938 T2\m A- — d A^ C/5 — n: = == 33 0^ ^= CD 5 = — — O 6^ ^^^ 1 — 8 THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES MONEY SHOULD BE THE SERVANT OF THE PEOPLE NOT THEIR MASTER. A LETTER TO WILLIAM LEATHAM, ESQ. BANKER, WAKEFIELD. BY JAMES TAYLOR, OF BAKEWELL. '■ That your Petitioners have reason to apprehend that measures are in con- templation, with reference to cash payments by the Bank of England, which, in the opinion of your petitioners, will, as they humbly submit to your lordships, tend to a forced, precipitate, and highly injurious contraction of the circulatuig medium of the country. " That the consequences of such contraction will, as your petitioners humbly conceive, be to add to the burthen of the public debt ; greatly to increase the pressure of the taxes ; to lower the value of all landed and commercial property ; seriously to affect both public and private credit ; to embarrass and reduce all the operations of agriculture, manufactures, and commerce, and to throw out of employment a great proportion of the industrious and labouring classes of the community." — The [Prophetic] Petition of the Merchants, Bankers, und Traders, of London, to the House of Lords, May 21s<, 1819. LONDON : PRINTED FOR PELHAM RICHARDSON, CORNHILL, AND JAMES RIDGWAY, PICCADILLY. 1842. Price One Shilling. LONDON: FKINTED BY JOHN WEKTHEIMEK ANll CO. CIRCUS PiAcn, PI^sBrK\■ cikcu*. CONTENTS. \ X 1 Yr, PAGE Possibility of interested parties obstructing the Bank of England from getting a regular supply of Gold at those times when she most needs it ... 1 Balance of Trade, and course of Exchange naturally in favor of Britain, but liable to be rmnaturally obstructed, not only by defective harvests, and a few large Capitahsts, but by the cunning policy of a Foreign otate ■ • « . • • . • • ^ Premium paid to Mr. Rothschild in 1 825 for the Gold he supplied to the Bank. Monopoly of the Spamsh Quicksilver Mines ...... 5 " Mystery of Money," the importance of its being under- stood by Statesmen ...... 6 Prophetic Warning of the Court of Bank Directors in 1 81 9 7 Difference of opinion on the effect of the Law of 1819, between the late and the present Sir Robert Peel. Erroneous notion of the latter, as to the cause of the People's present distress . . . . .8 A Circulating Medium adequate to the Domestic Taxes and Customs of every nation, is a matter of the Jirst importance to its welfare. Convertibility of the Home Money into Foreign Money of second importance . 10 Gold and Silver should be made subservient to the Peo- ple's use ; and the people's comfort not made to depend upon a supply of Gold and Silver . .11 Instance of the Money Transactions of a great Nation being carried on almost without the use of Gold and Silver in its Domestic Circulation . . . .11 The advice of the Bank Directors in 1819 rejected, the Ministers of the Crown determining to submit the amount of our Domestic Circulation to be controlled by the Foreign value of Gold . . . .14 The precious metals tincoined have their value determined between different Nations on the principle of Barter ; in coin by the authority of the Law in each Nation . 15 No permanent benefit to be derived by any Nation from deteriorating its Coined Money ; but great benefit to be had from t\iQ judicious use of Paper Money . 16 Prussian Currency System . . . . . .19 9 U CONTENTS. PAGE The Court of Bank Directors in 1827, and subsequently, essentially altered fi'oin what it was in 1819 . . 21 The Bank of England, by the useless efforts of its Direc- tors to bolster up an impracticable System, reduced to a state of dependance upon the Bank of France . 23 America affords an instance of a prosperous people without any National Debt, being rapidly reduced to a state of extreme distress through erroneous monetary Le- gislation. Her experience illustrative of the possi- biUty of a Nation " buying Gold too dear " . .24 The United States Bank made the "Scape Goat" for President Jackson's folly . . . . .25 No natural affinity between Paper Money and the Pre- ciotts Metals : — their relative value Arbitrary . . 26 The error of those Writers, who, to avoid fluctuations in the value of Paper Money, would exclude Local Bankers from the free use of their own credit , . 27 Various plans for avoiding any obstruction to our Domestic Circulation, at those times when the Mercantile v^Ane of Gold maybe temporarily enhanced above our leyal value for it ....... 29 Mr. Baring's declaration in 1828 f nine years after the miscalled "settlement of the Currency Question ") that Parliament had still its Lesson to learn on Cur- rency and Banking ...... 32 The present Currency Law leaves the Directors of the Bank a discretionary power to do mischief, but de- prives them of all power to avert it when done bv others ......... 33 Fluctuations in the price of Gold towards the close of the last French War erroneously attributed to excessive issues of Bank Notes ...... 34 Repetition of the Writer's main object. Relief to our National difficulties alleged to be easily attainable under a Statesman possessed of the commercial Genius of the late Mr. Pitt. Reasons for appre- hending a less favorable result from the ministry of Sir Robert Peel . . . . . . .36 Postscript . ........ 42 Petition alluded to in the Letter, page 18 . . .45 The late Sir R. Peel's Speech in 1819, against his Son's Bill 53 A LETTER. Bakewell, March 14th, 1842. Dear Sir, — I have been much gratified to find, on perusal of the pamphlets which you have kindly sent me, that your view of the evils which beset our credit circulation, is very similar to that which I have also entertained for several years past. In addition to the natural diffi- culties to which our credit circulation is exposed, and which are so forcibly portrayed in your writings, there are some artijicml dangers which are not generally noticed. Mr. Alexander Baring, (now Lord Ashburton,) in his evidence before the Committee on Coin, which sat at the Board of Trade in 1828, alluding to the diffi- culties which the Bank of England encountered in 1825, from the want of an adequate supply of the precious metals, said, " The wants of the bank, when they occur, interest speculators and jobbers of every description, and, independently of operations to derive a profit from the price of gold, there will be persons interested in thwart- ing the bank, and preventing its supply. A large capitalist might do this with effect — a £ combination of three or four might do it ahiiost with certainty." I am aware that when the late Mr. Rothschild was questioned upon this point four years afterwards by the Bank Charter Committee, he wished the committee to believe the thing impossible to be done : but a chain of circumstances may be adduced, commencing with the early part of 1824, and ending with the panic of 1825, evincing a strong probability, not merely that such a speculation w^as possible, but that it was then made effective. Again, in the natural course of commerce, there can be no doubt that the balance of trade between Britain and the rest of the world must be in favour of this country. ** You import £1000 worth of iron from Sweden," said Mr. Rothschild to tiie Bank Charter Committee ,> '*when it is manufactured it is worth £10,000, and it is then sent to all the world. You get cotton from America : the cotton costs there dd. or Qd. per pound, but when it is manufactured, that pound of cotton is worth four times as much. In the regular course of things, the exchange with every country must be in favour of England." And, he added, " If we had not sometimes importations of corn, and sometimes foreign loans, he knew not how the people on the Continent could live." However true Mr. Rothschild's illustration may be, in the regular course of things, your pamphlets show that this just and natural effect of British skill and indus- try, may, for a time, be fearfully disturbed by defective harvests ; and though the specie may ultimately find its way back to this country, as it is now doing, yet in the mean time the working population may be starved, and their employers ruined. Another way in which the natural course of commerce may be deranged, and to which I am desirous of drawing attention, is the manner in which our money may be borrowed from us by foreign states, and, wuler the existing law, used to our national inj ury . To illustrate my meaning : suppose a foreign state in good credit. Russia for instance, wants to borrow £10,000,000 to clothe and equip her army, and to store her military chest. England is the market for nego- tiating the loan, and all the energies of some of the principal loan contractors are applied, for the time, to make money easy and cheap with us. Through the medium of these contractors, Russia obtains her loan upon favourable terms. It may be that a large portion of the loan is for the purchase of British commodities, and not more than two or three millions required in specie ; but, instead of taking the commodities from us in the first instance, it is obviously her policy to draw from the Bank of England in the first place, whatever gold she may want. The Bank, finding two or three millions of gold withdrawn from her coffers takes the alarm ; and the usual discounting of bills of exchange is obstructed. The more needy of the manu- facturers, who are oftentimes the most enter- prizing, are compelled to make forced sales of their commodities. Prices are reduced. The richer manufacturers and their workmen are obliged to submit to a reduced market price ; and Russia may then purchase or contract for all her supplies upon terms far more beneficial to herself, even if she paid a premium of five per cent, for the gold, than if she had bought her stores in the first instance. Suppose, on the other hand, that the Bank of England, in order to prevent this unnaiural export of gold, offers a premium in addition to the Mint value for it, the direct consequence is, that the gold which the laws of commerce compel her to buy as an article o/" MERCHANDIZE at £4 or 4 guineas per ounce^ the present law of England compels her to part with, as an article of money, at £3. 17. lOJ. per ounce ; and, possibly, the same parties, through some secret link, may sell to the bank one day that gold which they take from her on the nei't. In the evidence taken before the Bank Charter Committee in 1832, it appears, that during the pressure on the bank in 1825, Mr. Rothschild received from that establishment about £100,000 in addition to the Mint value, for the gold which he then supplied to her. A recent number of the " Circular to Bankers " states that the same gentleman*s family are now deriving an enormous profit from the monopoly of the Quicksilver Mines in Spain — that the effect has been to withhold many millions of silver from being supplied by the mines of South America to the commercial world ; and that thus all merchants, bankers, &c., engaged in large credit transactions, the success of which depends upon the regular supply of the precious metals, are liable to have their best calculations falsified, by the secret machinery which a few individuals may set in motion. Our dealings with America, during the last eight years, afford another proof of the possi- bility of the hasis of our currency being drawn from us, to our extreme injury, by a nation, from which, in the natural course of trade, there ought to have been an uniform flow in the con- trary direction. In fact, the whole history of the monetary affairs of the world, so far as I am acquainted with it, constitutes one continuous illustration of the justness of the following- remark, made by a writer more than two cen- turies ago, and which I have often had occasion to borrow: "Unless those advantages, which 6 one country may make upon another in the mystery of exchanges, be thoroughly discovered and prevented by such as sit at the helm of the state, it may fare with us, notwithstanding all our commerce, as with some bodies after much food, that, instead of growing full and fat, we may pine away and fall into irrecoverable con- sumption*'' The extensive use of credit money which now prevails, adds greatly to the force of the above remarks, when applied to our own day. It is notorious, that, with us, every bale of goods may constitute the real basis of a bill of exchange. There is indeed no article of com- merce which may not be thus represented by the pou/ids, shillings, and pence, expressed in such an instrument of exchange ; and thus, our credit or bill currency may be co-extensive with the gross nominal value of all the commodities which are daily passing from hand to hand. In your tables and pamphlets you have forcibly drawn attention to the startling disproportion that exists between these liabilities, and the legal means there are of liquidating them. Unless we can bring ourselves to believe the absurd proposition that " a part may be equal to the whole,"" it seems impossible that our credit currency, representing (as it does) every other kind of property as well as the precious metals, should at all times, and under all circumstances of peace, war, famine. or artful speculation, be absolutely redeemable in pieces of gold of a specific weight and fineness. I was no sooner acquainted with the provi- sions of the law of 1819, than I became con- vinced that a fearful shock awaited us, whenever the market price of gold should be enhanced above the mint price ; and, persuaded that pri- vate speculation, as well as many natural causes, might operate so to enhance the mercan- tile value of gold, I submitted a paper on the subject to a public meeting which was held here for the purpose in March 1823. To the argu- ment in that paper I obtained the assent of all the gentlemen who attended the meeting. I was further confirmed in my apprehensions when I afterwards found that my fears were very much in unison with those which the Court of Bank Directors had stated to His Majesty's ministers in 1819, whilst "Peel's Bill" was pending. The experienced men who then managed the bank forewarned the government that the proposed system of cash payments would, if passed into a law, probably "com- promise the universal interests of the empire in all the relations of agriculture, manufactures, com- merce, and revenue,''^ a prediction which is every day becoming more perfectly and more fear- fully fulfilled. 8 There are few things with which men in a state of civilized society are more familiar than "money;" yet few things, the real nature of which has been less understood by them. Ac- customed to the use of it from their childhood, almost every one assumes that he has a thorough knowledge of its nature and properties ; and yet, when even learned and scientific men have attempted to define accurately what they mean by "money," — what constitutes its exchange- able value, — what rules govern and regulate its circulation, — they have been far more puzzled to do it than to describe the essential properties and working rules of the most intricate piece of machinery ever invented. One class of political economists thinks that the precious metals have the character of money essentially in themselves. Another class regards them as commodities which derive their monetary character wholly from the authority of the state, or some conventional agree- ment among men ; — whilst the great majority of the people, however well they may avail themselves of the power of money to command the necessaries of life, and to enrich themselves, are, in reality, as little acquainted with its essen- tial character, as they are with the natural prin- ciples which govern the circulation in their own veins. Sir Robert Peel appears to belong to \\iejirst denomination of persons : his father was 9 probably one of the second, which may account for the very opposite opinions they entertained of the effect to result from the Bill of 1819. The present Sir Robert Peel anticipated national prosperity from that measure — his father /ore^o/^ national ruin : bitter experience has shown the father to be the wiser statesman of the two ; and now, when the troubles are come upon us, which the late Sir Robert Peel and the Bank Directors of 1819 predicted as the probable consequence of "Peel's Bill;" our manufac- tures, commerce, and revenue compromised ; our agricultural interests placed in great jeo- pardy ; we are required to believe, not that bad legislation, but that the excessive skill and industry of the people have produced the mischief: and we are told by the present Sir Robert Peel, on behalf of the Tories, and by Lord Melbourne on behalf of the Whigs, that legislation can do little or nothing towards our relief. If it had been alleged that the distress of the people was the consequence of idleness and improvidence, Sir Robert might justly have said that legisla- tion could not cure it; but when he accuses our manufacturing population of extravagant indus- try, and when he well knows that our Savings' Banks show the English to be habitually a provident people ; then, to tell them in their long-protracted distress, that legislation cannot 10 eftectually relieve them, is surely as monstrous as it would have been for the Egyptian monarch, after depriving the industrious Israelites of " straw for their bricks," and requiring an equal *• tale " at their hands, to have told those indus- trious and afflicted people, that their distress was beyond the reach of legislative remedy. As I believe all Scripture to be given for our instruc- tion, so I take it to be one of the Jirst duties of every government, to secure for the people '* strmviov their bricks" — the means of fulfilling their tasks — or in other words, a circulating mediwn adequate in amount to the payment of their labour, and to the free exchange of all the products of labour and of art throughout the nation, on such terms, and at such rates, as shall be fully equal to the money charges which the ta.ves of the state or the customs of the nation impose upon the people ; and that, as all addi- tional wealth in the nation must be produced by the skill and labour of the working part of the community, it is especially the duty of the execu- tive to see that this portion of the people should never be forced into idleness for want of a regular and sufficient ??iedium, by which their labour, or the produce of their labour, may be exchanged or accumulated. The ne.rt great duty of the state in regard to its money, is to devise means whereby the circulating medium at home may be 11 equitably and freely converted into the money or circulating medium of any foreig/i nation. But this foreign object, though an important feature in a perfect money system, is of second- ary importance to the home circulation. However much the customs of the world may have used the precious metals for money, it is essential to the happiness of the people in every nation, that the rulers of nations should take especial care that the precious metals be made subservient to the comfortable enrploymeiit of the people, and not that the people's comfort should be made subservient to ox dependent upon a supply of the precious metals : for otherwise, as we have seen, a foreign state, or a combination of th7xe or four capitalists, who can for a short time withhold the regular supply of the precious metals from an otherwise opulent nation, may control the money value of the people's labour, and throw all the important interests of that nation into the greatest confusion and distress. That the internal monetary transactions of a great nation may be carried on for many years, almost without the use of the precious metals, is evident from the experience of this country within the last 45 years. Necessity, the pro- lific parent of almost every useful invention, did, during the late war, force us upon a system, endowed in an extraordinary degree with the 12 attributes needful for the home circulation ; a system so adequate to our domestic wants, as to enable Britain to surmount difficulties greater, I believe, than had ever before been surmounted by any nation. Under this system, the Bank of England note became the practical represen- tative of the pound sterling, and of the pound in account throughout this kingdom, and, I might add, in many other parts of the world also. The bank itself was the wholesale dealer in this medium of exchange ; and country bankers, in a smaller way, supplied the local wants of their immediate neighbourhoods. This system, which the necessity of the times, and the conveniency of the people, brought into active operation in almost every town throughout the kingdom, furnished the means whereby labour was freely purchased. Labour employed, increased the pro- ductiveness of the soil in agricultural districts, and i\\Q productions oi i\\Q people in manufacturing districts : rents were increased, not by forcing the people to buy homegrown corn, but by the increased means which the people had of paying for and consuming that which was grown by their own neighbours; and the re-expenditure of those increased rents, with the expenditure of all other accumulations of capital, was visible in new and improved houses, new public roads, canals, bridges, docks, drainages, enclosures, 13 and an almost infinite variety of profitable public works, which, whilst they ennobled and beauti- fied the country, provided new and beneficial employment for those whose former occupations might perchance have been superseded by machi- nery. It could scarcely be expected that a system pregnant with such important and beneficial effects would be entirely free from imperfection. The good faith which generally distinguished those whose credit supplied the medium through which much of this good was produced and dif- fused, was occasionally tarnished by the unwor- thiness of some parties, and by the indiscretion of others ; but these imperfections were every day working their own cure far better than any direct interference of the legislature could do it ; and whatever the people can do for themselves, is almost sure to be done better than by any legislative enactment. Admirably as this sys- tem had supplied all our pecuniary wants at home, enabling us throughout the war to do either with or ivithout the precious metals ; it became necessary, on the return of peace, to reconsider the act of 1797, under which our home currency had been fostered, and as you. Sir, are well aware, to adopt such a system of cash payments, as, in the event of any future war, should preserve us from a repetition of the catastrophe of 1797, and provide means for our 14 home money being at all times equitably con- vertible into the money of any foreigyi country. I cannot entertain a doubt that these import- ant objects would have been satisfactorily attained, had our rulers duly profited by the counsels of the Bank Directors in 1819. The plan they suggested would, with very little modification, not only have accomplished these objects for ourselves, but would, I believe, have averted many of those calamities which have since befallen the commercial and banking inte- rests of many other countries also. Unfortu- nately Lords Liverpool and Grenville, and other noblemen, who, as ministers of the crown, had gladly availed themselves of the services of the bank directors during the war, thought they could do without that assistance in 1819, and thus the counsel of those directors was not only disregarded, but — if we may believe the reports of the day — was rejected very uncourteously. Those noblemen, as well as Messrs. Huskisson, Canning, Peel, and many other influential per- sons, became converts to the new and fashionable opinion, that the amount of the ci^edit circulation of Great Britain should no longer be regulated according to her internal taxes, rents, and other credit engagements, but by the state of the foreign exchanges ; or in other words, by that estimate of the value of the precious metals, lo which was to be found in the average rate at which gold and silver could buy the cheap labour of the poorer nations of the world. A doctrine in reality not more reasonable than that a full- grown athletic man, such as Jolni Bull was once represented to be, should be required to have his circulation regulated, not by the natural wants of his own system, but by the average wants of all the needy bodies around him ; and that they should be allowed, like so many leeches^ to borrow his life's blood from him, until they could pull down his strength, and raise their own to an equality, leaving poor John to bear all the costly honours of his own cumbrous body, with only halfh\s proper circulation. 1 fully admit that between one independent nation and another, the precious metals, in an uncoined state, must have their exchangeable value solely determined by weight and purity, upon the same system of barter as that upon which all other foreign transactions are generally conducted : but hence it follows, that whatever nation, after well supplying the wants of her own people, has the most surplus produce, or manufactured commodities to part with, such na- tion can afford to give the most goods in exchange for gold and silver abroad, and must consequent- ly, in the natural course of tilings, command the largest quantity of those metals. If the rulers 16 of such a nation understand the mystery of money, I have not a doubt that they may deter- mine the mode and the terms by which this superfluity of the precious metals shall be parted with to other and more needy nations, agreeably to the opinions implied in the evidence of the late Mr. Rothschild as quoted in the second page of this letter. These remarks apply to the principle which governs the exchange of the precious metals betiveen different nations. In the home dealings of any given country, gold and silver are governed by another princi- ple. The authority of the state, in this case, determines the relative value which specific pieces of those metals in coin shall possess in the legal discharge of all taxes, debts, and credit engagements within the realm ; but the expe- rience of every nation shows, that, as the legal or coined value of the precious metals is enhanced, so the mercantile price of them in the same coun- try has always had a tendency to advance also ; and just at those times when the country could least bear it, then the mercantile value has gene- rally been found to exceed the coined value, however much the latter may have been pre- viously enhanced. Hence, a needy state has never derived permanent relief, by diminishing the specific weight, or deteriorating the quality of its coined money. 17 The issuing' however of a paper or credit cur- rencij, under certain limits, has a very different effect. Judiciously used by the government of an industrious nation in good credit, it may be made the means of controlling; the mercnjitile value of the precious metals, and thereby of sustainino; the intrinsic character of the coin both in weight and purity. As an illustration, take a supposed case from our own country. Her government is entitled by the consent of parlia- ment to receive from the people taxes and revenue, amounting, say, to £40,000,000 an- nually. She does not receive this money to hoard and accumulate^ but to pay back to the people for dividends, stores, services, &;c. &;c. Let then the government ordain that this £40,000,000 of taxes shall be paid, in whole or in part, as may be most convenient to the people, after the following manner: either in gold, after the rate of £4 per ounce ; in silver, after the rate of 5s. per ounce ; or in exchequer notes, each £5 note being deemed the equivalent for 1^ oz. gold, or 20 oz. of silver. This being then the lescil relative value of gold and silver to such exchequer notes, there can be little doubt that, whilst the amount of them was kept within the average demand required for our current taxes, those notes, in all domestic transac- tions would be quite as valuable, though stamped 18 and signed on paper only, as if they were stamped pieces of gold weighing \\ oz. each ; and more valuable in one sense than our present gold coinage, which, it now appears, may be robbed of its intrinsic value to the extent of 15 or 20 per cent, without the public knowing how to detect the fraud. This explanation may serve to illustrate the opinion 1 entertain of the nature and value of credit or paper money ; but as one mode of practicalli/ applying these opinions to the gene- ral use of this country, I beg to refer you to the accompanying petition which, in 1830, I placed in the hands of Mr. now Lord Denman, and Sir James Graham, for presentation. I saw these gentlemen upon the subject, a few days before the Duke of Wellington made those celebrated remarks in the House of Lords, which, acting upon the groiuing distress of the people, threw the whole nation into its Reform fever. There seemed then so little chance of obtaining any attention in Parliament to the dry subject of the currency, that the petition was not pre- sented, but I printed and circulated it amongst my friends in the enclosed form ; and it was republished in some of the newspapers of the day. I purpose also sending you two or three pamphlets, reiterating, with different arguments, the same sentiments which were first addressed to the Bakewell meetinsr in March 1823. 19 111 the year 1829 I was discussing this subject in London in the presence of a Prussian gentle- man, who remarked that he thought the views I entertained on currency were not very dis- similar to those which were acted upon in his own country ; and, the next day, he sent me a note, of which the following is a copy. *' It quite escaped my recollection when we conversed on the subject of Prussian currency, that I could give you some information that probably might interest you. » " The Prussian government issues its gold coin called Friedrich d'or, at five dollars, and com- pels the people to pay their duties as follows — *' One third in the above coin at the price at which it is issued. ** One third in ' treasure notes,' which circu- late like Bank of England notes — and " The remainder in silver. " If a person cannot pay the amount required in gold, he is charged the agio, or the market price in addition, so that if the Friedrich d'or is worth five dollars and a half in the market, he must pay the half dollar in addition." It will be seen by this sketch of the monetary system of Prussia, that provision is made for the possi- bility of her " treasure notes " being at a discount in the market. By providing a remedy for such c 2 20 a contingency, I believe it will be found, that so far from these '' treasure notes '' being at a dis- count, tliey generally bear q. premiimi throughout Germany, as being so much more convenient and safe for transfer than gold and silver. Per- ceiving that this plan must obtain for Prussia that security for her credit circulation, which, through the agency of the Bank of England, I was seeking for ours, I named the subject to the Duke of Wellington, in a letter which about that time I had His Grace's permission to address to him. I also spoke of it to an influ- ential London merchant, with whom I had corresponded upon the currency question ; but, at that time, though England had sufl'ered much, it appeared we had not suffered enough to humble our pride. The latter gentleman thought it an absurd thing to suppose that England could possibli) derive any useful lesson upon money and currency from Prussia, which he then regarded as an insignificant State. In the few years which have since elapsed, the rapid progress which Prussia has made in the scale of nations, furnishes a remarkable instance of the benefit to be derived through a monarch, who, having learnt wisdom in the school of adversity, knew how to make money the servant of his people, and not their master. The com- 21 mercial code of Prussia, without her judicious monetary system, would, in my opinion, have done comparatively nothhig for her. I regret to see, in your valuable pamphlets, much evidence that the bank directors of late year's have not manifested that commercial wis- dom and practical banking knowledge which distinguished their predecessors in 1819 It would seem, from the evidence of Mr. William Ward before the Bank Charter Committee in J 832, that between the years 1819 and 1827 a great change had taken place in the counsels which governed the bank. Mr. Ward informed the Committee, that in 1819 he was the youngest, and the only member of the court who had adopted the then new opinion, that the amount of the credit circulation of Great Britain ought not to be regulated by the internal wants of the kingdom, but by the state of the foreign exchanges : but in the year 1827, the members of the court had become so changed, that it appears he had now the gratification of finding a majority favorable to his views. Contempo- raneously with this change in the directors, the resolution appears to have been formed, that the bank should always retain in her coffers specie equal to one third of her liabilities : a resolution which experience has since convinced them they had not power to execute. It is fair to believe 22 from the opinions expressed in the memorial of the directors in 1819, that those gentlemen would h^ve foreseen that the resolution in question could not be kept under all circumstances, without ruining first their customers, and afterwards themselves, so long as the credit circulation of the kingdom remained under the government of " Peel's Bill." The same wisdom which dic- tated the memorial of 1819, would probably, after the panic of 1825, have prompted them to say to the ministers of the crown, *' We have done all in our power to support your new mo- netary system. We have brought this great national establishment into such jeopardy by our efforts to support your views, that we are indebted to the help of one man for its preserva- tion. When the bank was in its extremities, we were advised by an influential minister of the crown, (Mr. Huskisson,) himself a distin- guished supporter, if not the real author of * Peel's Bill,' to close our doors to the public. We are convinced that the minister who could give such advice is totally ignorant of the nature and value of English credit ; and, unless you so alter the monetary laws, as that, for the future, we can protect this establishment, without ruin- ing the mercantile and banking interests of the nation, we must resign the trust imposed in us." But instead of addressing such plain truths as 26 these to the ministers of the crown, tne directors of 1827, and their successors, appear to have com- bined with those ministers to obtain a selfish monopoly of the whole credit currency of the kingdom ; and by their unsuccessful efforts to bolster up an impracticable system, reckless of the ruin of the manufacturing and commercial interests of the nation, have brought great and bitter complaints against themselves — in- volved the credit engagements of the country in repeated difficulties — and, upon one occasion, made the continued existence