ing, with the exception of a few prefatory pages, the whole of the Second Letter to the consideration of the Poor Laws.

But although we think this attempt to link together the Bank Restriction question, and the subject of the Poor Laws, unfair and injudicious, it is not that we are insensible of the paramount importance of an inquiry into the present state of our paper system, in its bearings upon the moral as well as the commercial interests of the country. The Letter to Mr. Peel contains in this reference some highly important remarks, and we have only to regret that the Writer has taken so partial a view of a subject he is so well qualified to illustrate. To us it appears that the evils of the system upon which the Bank issues have been conducted, are not to be measured by the fluctuations in the Exchange, or the depreciation of the currency. The dangerous facility with which, in consequence of the unlimited power of accommodation possessed by the Bank, credit has been obtained upon the discount of commercial securities, has encouraged a spirit of speculation, or, as it might with more propriety be termed, a spirit of gambling, which has insinuated itself into every branch of trade, and has already begun to sap the very foundations of social confidence. To this pernicious effect of the system, Mr. Huskisson adverted nine years ago, in his admirable pamphlet on the depreciation of the currency. After shewing that it is not for the benefit of the landed interest, that the present system should be continued, he meets the question, whether the commercial class is really benefited by this state of things. No one denies that a few individuals, who have been fortunate in watching their opportunities, and in boldly availing themselves of this facility, have made great and rapid profits by their speculations; but whether the mercantile body of this country, considered in the aggregate, has reaped any substan'tial advantage, or will ultimately derive any benefit from the superabundance of paper currency, is, to me at least,' says the Right Honourable Gentleman, a much more doubtful question. It is impossible,' he adds, for any observer of events accurately to discriminate between the adventures to which this excess has given rise, or, at least, a principal aid and support, and those which have their foundation in the mercantile capital and industry of the country, and would have been car ried to the same, or perhaps, to a greater extent, if the ' amount of discounts and circulation had been kept within those limits which are compatible with the sound state and undepre'ciated value of our currency.'

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Mr. Huskisson proceeds to describe what had then recently taken place in the commercial world, as the effect of the new direction which had been given to mercantile speculation, by the political convulsions of the world. The first explorers of the

new channels into which the trade of Europe and America had been diverted, and who had the address to elude the difficulties and dangers which beset the approaches to them, were eminently successful. Their exports were inadequate to the demand abroad; their returns unequal to our wants at home: great profits were the result. This result became generally known, and the temptation was irresistible. Not only the original ' adventurers, in most instances, re-embarked largely in the same 'pursuits; but hosts of new ones sprung up in every corner of the kingdom; every one, anticipating a gain like that of the 'first speculators, became, of course, anxious to procure credit to the greatest possible amount-negotiable securities were 'multiplied in every shape-discount was sought for in every quarter-ingenuity was at work to multiply the means of obtaining and affording accommodation. So long as the sales ' were brisk, so long as the demand, both for raw materials and 'manufactured goods, continued to increase, and prices to rise in the home market, every thing went on smoothly, as much to the satisfaction of the manufacturer and the merchant, as of those to whom they were indebted for the discount of their bills. It was then that all these parties discovered to what a degree the 'suspension of cash payments afforded facility and security to ⚫ the extension of this description of credit: but the currency, in which the discounts were effected, became depreciated in proportion to the rapid increase in its amount. If trade had continued in its ancient and accustomed course, and the spirit of rash adventure had not been excited by new prospects of extravagant gain, there is reason to believe that the expense of discount, aided by the strict adherence of the Bank to its 'long established regulations, and by the reluctance to engage in 'Country Banks, which had been created by the disasters of 1793 and 1797, might have afforded for some time longer, (as they had for several years after the restriction was first imposed,) a 'sufficient guard against any very material excess, or any great 'depreciation of the currency. But, on this occasion, the Directors of the Bank appear to have considered the increased eagerness for discount, as requiring some increased indulgence on their part; and, perhaps, while trade appeared so flourishing, it was not unnatural that they should consult their own 'fair interest, as bankers, in this respect.'

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The amount of their paper,' continues Mr. Huskisson, was, in consequence, considerably increased, although, by the great and simultaneous augmentation in the circulation of Country Banks, the use of Bank paper beyond the limits of the metropolis became every day more circumscribed. Under these circumstances, the rise in the price of goods, ' which, at first, was the effect of an increased demand, was

soon considerably aided by the depreciation of the currency, as well as by the power which the facility of discount afforded to new speculators (calculating upon a still further rise) of keeping back their purchases from market. Thus the diminution in the value of our currency, brought on in a great measure by this mercantile delusion, has, in its turn, 'been one of the principal means by which the latter has been kept up and supported in the home market. Many a speculation, probably, within these last two years, for which the party takes to himself the credit of commercial acuteness and great foresight, was principally founded, however unconsciously to himself at the time, in the decreasing value of our currency. In the nature of things, such a speculation could not be universally and uninterruptedly fortunate. The markets, at first scantily supplied, would soon be overstocked. Some of the adventurers from being too late, others, from " ignorance or misconduct, extravagance or misfortune, would · fail. The chain was sure to give way in some of its linksgreat and numerous failures are the consequence-suspicion and alarm become general-securities, hitherto negotiable, can no longer find discount-many of the discounters themselves are ruined, and all put upon their guard-the markets 'fall-goods are forced upon sale, when all are afraid to buy; and, whilst the fortunate few retire upon wealth rapidly ac'cumulated, thousands are left to lament the ruin, which, deluded by the example of such rapid success on the one hand, and tempted by the facility of overtrading on the other, they have brought upon themselves.'

The accuracy of this picture cannot be questioned. The facts are too fresh in our recollection, nor have the effects of this delusion ceased to operate. The whole system of domestic trade has assumed within these twenty years a new character. Those operations which used to be performed by real capital, are now effected to a large extent by the discount of fictitious securities. The excessive competition produced by this vast augmentation of fictitious capital, has led the dealer to forego a portion of the fair and long established profits of business, in order to secure a preference, and then, to compensate for this reduction of profit under the increasing weight of taxation, he has been compelled to extend his dealings beyond all proportion to his capital. Every one acquainted with trade, knows that in almost every branch, the regular profits of the dealer have suffered a material reduction, as the effect of competition, and that the consequence of this has been, that men have come to regard speculation as the only means of obtaining that wealth which used to be the fruit of steady, persevering industry. Individuals the most averse in their habits of thinking

from this spirit of rash adventure, have been compelled to give in to the general spirit of the times. With how fearful an anxiety is the discount day at the Bank looked forward to, by hundreds and thousands in the metropolis, who, but for the depreciation of our currency, and the depreciation of the value of what may be called mercantile labour, that is to say its depreciation as measured by profits, would have contentedly maintained their families upon the fair proceeds of a trade Hmited by their capital! It is on this account that a reduction in the issues of the Bank, followed, as it is apprehended it must be, by a diminution in their discounts, is contemplated with so much anxiety and alarm. Were restriction on cash payments taken off,

to what a degree of diminution,' says the Author of the Reply; the Bank would, in such a case, he obliged to contract its issues; what failures would thereby be produced in this mercantile country; what stagnation to trade; what abandonment of manufactures; and consequently, what multitudes would be then thrown out of employment; what distraction and disturbance would ensue; what depression of our funds; what difficulty in collecting the revenues which support them; no man can presume to estimate or predict. These evils might be greater or might be less than will be presumed. But, surely, it is a sufficient objection to the attempt, that we do not know the extent of its calamitous consequences. We have no experience to guide us; we have got into an unexampled state, without any parallel in the history of nations.'

Mr. Huskisson, however, denies that any stop which might be taken towards the resumption of cash payments, would immediately compel the Bank Directors to reduce, in a very great degree, the amount of their accommodation to the merchants, much less to cease discounting altogether. "The abettors of the present system,' he says, have used this language with much success, as the means of creating an alarm in the mercantile world.' The power possessed by the Bank, of giving an increased accommodation to the trade of the country, or of continuing it to the present extent, depends more, he affirms, on the greatly increased amount of the balances deposited by Government in their hands, and which are lent out again upon good bills of exchange, than upon the enlarged amount of their circulation. The amount of these deposites is independent of the amount of the latter, and would 'not be affected by its reduction, whilst the effect of that re'duction, in raising the value of their paper, would be precisely the same, whether it were brought about by a diminution of their loans to Government, or to individuals; because it is to the aggregate excess of their issues, and not to the

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particular nature of the securities on which they are made, that the depreciation is to be ascribed. That excess affords a facility to the abuse of credit, and gives birth to wild adventures in other quarters: those, I admit,' adds Mr. Huskisson, will be checked by a diminution in the total amount of their currency, although it should be effected without any 'diminution in the scale of commercial discounts at the Bank of England. But have we not seen enough of this artificial fa'cility, and these forced speculations?'

Into the general question of the necessity of the resumption of cash payments, we cannot now enter. A future opportunity will present itself for examining the arguments which have been adduced on both sides, as well as for prosecuting the inquiry, which we now purposely waive, In what sense the Bank note is at this time depreciated; whether, under the present mint regulations, gold bullion forms the standard by which the depreciation is to be measured, and also, whether the extent of the Bank issues is that which causes the variation between the Mint price and the market price of gold. We waive these inquiries, because they appear to us to have no immediate connexion with the general fall in the value of money as the measure of other commodities, and because we are not satisfied with the proposed criterion of the excess in the paper currency, the value of the note in reference to gold. That excess we conceive to have taken place prior to any such depreciation of the Bank paper. The Second Letter, so far as it treats of the Poor Laws, is highly valuable, on account of the mass of information it comprises, and the important extracts which the Author has been at the pains of making, from authentic documents, relative to the condition of the Poor, during the sixteenth aud seventeenth centuries. The view which he has taken of the subject, coincides in nearly all material points, with the opinion we have already given, both of the principle of the system of relief, and the legislative measures proposed for its melioration*. The alarming pressure of the Poor Rate arises, he contends, not from the principle of the laws themselves, but from temporary causes, and the only inquiry, therefore, ought to be, how we shall adapt our proceedings to the existing circumstances of the country. We shall not again go over the ground, by restating our reasons for a similar opinion, an opinion which we are happy to believe, is daily becoming more general; but shall content ourselves with the satisfactory reflection, that those sentiments will now obtain a chance of being received with attention in quarters where the humble labours of Eclectic Reviewers cannot aspire to be known.

• Eclectic Review, N. S. Vol. X. pp. 201, 420.
2 N

Vol. XI, N. S.