The Bullion Committee and Bullion Report
After the Irish controversy and the publication of the Report, from the Committee on the Circulation Paper, the Specie, and the Current Coin of Ireland; and also, on the Exchange between that part of the United Kingdom and Great Britain (1804), the exchange rate between Dublin and London returned to its parity level.
Bank of England notes remained almost at par in Hamburg for nearly five years. In 1809, the price of gold rose to about 15 per cent above the mint price and there was a considerable loss on the exchanges. David Ricardo published a letter in the Morning Chronicle of 29 August 1809 on “The Price of Gold,” in which he attributed the responsibility for both problems to over-issuing by the Bank of England. On 1 February 1810, Francis Horner, a Whig member of the Parliament close to Ricardo, called for a committee to inquire into the subject. Horner was a specialist in financial questions; in 1802, he had written a favourable review article of Thornton’s Paper Credit in the first issue of the Edinburgh Review. On 19 February of 1810 he was appointed Chairman of the Select Committee on the High Price of Gold Bullion, known as the Bullion Committee. Willam Huskisson, a Tory Member of Parliament and also a specialist in financial questions, and Thornton helped him to chair the sessions until 25 May and then to write the report, known as the Bullion Report, published on 8 June. According to Horner in a letter of 26 June 1810, the report:is a motley composition by Huskisson, Thornton, and myself; each having written parts which are tacked together without any care to give them an uniform style or a very exact connection. One great merit of the Report, however, possesses; that it declares, in very plain and pointed terms, both the true doctrine and the existence of a great evil growing out of the neglect of that doctrine.
(Quoted in Cannan 1919 [1969]: xxii.)The “true doctrine” was that a market price of bullion above its mint price is proof of the depreciation of paper money - that is, the great evil - and can only be rectified by reducing the quantity of banknotes. According to Horner, it was unfortunate that the opposing doctrine, according to which the high price of bullion was the consequence of a depreciation in exchange rates due to the war, and irrespective of excess issues, was also present in the report.
The report - discussed by Ricardo (1810 [1962]), Bosanquet (1810 [1994]), Vansittart (1811 [1994]) and Malthus (1811 [1994]) - went to Parliament for consideration and voting in May 1811. It was presented by Horner and introduced for vote in 16 resolutions, including the fourteenth, stipulating that the Bank of England had to refer to the state of the foreign exchanges and the price of bullion to regulate its issues as long as the suspension continued. On 6 May, the first 15 resolutions, asserting that excess issues were causing the high price of bullion, were rejected by 151 to 75. The sixteenth, which determined that the suspension should end within two years, whether the war was over or not, was rejected by 180 to 45. On 13 May, Vansittart presented 17 anti-bullionist resolutions which were adopted by a large majority. The Parliament disagreed with bullionism.