THE

THEORY AND PRACTICE

BANKING

BY

HENRY DUNNING MACLEOD, M.A.

OF TRINITY COLLEGE, CAMBRIDGE, AND THE INNER TEMPLE, BARRISTER-AT-LAW;

SELECTED BY THE ROYAL COMMISSIONERS FOR THE DIGEST OF THE LAW TO PREPARE

THE DIGEST OF THE LAW OF BILLS OF EXCHANGE, BANK NOTES, ETC.

HONORARY MEMBER OF THE JURIDICAL SOCIETY OF PALERMO

FOURTH EDITION

VOLUME II

LONDON
LONGMANS, GREEN, READER AND DYER

1886

THE AUTHOR RESERVES THE RIGHT OF TRANSLATION

CONTENTS

or

THE SECOND VOLUME

CHAPTER X

FROM THE RENEWAL OF THE BANK CHARTER IN 1800,

TO THE ACT FOR THE RESUMPTION OF CASH PAY.

MENTS IN 1819

PAGB

1

3

3

4

..

4

4

1. Great failure of the harvest in 1800 . . . . .

2. Opinions held in 1696, respecting the depreciation of paper.

3. Opinion of Adam Smith respecting the market price of

Bullion. . . . . . . . . .

4. After the restriction prices estimated in Bank paper . .

5. Sudden rise in the market price of Gold in 1801 . . .

6. Discovery of the truth that a rise in the market price of gold

Bullion was a proof of the depreciation of the paper cur-

rency . . . . . . . . . .

7. This discovery due to Mr. Boyd, Lord King, and Mr. Thorn-

ton . . . . . . . . . . .

8. Peace of Amiens--continuation of the restriction . . .

9. Mr. Fox first declares the cause of the adverse exchange in

the House of Commons . . . . . . .

10. Declaration of War in 1803—Lord King's principles of a

paper currency . . . . . . . . .

11. The issues of country banks based upon Bank paper .

12. Par of Exchange between England and Ireland . .

13. The Bank of Ireland directed to suspend payments in cash.

14. Extraordinary depression of the Exchange between London

and Dublin . . . . . . . . .

15. Appointment of a Committee to inquire into the state of the

Irish Currency . . . . . . . . .

16. First investigation into the theory of the paper currency

Parliament . . . . . . . .

17. Opinions of the Directors of the Bank of Ireland . . .

.

5

7

8

9

10

PAGE

13

16

18. Their description of the extraordinary debasement of the ***

Irish Currency.

19. Exchange with Belfast favourable to Ireland, while that with

Dublin adverse . . .

20. Difference of 12 per cent. between Exchange with Dublin and

with Belfast . . . . . . . . 14

21. The fact proved that a balance of payments was due to

Ireland, while the Exchange was so depressed . . . 14

22. First declaration of the opinion that gold had risen, and paper

had not fallen . . . . . . . . .

23. Opinion of Mr. Marshall that Irish Bank notes were depre-

ciated . . .

.

. .

. . . . . . . . . 15

24. His evidence on the subject. ..

25. The Theory of the Directors of the Bank of Ireland as to the

regulation of the paper currency . . . . .

26. Report of the Committee . .

. . 18

27. The Committee report that the Directors should regulate

their issues by the price of guineas and the foreign Ex-

changes . . . . . . . . . ..

28. Very debased state of the coinage . . . . . 19

29. The Committee do not discuss the new theory of paper

currency . .

30. They recommend an assimilation of the English and Irish

currencies . . . . . . . . . 20

31. Mr. Fox declares it to be a fantastical opinion that paper was

not depreciated, and that gold had risen . . . .

32. First declaration by a Parliamentary Committee that the

paper currency should be regulated by the Foreign Ex-

changes . .

33. Renewal of the Bank's loan to Government

34. Circumstances which lead to the great depreciation of the

British Currency . . . .

35. Perfidious conduct of Prussia in 1805 . .
36. The Berlin decree against British commerce in 1807 .

37. Immense speculation in 1808, and subsequent years .

38. Great multiplication of country banks in 1809 . .

39. Great rise in the market price of gold . . .

40. Appointment of the Bullion Committee ..

41. Report of 1810 identical in principal with that of 1804

42. Names of the Committee . . . . . .

43. Identity in sentiment between the witnesses examined before

both Committees . . . . . . . .

44. Remarks upon some of the evidence . .

45. State of facts agreed upon . . . . . . .

46. Issues maintained by one party . .

47. Issues maintained by the other party . . . . . 30

48. Discussion of the points of difference . . . . . 31

...

........

32

. 34

·

..................

.................

PAGE

& 49. Evidence of Mr. Chambers . . . . . . .

50. Remark of Mr. Huskisson . . . . . . . 34

61. Fallacy of Mr. Chambers's opinions . .

52. Another illustration . . . .

53. One argument to shew that there was no difference in value

between guineas and bank notes

54. Discussion on second point of difference between the two

parties . . . . .

36

55. Opinion of a foreign merchant .

56. Discussion of the third point of difference between the parties

57. Discussion of the fourth point of difference reserved . .

58. Analysis of the Bullion Report

59. The same continued . . .

60. The same continued

61. The same continued.

62. The same continued

63. The same continued

64. The same continued

65. The same continued

66. The same continued

67. The same continued

68. The same continued

69. The same continued .

70. The same continued

71. The same continued .

72. The same continued

73. The same continued .

74. The same continued .

75. The same continued .

76. The same continued .

77. The same continued . . .

78. The same continued . . .

79. The same continued . .

80. The Bullion Report is the standard by which all legislation

regarding the paper currency should be regulated

81. Resolutions of Mr. Horner . . . . . . .

82. Mr. Rose's reply to Mr. Horner . . . . . .

83. Speech of Mr. Thornton . . . . . . .

84. Mr. Vansittart's resolutions

85. Historical untruth of the doctrine that the coinage never was

intended to contain any fixed quantity of bullion . ..

86. Prevalence of a paper price and a cash price for goods .

87. Examples of this given by Mr. Sharp . . . . 53

88. Instances given by Sir Francis Burdett . . . . 53

89. Theory of the opponents of the Bullion Report . . . 53

90. Rejection of the Bullion Report_Mr. Peel votes with the

majority . . . . . . . . . 54

.................

..................