The Sun.
London, England, 1832-09-05 00:00:00

produce that action?--No, we wait foi- the actual
demand.

Are there not instances in which the demand for
Gold has continued upon the Bank,af.er the foreign
exchanges have been favourable to the country ?-1.
consider an unfavourable exchange to be a demand
upon the Bank for gold for exporttrion ; I do not
know what other criterion exists for judging of an
unfavourable exchange.

,
You stated in a former answer, that you regulate
your issues with reference to the par of exchange ;
what do you mean by the par of exchange 2—l do
not know how the par of exchange is to be defined
by figures ; an exchrenge below par, is the demand
for gold upon the currency of this country; you may
have that demand for gold at a very high exchange
as well as a very low exchange.
You stated in one of your answers, that you had
reference in the conduct of your issues to the par of
exchange; but in your subsequent answer you stated
that you had reference, not to the par of exchange,
but to the action upon the Bank ?—Such action
upon the Bank is, in my view, the only evidence of
the exchange being below par.
What l 7; the par of exchange between two countries,
one of which has a gold and the other a silver cur-
rency ?—ln this country, it is the price of the gold
currency in the foreign market at the moment.
Then any thing !ike a permanent par of exchange
between two countries, one having a gold and the
ether a silver currency, cannot be ?—lt cannot exist.
Does it not occasionally happen,that whilst the par
of exchange, according to the general evimate of it,
with another country (France for instance), is con-
siderably in favour of this country, and would there-
fore indicate a power of importing gold, there is at
the same time a demand for gold upon the Bank,
and an export actually taking, place arising from par-
ticular circumstances abroad ?—Certainly.

And there would therefore be a difference be-
tween the par of exchange as generally understood,
and the sense in which you are speaking of it, in its
action upon the Bank P—Certainly. If by the par
of exchange is meant the intrinsic value of coin in
the two countries, the Napoleon of France and the
Sovereign of this country, you may form a par upon
that calculation ; but gold fluctuates in price abroad,
and which has a corresponding effect upon the rate
of exchange.
When a bill for a certain amount will purchase
the same quantity of gold both in England and
France, supposing that gold to be gold of a certain
weight and a certain standard, would you not con-
sider that to be a par of exchange in those two coun-
tries ?—I should so consider it.

Is it that which you alluded to in your former
answer ?—I can hardly define an unfavourable ex-
change otherwise than by a demand upon the
Bank; but a demand upon the Bank will not be
likely to continue for a great length of time at a high
rate of exchange; there may be a temporary de-
mand, and I may instance the years 1832 and 1829,
as periods when there was a demand at a high rate
of exchange for about a million of gold for the sup-
ply of the Russian army, but it was evident to the
Bank that it was not probable to continue ; while it
was in action it was evidence of an unfavourable
exchange.
Can a creditor in France to any amount demand
gold for payment without paying an agio for it ?—I
believe not.

Then, do you consider that silvet is the legal
standard of the currency in France, and not gold
—Certainly.
Therefore, gold not being the standard of the
currency of France, but gold being the standard
here, is there any thing like a fixed par of exchange
between France and England ?—I think not.

not gold a legal tender in France, although a
creditor cannot demand to be paid in gold without
paying an agio for it ?—I believe so.
In making provision for meeting any demands for
gold made upon you by the country bankers, do you
not consider them as making that demand as holders
of bank-notes, as well as other persons to whom you
have already alluded in a previous answer ?--No ; I
consider the demand by the country bankers in times
of discredit to extend beyond the bank-notes they
hold im reserve.

not that occasioned by the demand which the
public make upon them ?—Certainly.
Are the Committee to understand that the infor-
mation you have given relative to the mode in which
courmry bankers make their issues, is not from any
personal knowledge you possess upon the subject ?
—Yes.

Are you aware that Committees of Parliament,
in frequent recommendations to the Bank, have de-
sired that they would always take in view the state
of the foreign exchanges with reference to their
issues of paper ?—No.
Are the Committee to understand that you have
not regulated your issues by such observations ?
Not by any instruction; I merely stated that the
issues of the Bank are regulated by the state of the
foreign exchanges.
When you stated, in your first answer upon this
subject, that one-third of the reserve of bullion has
reference to the par of exchange, did you mean more
than this—that it had reference to a state of things
in ►vhich there is no unusual demand upon the Bank
for bullion for exportation abroad ?—No demand for
bullion for exportation.

You have stated, that in estimating the danger of
the different liabilities of the Bank in case of diffi-
culty, you consider the note out to be the most
dangerous liability, and the drawing account to be
the least so in comparison ; would you not find in
reference to any case of internal ddliculty, such as
that which occurred in the year 1825, that the bank-
ers arid others having large deposits with you, are
more likely to come en masse against you, than the
mere circulating paper of the Bank ?—ln alluding
to the deposits of the Bank, perhaps it would be
desirable to have separated the bankers' deposits
from the deposits of individuals, for it is quite cer-
tain that the bankers' deposits are more liable to
be called out in times of scarcity of money, and they
are called out when the deposits of individuals re-
main undisturbed.
_ .

In looking at the fluctuations that have taken
place in your deposits and in your circulating
paper, are not the fluctuations greater in the depo-
sits than in the circulating paper ?—No, I believe
that they are not, if you exclude the bankers' de-
posits.
Taking the whole together, do not you think
they are ?—I think not ; but I can refer for more
precise information, if the Committee wish me to
do so.

You stated that the principle was to keep the
amount of securities in your hands nearly the same;
do you, in order to effect that, restrict your dis-
counts upon the bills of private individuals ?—No.
Does it ever occur that the amount of private
bills accumulates beyond its average amount ?
Yes.
In such case how do you keep the whole amount
of your securities at the same amount ?—By clninging
the GJvernment securities into the commercial bills.

Then, when you said that you have never forcibly
contracted the amount of currency, )ou do not
mean to exclude your selling securities in the mar-
ket, in case the securities accumulate in your hands ?
—lf there be a demand for an increase of the issues
upon commercial bills, the Bunk finds the means of
supplying the demand by a sale of part of their Go-
vernment securities, thereby providing that the
amount of their securities be not increased, but
merely their character changed.
When a demand comes upon you from a country
banker, either from any panic or from any other
cause, is not the operation of a demand of this na-
ture, that a banker, if he has none of your paper to
come and claim bullion for, either sends up to his
London correspondent to real:se his securities, either
his Exchequer-bills, or his stock, or any thing else,
or sends up the notes arising fr.An realizi..g them
elsewhere, and claims specie at the Bank ; and
does not this disposition of the country banker
to throw his securities into the market for the
purpose of calling upon you for specie, meet you in
the market, when, in consequence of any great de-
mand, you are obliged to realize any securities for
the purpose of satisfying his demand ?—Whenever