Loyd seems to suppose, any doubt whatever as to the causes of the run, and the destination of the bullion drawn from the Bank. It is clear, too, that the latter could not have stopped a drain of this sort by simultaneously contracting her issues. On the contrary, the fair presumption is, that a measure of this sort, by rendering pecuniary accommodation from the metropolis still more difficult to be obtained, would have increased the discredit in Ireland, and the provincial parts in England, and occasioned a heavier drain for bullion.

But though we are thus clearly of opinion that the internal drain for gold now alluded to would not of itself have warranted the Bank directors in reducing the circulation, we are at the same time ready to admit, that there were other circumstances which should have led them, since October, to act in the way of contraction much more vigorously and systematically than they have done. The stock of bullion in the Bank was reduced, in October, to about five millions;-being less than half the sum she ought to possess, to place her in a state of security; the efflux of bullion to foreign parts had no doubt ceased, but none had begun to be imported; the exchange was wavering, and there was, besides, every reason to suppose that, should confidence be again restored, there would be a fresh over-issue; and that consequently the Bank, with narrowed and insufficient means, would have to withstand a renewed drain. Under these circumstances the Bank ought undoubtedly to have narrowed her issues; and to accomplish this, she should have raised the rate of interest to six or seven per cent. or more, had it been necessary, to lessen the pressure upon her for money.

The Bank directors may, no doubt, reply, and in fact have replied, that they are aware their issues should have been limited; but that they have not been at liberty any time, since the middle of October, to follow the course which a respect to principle would have pointed out, and they were most anxious to follow; but have been compelled, by a regard to other interests, reluctantly to deviate from it. We doubt, however, whether this apology can be sustained, "except in a very recent instance. The first duty of the Bank, and that to which all other considerations ought, speaking generally, to be at all times subservient, is the regulation of the currency, so as to preserve a sufficient supply of bullion in her coffers. Circumstances, which the directors are unable to control, have already hindered, and may again hinder, them from accomplishing this; but this is the one object to the attainment of which their efforts should be systematically directed. The monopoly of the London circulation was given them merely as a means by which they might the

more easily bring it about. The protection of commerce, and the support of credit is no part of their duty. It may reasonably indeed be expected that they should render to both all the assistance in their power; but the protection of the public from injurious fluctuations in the quantity and value of money, and the maintenance of an adequate stock of bullion, ought to be the paramount consideration. We do not go the length of saying, that the Bank ought never, under any circumstances, to postpone this consideration to others; but these would require to be very peculiar, indeed, and such as do not seem to exist in the present instance.

We take for granted, from the publicity they have obtained, that our readers are sufficiently acquainted with the circumstances that led to the downfal of the Northern and Central Bank. This bank, which had been established at Manchester so late as 1834, with a paid-up capital of above L.700,000, and about forty branches, had so grossly mismanaged (to use no harsher phrase) its business, that, after getting itself involved in the greatest embarrassment, and exhausting every other resource, it was compelled to apply to the Bank of England for assistance; and had this been denied, it would have been obliged to stop payments. The Bank, anxious to avert a catastrophe of this sort, which, it was feared, might occasion a panic in Lancashire, came forward to the support of the embarrassed establishment, and made large advances on its account. Different opinions have been entertained as to the propriety of this interference on the part of the Bank; but we believe there is now a pretty general agreement among well-informed parties, that she ought not to have come forward. We have little doubt that this is a sound opinion. The interference of the Bank blinded the public to the real defects and practical working of a system as to which it ought to be well informed. It also established a most inconvenient precedent; for if the Bank interfere in one case of this sort, it is difficult to see on what grounds she can refuse to interfere in other cases; and if she become a point d'appui, on which all embarrassed jointstock banks may fall back when they get into difficulties, it is plain that what little security we might otherwise have for their good management will be very much impaired. However, we might have excused the interference, had the assistance which the Bank of England undertook to render to the Northern and Central Bank been furnished without adding to, or keeping up the circulation at an improper amount. If the directors choose to sell Exchequer bills, the dead weight or other securities, and to apply the produce of such sales in propping up bankrupt mismanaged establishments, it is their affair and that of their pro

prietors, and concerns no one else. But we agree entirely with Mr Loyd in thinking, that if the advances were made, as we suspect was the case, not from spare funds in the possession of the Bank, but by adding to the quantity of paper afloat, when the most obvious principles required that it should be diminished, the transaction was one for which it will be very difficult to find any valid excuse.

The Bank also interfered, and with much less reason, in the case of Messrs Esdaile. - That the stoppage of the latter would have been injurious to the London bankers is, we believe, true; but it would not have been injurious either to the Bank or the public; and if the bankers anticipated any evil consequences from it, they should have taken the entire responsibility of winding up its affairs upon themselves, and not have pressed that duty upon the Bank.

The radical defect, in fact, in the constitution of the Bank, consists in its participating too much in the feelings and views of the mercantile class. It is managed by merchants, and we need not wonder that it should sympathize with them. It may, however, be inferred, with almost unerring certainty, that the Bank is acting on erroneous principles, when its conduct is warmly approved by the merchants, and conversely. Whenever the city articles of the metropolitan papers teem with eulogies on the conduct of the Bank, we may be quite certain that mischief is abroad. A merchant is anxious to get bills readily discounted at a low rate of interest; and his good or bad opinion of the Bank directors depends, in nine cases out of ten, on their readiness to negotiate the paper he lays before them. This might be a fair enough test of the liberality, though it would be none of the prudence or sagacity of the Bank, were she a bank of deposit only, and had nothing to do with the issue of notes. But in the actual situation of the Bank, her other business is, or at all events ought to be, subservient to her functions as an issuer and regulator of the currency. With her the salus populi should be the governing principle; and her liberality to the merchants should rarely begin till she has provided for the security of the public by amassing a stock of bullion equal at least to the third part of her liabilities.

We acknowledge that it is very difficult for parties in the situation of the Bank directors, to resist the solicitations and exaggerated representations of those among whom they live, and with whom their own interests are frequently identified. No doubt too, there may be, and have been, cases in which the public interest requires that they should give way to their solicitations, and when it would be wrong in them to abide strictly by principle. It is

their duty to compare one course of conduct with another; and if there be solid grounds for concluding that an adherence to principle on any particular emergency, would be productive of decidedly greater inconvenience and injury to the public generally, than can fairly be expected to result from a departure from it, does any one doubt that they should modify their action accordingly? We admit that this is a power very liable to be abused, and its exercise is always to be viewed with extreme suspicion; but still we do not see, so long as the present facilities for the increase of spurious credit are allowed to exist, how it could be denied to the Bank without involving the most serious consequences. The assistance recently afforded to certain houses engaged in the American trade is an example of this. Owing to the reckless imprudence with which their paper was negotiated by the money dealers in town and country, the houses in question were led to contract engagements to an enormous amount, and out of all proportion to their capital. But, from extreme and misplaced confidence there is but a step, and that not a difficult one, to unreasonable and unfounded distrust. The money dealers of London and the provincial bankers, finding they had gone too far on the one side, went, as on such occasions they uniformly do, immediately as far round in the opposite direction; and it soon became all but impossible for the parties referred to, to get their paper negotiated on any terms! In this situation they had nothing for it but to apply to the Bank. The latter, however, owed nothing to them; and had she interfered and increased her responsibilities, when she was so ill provided with bullion, merely that she might extricate Messrs A, B, and C from the abyss into which their folly and avarice had plunged them, her conduct would have been wholly indefensible. But, unfortunately, the downfal of the parties referred to would have compromised the public interests to an extent which those unacquainted with the circumstances would not easily imagine. Had the Bank refused to take their paper, bills to the amount of from L.8,000,000 to L.12,000,000, would have instantly ceased to be negotiable; and it is all but certain that the shock which such an event would have given to credit, would have produced an extent of bankrupcty and ruin, to be paralleled only by what followed the breaking up of the Mississippi scheme in France. Under these circumstances, the Bank, though with great reluctance, did come forward, and having provided as well as she could for her own ultimate security, and for the effectual reduction of the engagements of the tottering houses, consented to take their paper. That this proceeding will involve some increase of issue is certain; and the transaction is, in so far, objec

tionable. It is, however, believed, and we think with good reason, that, owing to the extensive discredit that has taken place in the manufacturing districts, a channel has been created more than sufficient to take off all the additional paper the Bank will have to issue without allowing it to influence the exchange.

We hardly think that, in this instance, there can be any difference of opinion as to the conduct of the Bank. Had she not thrown herself into the breach the consequences would have been frightful. At the same time, however, we are disposed to think she might in some degree have anticipated the crisis, and have taken measures in the view of its coming on. The extent to which the American houses had been availing themselves of the facilities afforded by our present monetary system for the creation of spurious credit and confidence, have been well known for at least twelve months past; and for more than six months it has been known that they had traded very far beyond their means, and were involved in the most serious difficulties. More recently it began to be pretty obvious that they would have to fall back upon the Bank; and if she were satisfied of the policy of extending a helping hand to them, or even supposed she might be compelled, on public grounds, to assist them, she should have endeavoured to prepare herself beforehand, as well as she could, for such a contingency, by narrowing, as much as possible, her issues in other quarters. Hence we cordially agree with those who contend that the rate of interest should have been raised in September or October, or later, to 6 or 7 per cent. This would have made the richer class of merchants, manufacturers, and tradesmen reduce their demands for discounts to the lowest point, so that there would have been a larger amount of money to advance to others. Had the Bank raised the rate of discount when Government raised the interest on Exchequer bills, the latter measure would have had all the effect that was anticipated. Those who urged the Chancellor of the Exchequer to raise the rate of interest on the bills in question did so principally in the view of enabling the Bank to sell them, and consequently to contract the circulation with the least inconvenience to the public; but it was quite clear, that if the Bank did not raise the rate of discount, when the rate of interest on Exchequer bills was raised, the only effect of selling the latter would be to occasion a corresponding increase in the applications for discounts-and such has turned out to be the fact. As the issues of the Bank,' to use Mr Loyd's words, do not appear to have been reduced, 'we must conclude that this measure bas only served to enable the Bank to sell her Exchequer bills and increase her discounts, thus forcing upon the Chancellor of the Exchequer a rise in the