nomena of excitement, and the extent of foreign engagements which constituted the overtrading, had at that time reached their utmost development. The conclusion therefore is, that, as far as relates to the state of things as it existed in the spring of 1836, it would not have been prevented by a circulation varying as a metallic one, because, at any rate, there would have been no reason for a diminution of bank notes while the stock of bullion was rising to about eight millions; and the Bank would equally have had the motives which before existed to re-issue its extra deposits; while those motives would have been strengthened if the influx of bullion beyond six millions had been attended with an increase of circulation, and consequently, perhaps, of deposits.

The mischief which lay in the excitement and overtrading would, therefore, obviously have occurred, at least equally under a metallic variation. And the only question in determining how far a variation strictly upon the metallic basis, such as has been recommended, would have been preferable in its operation to the system acted upon by the Bank is, whether a more abrupt termination of the excitement and overtrading was desirable; for more abrupt the termination would doubtless have been by a strictly metallic basis, inasmuch as, upon the occurrence of the drain, the reduction of bank notes would have been immediate. And suppose that, by the coincident suppression of bank paper, the drain had gone only to half the extent which it did, namely, to two millions only, instead of four millions, the pressure on the money market, severe as it was, without any reduction of Bank of England notes, would have been considerably aggravated by a reduction of at least two millions. There are, doubtless, some points of view in which a more abrupt termination of the excitement and overtrading, compared with the more lingering one

which occurred, might have been beneficial on the whole; and the principal criticisms on the conduct of the Bank have proceeded, on the ground that the drain of bullion should have been met by a corresponding contraction of its paper. But the main charge against the system pursued by the Bank has been that of its having been conducive to the great fluctuations of trade and of prices. Now, it appears that, under a more correct system of issue, if the use of its deposits by the Bank had been the same, the fluctuations would have been as great, with only the difference of a more speedy termination of them.

Whether the administration of a paper currency would be conducted more beneficially for the public, upon the footing of a variation in amount exactly the same as if the basis were strictly metallic, than upon the principle professed by the Bank, and upon which it was conducted between 1827 and 1833, of keeping the securities even (subject, of course, to a periodical revision of the proper amount to be held), and allowing the public to act upon the other elements of the position of the Bank, is a question upon which it would seem to savour of presumption to entertain a doubt, seeing such an array as is presented of justly distinguished authorities, namely, Mr. Loyd, Mr. Norman, Mr. Samson Ricardo, and Colonel Torrens, who express themselves unhesitatingly in favour of the former. I cannot, however, help thinking that there are several considerations which might be allowed to weigh in a preference of the latter, if there were sufficient security for its being firmly and consistently acted upon. But the deviation from that principle in the autumn of 1835, and the strange reasoning in justification of it, founded upon the arbitrary distinction of the nature of the deposits, and the vacillating and inconsistent course subsequently pur

sued, have naturally created doubts among the friends of the system, how far the maintenance of it can, under the management on its present footing, be relied upon; more especially as the old and, as it was to be hoped, the obsolete, doctrine has recently been revived and insisted upon, that the Bank is bound in the regulation of its securities and its issues to attend to the accommodation of trade and the support of credit. Under the influence of this doctrine, there can be no security for the maintenance of a sound administration of the currency. There is no degree or extent of deviation from principle to which such doctrine may not serve as a cloak. And either the bias of private sympathies, or the notion, sincere, though ill-founded, of being called upon to interfere for the accommodation of trade or the support of credit, may, under a variety of contingencies, compromise the principle, which ought to be held sacred, of the convertibility of the paper. There is, moreover, the constant danger lest the object of securing a certain dividend to the proprietors should induce a greater effort to extend the securities than a clear view to the maintenance of a sound state of the currency would justify. This object may not have entered into the motives for the employment of the extra deposits; but there is no security against an undue influence from such object under the present system.

SECTION 7.- Summary of the preceding Survey.

1. The fall of the prices of corn, from the harvest of 1832 to the close of 1835, was the necessary consequence of a succession of abundant crops, the produce of which appears to have greatly exceeded a largely increased consumption.

2. The rise of the price of wheat in the spring of 1836 was the consequence of reduced stocks on hand, of reports of a diminished breadth of land sown with it, and of unfavourable appearances on the ground.

3. The prices of corn, but more especially of wheat, continued to advance throughout the great pressure of the money market in the last six months of 1836, and, after an intermediate inconsiderable depression, rose again in the summer of 1837, during the greatest commercial discredit and distress, the price of wheat having been at that time nearly 70 per cent. higher than in December, 1835.

4. The prices of several leading articles of consumption, and the raw materials of some of the principal manufactures, and the metals, rose in the interval from 1833 to the close of 1835, while the price of wheat was falling very considerably.

5. The rise of prices of produce in the spring of 1836 applied to a very large proportion of commodities, and included agricultural produce; but in few instances did the advance of prices go beyond the degree which was fully warranted by the relative reduction of stock.

6. There was no general fall of prices in the last six months of 1836; nor, in the case of such articles as did fall before December of that year, was the depression greater than the relative increase of stock and approaching supplies accounted for and justified.

7. The extreme fall in the markets for produce, between November, 1836, and July, 1837, was confined to such articles as had been the subject of overtrading, chiefly in the American, and partially in the China trade.

8. Both in the rise and in the fall of markets for produce, in the interval from 1833 to 1837, the circumstances peculiar to each article account

for the variations of price, without supposing any direct influence on general prices from variations in the quantity of money.

9. The aggregate issues of the Bank of England, and the Bank of Ireland, and of the English and Irish country banks, did not so vary in amount or in order of time between 1833 and 1837, as to justify the assignment of those variations of the amount of issues as having caused the fluctuations of prices and the vicissitudes of credit which occurred in that interval.

10. Although there is no trace of any direct influence of the state of the circulation in elevating the markets for produce in this country, there is every reason to believe that the low rate of interest and the facilities of the money market induced the houses in the American trade to grant credits and to make shipments uncovered to a vast amount; thus indirectly causing an increased demand for manufactures, and consequently an increased price, as long as the demand lasted, for the raw materials of those manufactures.

11. The Bank of England, by enlarging its securities in the autumn of 1835, in violation of the principle of management announced by the directors in 1832, and by thus forcibly reducing or keeping down the rate of interest, promoted the formation and extension of joint-stock banks, and encouraged and facilitated the system of discounts and re-discounts, and advances on personal securities, which was carried on by those banks to a mischievous extent. That measure, namely, of re-issuing its extra deposits, also greatly favoured the overtrading in America, and in the American branch of trade in this country.

12. The enlargement by the Bank of its securities favoured the views of the American government in the alteration of the mint regulations of the United States, as it favoured also the financial