drawing out and carrying in the notes of the Bank in exchange for it.

But by the 4th section of the Bill-any importer of bullion may take it to the Bank and constrain the "Issue department" to give forth its promissory notes for the value of it at £3. 17s. 9d. per ounce. Suppose-at any given time when the proper and requisite quantity of the circulating medium of coin and paper-money out is 72 millions, or any other sum-5 millions of bullion brought to the bank for sale by an importer or importers of bullion-the bank, under the compulsory provision of the 4th section of the bill, must take such 5 millions of bullion, and give forth for it 5 millions of its notes-which will evidently be an issue of 5 millions of notes in excess, if the proper and requisite quantity were previously out in circulation.

The only way in which the bank can remedy that excessive issue of 5 millions of its notes-is by sale of 5 millions of securities (e. g. of Exchequer bills), carrying interest to the bank, and getting back for the same 5 millions of its notes and cancelling the same.

The effect of that compulsory operation,-to which the bank is subjected by the 4th section of the bill-is-in the case supposed to load the bank with 5 millions of bullion for which it had no demand, to lie dead and unproductive in its vaults and coffers-in order to bear which load-without forcing out 5 millions of notes in excess-the bank must part with 5 millions of Exchequer-bills (or other securities) carrying interest to the bank.

E converso. Suppose 5 millions of notes brought by an exporter or exporters of bullion to the Bank in exchange for bullion-which (or gold in coin) the bank is bound, according to the tenor of its notes payable to bearer in coin on demand, forthwith to deliver out. If the proper and requisite quantity (72 millions, or any other sum) of circulating medium were previously out in circulation -such quantity becomes immediately defective by the 5 millions of notes brought in for the 5 millions of bullion drawn out to be exported.

The only way in which the bank can remedy that sudden and unnatural contraction to the amount of 5 millions of its notes out-is by purchasing 5 millions of securities (e. g. of Exchequerbills), and so, by the issue of 5 millions of notes for such purchase, restore the equilibrium of the circulating medium.

Hence it appears, that the theory on which it is by the Bill professed to legislate for the regulation of the "Extent and management of issue by the bank," is just exactly the reverse of what reason and common sense, guided by facts, would dictate. -namely, when there is an efflux of bullion from the bank for exportation, reason and common sense say-re-issue the notes withdrawn from the circulating medium OUT, and brought in for the bullion for exportation-to prevent disturbance of the equilibrium of the circulating medium out,— the Bill says, when there is an efflux of bullion from the bank for exportation, let the bank and all the banks in the United Kingdom contract their issues of paper-money, ultra the unnatural con

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traction of the circulating medium caused by the notes carried into the bank for the bullion required for exportation.

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And e converso-when there is an influx of bullion into the Bank and the Bank, for the compulsory purchase by the directors of such bullion, is thereby constrained to issue bank notes in excess beyond the ordinary existing and natural demand for circulating medium,-reason and common sense say, contract the issues of paper-money thus unnaturally expanded for the compulsory purchase of bullion: the Bill says, upon such influx all banks may safely and freely EXPAND their issues of" paper-money."

To what is hereinbefore stated, much might be added, showing the loose and fallacious inferences from assumed facts--and showing the false reasoning-of the framers of the bill.

Take, e. g. one instance of fallacious inference, viz., that the quantity of circulating medium in existence in the United Kingdom, at any given time, is ascertained, and may be judged of and reasoned upon-merely upon knowledge of the quantity or amount of paper-money at any time out in circulation in the United Kingdom.

The circulating medium consists of a mixture of coin and paper-money. On the assumption that 72 millions (or any other quantity) of circulating medium, composed of coin and paper-money, circulating with its acquired velocity, being requisite in the United Kingdom for the circulation of all other commodities within it-If the component part of the 72 millions (or other quantity) which

is coin, be diminished, the other component part, which is paper-money, must be increased-and vice-versa-if the component part of the 72 millions, which is paper-money, be diminished, the other component part, which is coin, must be increased.

It is evident, therefore, that only loose and fallacious inferences can be drawn as to the quantity of circulating medium at any time out in the United Kingdom-from the quantity of papermoney out, without knowing also what quantity of coin is out-and the fluctuations in the quantity of coin out, as well as the fluctuations in the quantity of paper-money out at any given time.

To judge of the whole quantity of circulating medium at any time out-by the quantity of coin only, at that time out-or by the quantity of papermoney only at that time out-without knowing the quantity of both would be somewhat like a man judging of the hour of the day by looking at the figures on a dial in the absence of the sun.

In the speech of the Prime-minister (published by Murray, p. 28) he is reported to have said, "If we admit the principle of a metallic standard, "and admit that the paper currency ought to be "regulated by immediate reference to the foreign exchanges—that there ought to be early con"tractions of paper on the efflux of gold-we

might, I think, infer from reasoning, without the "aid of experience, that an unlimited competition "in respect to issue will not afford a security for "the proper regulation of the paper currency."

The quantity of paper-currency and the quantity

of coin, composing the circulating medium of the United Kingdom, are, probably (as hereinbefore estimated) equal, numerically, in amount, but taking into account velocity of circulation-the velocity of circulation of paper-money so much exceeds the velocity of circulation of coin -that as component parts of the power of the circulating medium, the power of the paper-money is, perhaps, 50 or 100 times greater than the power of the coin.* To admit, without reason or a shadow of proofthat the paper-currency of the United Kingdom ought to be regulated by immediate reference to the Foreign-exchanges-and be contracted (or expanded) according to the fluctuations of such Exchanges would be most illogical and unphilosophical—for that would be to admit, contrary to reason, that the supply of circulating medium to the people of the United Kingdom should be regulated-not by their demand for circulating medium-but by the demand of foreign nations for gold.

If the whole paper-currency of the realm were placed under the power of one single bank of issue acting upon such a principle, or rather fancy-and the whole of such paper-currency circulating with immense velocity were to be subject to early contraction (i.e. were some, perhaps a large part, of it to be suddenly withdrawn from circulation) whenever

The power of the circulating medium of the United Kingdom is the amount of the paper-money OUT, multiplied by the velocity of its circulation-PLUS the amount of the coin OUT, multiplied by the velocity of its circulation.