be issuable, and continue to circulate, but that the small notes of the Bank of England should be issuable, though dated subsequently to the 5th February, and up to the 10th of October. The effect of this would be, and the intention of it was, to enable the Bank to supply, for a limited time, and to a limited extent, any sudden vacuum which might be produced by the withdrawal of the country paper from circulation. There was in this neither danger to the currency, nor any contradiction of the principle of the general measure. Although there were no serious difficulties in the way of that measure, nor any thing which rendered its success even problematical; it would be wrong to be blind to the consequences which might follow, if the country paper were to disappear at once, without a temporary substitute having been provided. By the principle of the resolution itself, it was distinctly admitted, that some delay was necessary before it could be carried into full effect; it assumed, that the circulation of small notes could not be altogether dispensed with for three years; and, therefore, to allow the Bank of England to stamp them for eight months longer, they still being to be withdrawn at the end of the three years, was only a consequence of that principle, and necessary to make its operation complete.

The clause, as it met, in some measure, the objection to the bill founded on its alleged tendency to produce an injurious contraction of the currency, was supported by many who had resisted the general principle; while its opponents consisted of none but those who had voted for the original measure.

Their opposition rested on two grounds. The clause, they said, was inconsistent with the very principle of the bill; and the power, which it gave the Bank, would be so abused, or, at least, used, as to deprive the measure of all real effect. It was inconsistent with the principle, because it went to encourage an extension of the very evil against which that principle had been set up and asserted. When, on the moving of the original resolution, different members had pleaded earnestly for different periods of delay, ministers had very properly refused to procrastinate, on the ground that, at the expiration of any given time, we should be in no fitter a situation for making the experiment than now, and that the interval would not be employed in preparing for the change, but in rearing up new obstacles. But the very same reasons applied against the proposed clause ; they were as good against eight months, as against twelve months, or two years. Again, this was to enable the Bank to counteract the whole measure, by giving them an unlimited power of stamping small notes to any amount, during eight months, and circulating them by all the means within its command. It would be the interest of the Bank to take advantage of this power, and there was no check by which their issues could be controlled. It would not do to say, that it was merely intended to enable the Bank to fill up any vacuum which might be made by the withdrawing of the country paper; for who could engage, that the Bank would confine itself within this limit, and not supply, likewise, that other portion, the existence of which was the sole object of the whole measure?

Moreover, if the plan for establishing branch banks were carried into execution, nothing would be easier than for the Bank of England to inundate every part of the country with one-pound notes. !,

These objections were met by Mr. Canning and Mr. Huskisson, who denied that there was any inconsistency between the clause now proposed and the principle of the original measure. It so happened, that the country bankers had acted doggedly in regard to the withdrawing of their small notes, and had, all at once, put a stop to their circulation, instead of spreading it over as long a period as was consistent with the proposed change. In such a case, it surely was the duty of the House to guard against the consequences which might ensue from a complete and simultaneous contraction of the currency to the amount of all the small notes in circulation: unless there were gold in readiness to rush in at once, by every channel, to fill up the vacuum, a most extensive stagnation of commerce must ensue. Should this take place, or rather, should it have already occurred, it would be neither more nor less than a recurrence of the crisis of December, which a prompt issue of Bank-notes under 5 had remedied. The amendment was conceived in the spirit of the original measure, and no charge of inconsistency could lie against those who proposed or supported it: neither was there any better reason for supposing that the Bank would make an improper use of the power which was thus to be conferred. It was not the interest of the Bank to make an issue of this kind; and accordingly it had never been a favourite of the Bank, for it never failed to come back to