Star. — London, England, 1826-02-11 00:00:00

II F eted, a relnetance to give up a rate of anneal rroP-., wliich, during the war, had afforded these dividends, h a d however influenced their conduct during peace, it could not be denied that there was some degree of blame.' Tic Innen possession of this large amount of specie, c a, no cam rensation for the advantages they had before possessed. They did increase the issues of the Bank, anJ although there is no immediate connection between an increase of Bank of England paper and of country back paper, yet the one naturally follows the oaer. An immense increase of the whole cur rency to. k pla. - e. A great abiindance of money aas the consequence. Nobody knew what to do with it. The anxiety to secure some sort of i:lterest tempted Bankers to lend money upon most pa,4e, and otherwise to put it out of their immediate teach. The Bank of England was soon admonished; as soon as it found the demand for gold increase, the loose arm with which it had been riding - was suddenly ericed up. The precautions they adopted quickly i•lrectel the Bankers in London. These, , in their turn, %ere compelled to contract their usual accommodat:on :o the Country Bankers, and from the Country Bankers tile prepure was diffused throughout the country. In such a state of things some of the weakest houses fell to tbe_glound, concealed insolvency now becomes ap• parent, failures become frequent, and panic succeeds, runs take place upon - Banks so generally that no prudent Banker -feels easy without Bank of England notes, or cash, actually' before him to the full arnou'.t of what he owes. All the complicated machines yof credit in this country is at once •destroyed—no man can trust his neighhour—every man stands upol his own resources. Tie Juin extends to the most opulent and respectable, tn~n. lie had known an instance of a man hunoutablrand fairly worth 200,0001. being compelled to apply for relief. 11,:agreed in the propriety of eventually and perma wqliy calling in the small notes, but doubted exceed 1.:,!!y the wisdom of taking any measures at present vards that object. He lamented th the Govern :l eitt had not withstood the importunity of the Country 13 .nkei s, when they urged the continuance of this paper; but fie dal not like the triumph of general principles to b- sought at this moment. No man would discuss abso Act questions when his, house was on fire. He must again repeat, that he thought the revenues of the Bank of England too much choked up by its connection with Government. There had been already advanced eight millions on account of the dead weight; and if the bar pin was completed, the Bank would be in advance nirteen millions on this separate account. Owing tothe .genious contrivance s of Lord Bexley, when Chancellor if the Exchequer, the Bank bad been saddled with pay kg on account of Government the deficiencies on the in- Iciest of the debt, amounting to seven millionssterling. ['rite caLweeatos of the Eacnonttsa : Those deficiencies do not exceed Ave millions and a half.) Mr. BA RING said, he was unwilling to over state the question, and what had been admitted by the . Hight Hon. Gentleman was Sufficient for his argument. These 5,500,0001. however, which the Bank advanced f r Government, although they might be repaid as quickly as pos , ible, still tended to embarrass them. The great object of banking was, not to have funds tucked up, but to have them always disposable. The whole extent then of the Bank's engagements was Exchequer bills £7,000,000 Deficiencies ou dividends • . 5,000,000' Dead *eight . 8,000,000 _ _ . And to pay off the dissentient holders of 4 per cents. about . • '2,000,000 Total . . Je4e,soo,ooo which was entirely shut up by Government from the controul of the B In addition to this, there were 1,500,0001. invested in mortgages, which was in 'twit a most improper and imprudent step, wholly in eefensible upon principle. The amount, was not in i'self any great aggravation of the difficulties of the I': ink; but when it came to be added to the other disburse ments, it made up the enormous sum of 24,000,0001 of unconvertible capital belonging to the Bank...-. Bow, then, was it to be expected that a Bank should be in that state in which a Bank ought always to be, namely, ready to take up its engagements, and exercise a pow erful infilence on the state of public credit in cases of emetgency, such as they had recently witnessed? Had (X ivernmeet been embarrassed at all in its operations, instead of its being a period of profound peace, and Souks at 95 per cent. steadily, there might have been some excuse lor such an attempt to ease themselves at the expense of the Bank. But as it was, nothing could be mote clumsy than their mismanagement. All this while it should also be remembered, that the Bank was no capitalist. In the year 1783, when this country was experiencing the greatest difficulties from ,the come ciences of the American war, the Bank of England was s far exhausted that it had not actually half a million sterling in its possession,and was all but bankrupt. Again, during the French revolutionary war, the Bank was, in 1 7 97, obliged to suspend its pay ments,the coup de grace having been given to its solvency by the Austrian Loan. Tile Rank, then, being itself possessed of no permanent capital, how was it possible that being choked up by Lie want s of Government to the amount of '24 millions, it should be. at ease, or have . elbow-room for its own commercial operations? He WAS far from thinking that our embarrassment was anything but temporary; yet he considere f the Bank as it were , the heart of the circul4tion of the country ; and if any check was expe rienced there, it was sure to extend to all the Country Ea tt ks. If, added to All tltis,..a frenzy of speculation, such as that which they had witnessed, should, like the wind, wh ch comes one knows not whence, break in upon the resources of credit, and overwhelm reason and pi udelice, it w 4, not wonderful such results should have t then place as we at this day witnessed. The. Ministers seem to have forpt that it was their duty in peace to ICe etio their money up, as his Majesty's ships were all re sdy for a start, lest an alteration in affairs, however ifloinising they now appeared, should render a war cessAry, or n large sudden expenditure expedient. But ete,whilst they hod been choking up the Bank with the olustquences of foolish philosophical conceits, they had tinbartassed both it and the country, and were in such .tote for want of means that they were unable to 'quip a fleet of ships of war, or even to make the' least defliOthtrati;:ll of hostilities, should there be even real ground of provocation or offence. The power of a Government like England consisted in its fret:my,' we had long since discovered to be far beyond erlitrry strength by the unerring test of experience. Taus in the leg great contest all our successes were "log to our money, and though we never had more tl"u between ion) and fifty thousand British soldiers the field, set they were sufficient, under that dis- Itriginsfied 13.ixish leader first in the annals of fame, to r"oe t h e elme,u4 means of wresting other nati , " the grasp 14 th e powerful usurper of the atilwue of !''ranee:. Ting reel scnwcr of our great ness had been overlooked, and everything had been sacrificed to foo:ish financial kitties. The ;liberality of its issues on the part • of the- Bank, 'would have, perhaps, effected mach, and relieved pub lic credit, if the Ministers had not fettered the Bank as to its operation on trade and commerce. This was the more likely, because that thrie.fourths of the panic was created out of the other fourth, for which there was some foundation. It was just the same as in an alarm of fire at a Theatre, where the great-danger arose from people treading each other to death in their anxiety to escape from that which was often only fancied danger He shnold next suggest to- the Batik the propriety of not looking to such very great profits on their busi- Imes. It would be wise if they would rest settled With realising a profit of six instead of eight per cent. As, to the popular projects for reeving the pressure now experienced and preventing its recurrence, the first was one for the erection of a second National Bank; this he confessed he thought a hazardous expedient, indeed he would not disguise his opinion that it would rather tend to increase the confusion, if a great banking est iblishment in the West were found contending with the present in the East. The Right Hon. Gentleman this evening had said that the Bank, forsooth, had con sented to relinquish that part of its privileges, which secured to themselves alone the privilege of being baited in a banking firm consisting of more than six persons. Now it appeared that out of 800 banks there tome not more than 26 which availed themselves of the privilege of having six partners in the firm. It was not, therefore, very likely that if the Legislature opened the field of speculation in this way, and permitted an enlarged number of proprietors in banks, the number of partners would be found to exceed that now flied by law : since Into very few instances even six private Gentlemen would be found to trust each other reciprocally. Indeed, if any Cmintry Gentlemen should be tempted to commit their property to the issue of these speculations on an enlarged scale as bankers, they would be guilty of an egregious folly. It would have a very different effect, he believed; if the Right Honourable Gentleman would retort mend to Parliament the passing of an Act for sanctioning Banks, in which the partners should only be liable to the amount of the sum for which they origi nally had consented to become liable. He believed this would prove a public benefit, by inducing a number of respectable men of undoubted 'property to embark in banking on this prudent, and, as he considered it, solid principle of a JointStockCompany for this purpose. If such a proposition were acted on, he should propose that a public record should be kept of all such banking companies, their partners, capital, and separate liabi lities ; that these books should be open to inspection yearly, and that if it appeared any one had drawn out his capital, or incurred debt, he should be compellable to withdraw. These was another improvement to which he should have to apologize, in the first instance,, for drawing their attention somewhat in detail. He meant the que.tion of the standard of value. And first he should propose that payment, in silver as well as gold, should be a legal tender. The value of any fixed standard must, in a great degree, if not altogether, consist in its invariability, and this he thoughtwoyld be best attained if the standard were to be fixed by re ference to the values of both gold and silver, as such a standard of values would be less variable. Silver is to be bad at all times with greater facility than gold.— The exigencies of commerce and foreign remittances made it often necessary to send' abroad Specie; that 'could be done without difficulty in silver, but 'where gold was to be bought first, as was often the case, with that silver, all the evils of an uncer tain standard were experienced. If the Bank, then, were. at liberty to use both as a legal tender, its transactions would be conducted with greater ease and with reater public accommodation, because it would at all times lay its hands at will on the silver, which would fix the standard of values with much mere certainty; besides, .if the silver were equally available we might double or treble the amount often required in specie. Gold too being, after all, but a mere merchandiseable commodity, It was open to the operations and competition of trade, and the Baek of England might feel itself thwarted and opposed in collecting together a sum in gold sufficient for its purposes ; and he was fully convinced that it was perfectly possible for certain houses in business, with comparatively inconsiderable means, to prevent a single ounce of gold getting into the hands of the Bank, however anxious it might be to obtain it.— In the case of the American war alluded to, the war was obliged to be terminated with nioitification, for' want of gold; and in the French war the Bank of Eng land stopped payment, though the war went on because the French would not hearken or consent to peace. In , this country we took a metallic standard which no other country took: in France, where gold and silver lived togeth r in perfect harmony, there was not more than ten centimes difference between them, while he was in France. It had now got up, however, to one and a half, or two per cent. on account of the large drafts drawn on them by the Bank of England, under the present demand. Such was the effect of their fine philosophical standard, to the beauty arid consistency of which they sacrificed so'mech. If he were to sug gest a plan, it would be, to leave the small silver, the half crowns, shillings, and sixpences, as they were, but to call in the crown pieces, make them a quarter of a pound, and constitute them a legal tender at that rate. It might be said, that with ten sixpences of the common colts, they could then buy twelve of the standard ; but they cupid do the same thing now. Perhaps it might be objected, that the crown/ would be too cumbrous to answer the convenience of trade; bet such an objection could not be admitted to have muck forte, when at any time they could, for two shillings, get a hundred pounds in gold, in exchange, fur the silver. Experience had fully proved that gold went out of the country much quicker their sliver. We had made a beautiful new gold coin, the very perfection of which had a tendency to aLgravate that di sadvantage, especially since the repeal of the law which prevented the exportation of cobs. to the old times the coin used logo out of the country when the exchange was against us, but now it went out when the exchange was not against us. In old timers, the exchange breker had a risk to ran when the law was hi arms against him, and though, in times of difficulty, they would rather take on coin than paper, berating there was less risk, yet 'persons of large capital being.geoeridly unwilling to offend apron the law, all traffic of this nature was necessarily confined to small dealers, against whom the Bank could more easily protect itself. There was no reason, that he could see, why we should be more nice tiro the rest of the World in this respect, who were satisfied with the mixed seamiest', and found their advantage in adopting it. With respect to the supposed is sues of the Country Banks, the Right Honourable Gentleman had estimated tin amount of the notes supposed to hi in circulation at eight million,* few nights ago; sins then he had reduced hie calculi titan to six asiihens, and on this night he had sunk is se low as fem. But, however the fact might be, the Hume would de Ina to re collect that though a few million might have a Laza aoead in gais wealthy niettopolik tb4ty might be everything ip the cv41.1 1 11 Banks. It might be said that a great deal had been already dope, that much of this paper was already withdrawn horn ;initiation; but if Government, with a view to contract the Imre" stillbirth/se, was to apply the screw, the,effect of 'arch a sudden menete probably be to aggravate the present distress. The lag ' Gentleman had given them no opportunity at seeing teisedy what licsvn about, for chr. Resolution be but retool was .S ply that the Isiries or one pound country bank noteksbooli cease after shrew Teats. What be (//bk. ,M riot woad was, that thine sbOidd be let. alone foemethoe yeses when. if thtnip•wera allowed to.take their owns eettelleb it,.100e14 beloved that a great , fan of the present diainkivo,lo4 their, kaladatiaq lapan i c aide,, and that the substance and thaaaesee of this country WAS wholly unshaken by the.calacnity which .ssailed it. The establishment of banking houses in the nature, of Joint Btock.Companies would have a tendency to induce peop;e of capital to embark in such concerns," and operate in that way as a security for their solvency ; and if, in addition to this, Cluvernment would relieve the Bank of England from the incumbrance of their connt-ction, there could be link doubt that, after a short period, thn good effects of such regula tions would be manifested In the growth of prosperity. Lord FOLKES TONE called on the House to pause befoie they a4s-nted to a resolution which had been pro posed.by the Right Hon. Gentleman. He had listened with great pleasure to the statement of his Hon. Ft iend; and though there we-e many things in which he heartily concurred, there were some points to which be wished to advert. The House had been called on to remedy a great evil, without understanding the cause in which it originated. It appeared to hint that an important crisis , had occurred, which had produced a serious revulsion of property throughout the canary. N s man knows on what to calculate as his own, for, from recent expe rience it was easy to perceive that there was something unsound in the principles which had hitherto regulated the country. The Right Hon. Gentleman (the Chan cellor of the Exchequer) was mistaken if he thought him (Lord Folkestone) inclined to such fluctuations as had taken place. On the contrary, he was of opinion, that nothing was more pernicious to ti.e country than the recurrence of such fluctuations. He thought that the Right Hon. Gentleman was taking a wrong course in his endeavours to check the evil by the measure which he has in contemplation. The only remedy con sists in the repeal of the measure of 182A', in the pro motion of which the Right Hon. GeuCeman was instru ! mental. He (Lord F.) did not think it right that the Kill should pass without some concomitant measures. The Bill was brought forward in 1822,, after a periot of great distress, but since that time the Right Hon. Gent. stated that matters assumed a much better appearance. The great distress-prevailed in the year 1822-3., It was then asserted that the Bill was introduced to increase the circulating medium of the country. It has produced a rile of prices for since its passing prices live gra dually risen. In 1819, the Bill which was called Mr. Peel's, provided that after 18es there should be no fur ther issue of notes. The consequence was that the Bank of England began to collect gold to meet the exigency, and also to contract its • issues. This was a matter of prudence on the part of the Bank, though productive of great distress. To remedy this evil the Bill passed, and the natural event followed. Now, will not the same cause bring on similar distress? There was nothing more calamitous than the fluctuations to every descrip tion of persons in the kingdom. There was distreis in the first instance, and then Mr. Peel's Bill followed— then succeeded a - rise of prices—arid now it is proposed to proceed with s railer inconsistency. No person knows what to do, or how to provide against the uncertainty that prevails in this respect. The poor man, however, is the greatest sufferer in these eases, in more waitthan that stated by .the Right Hon. Gentleman. The poor man is affected by the rise and by the fall of prices. While all the fluctuations were going forward, the poor rates were, accordingly progressively advancing beyond any comparison which the Corn Laws would justify. There might have been a slight deviation or diminution, but the principle. ,of the poor-rates was progressive. ' le titioensan might be employed in a rise of prices. but at a fall he . had no other resource than the poor rates. The poor man of the present day wai not or such a character as he was twenty-five years ago. The rate is now changed to his prejudice. The poor rates continued to increaseCthey were increasing during all the periods of these fluctuations. The first scale of poor rates established in the county where he acted as a Magistrate, was Is. 6d. and a loaf of brea d per week for every man ; I s. 2d. and a loaf of bread for every woman ; and 11. and a loaf for every child. Its another county, where he also acted as a Magistrate, it was nearly the same, but new it was considerably reduced. Thee !actuations, which were always, he thought, principally attributed to the policy of the Government, operated fatally upon the lower orders; although the poor rates were increasing, the alloWance to the poor was consider ably diminished. He could not give his support to the resolutions of the Hon. Gentle Man, unless they were accompanied with some concomitant measures. There was not sufficient info-m.169n before the House to enable them to decide. A great outcry had been raised against the issues of one and two pound notes, but he did not think the fluctuations were at all attributable to them, These were not the cause of the embarrassments in 1789. nor of those of 1793. There was something peculiar in this country which required explanation. With respect to the other measure, there were many objections to it. If he understood these joint-stock companies, which it was intended should be • formed, instead of giving re lief they must operate injuriously. The distress upon the Continent. et this moment was as great as in this country. How could this be explained ? And as to those measures giving relief in times of difficulty, it was impossible. There was no security that these measures would relieve .the people. The Right Hon. Gentle man will get into a scrape by attempting to withdraw the one and two pound notes. The Right Hon. Gen tleman says those measures are intended to give se curity to the holders of notes; at another time they were only intended to guard against fluctuations. These in consistencies proved how unfit and how unprepared the Hon. Gentleman was td state his reasons for the intro duction of these measures. The correspondence between the First Lord of the Treasury and Chancellor of the Exchequer' and Bank of England, contained the greatest inconsistencies. At one time commerce was restored to its ,accustomed channels, but then there existed. difficulties. Once it is attributable to the revenue: another time it was beyond all Parliamentary inter ference; and now they were called upon to legislate : but the House would do wisely to pause, and consider well before they legislated upon the subject. It was this cry of prosperity that led to the speculations which produced so much ruin. Mr. MABERLY, jun. entirely agreed with his Hon. Fiend (Mr. Baring) in every sentiment which that. Gentleman had advanced. There were various opi nions prevalent with regard to the subject which then occupied the attention of the House. The distress of the country bad been attributed to the over issue of Bank paper, which was perceivable in, ami indicated by, exchanges. It was strange that the over issue had not been discovered for a period of more than a year and a hall. Ije denied that there was an over issue. If there had been an excess of Bank paper, the Bank and 'Government were, blameable, but he thought it could oe easily .provegi that Wets was not an over issue. Had such been the ease, it would have been discovcrei im mediately by the alteration of exchanges. .No altera- I Lion took place till the year 1824; and if we look at the speenlatian Mania, orb should find that it begin lafid Inßf . Mk thud spiettaiddirwatiktntlessi- the, - were encouraged 'by die; Inwriteara - hiresest, aiscl ih consequence followed which: had belie - elestribed:isy • Mrs Tooke—(Here Mr. Maberlj rdad &eters! -paean* front a Rublication applicable to the subjeetesponwhicat he was addressing, the House)—the re-setionhegae.,o. the sales became dull. It was imposiVe to raise moneti . and then followed the pack. which approached to e resemblance,of the celebrated South Sea -Bubble. The Honourable M e mb e r coo. " eluded by reading copious extracts from a Pamphl e t publithed during the panic of the South Sea Bubble, which tended to shew ad analogy between the wild spilt of speculation then pievakut and the late spirit which-led, aniong,other causes, to the great distresit in the Monied and dactimercial Interests of the country. Mr. HUSKISSON said, the* Noble Lord opposite, and his Honourable Friend (Mr. Baring); had made some observati' , ns which would afford him an oppor tunity of giving an explanation upon a point which appeared to be misunderstood. His Honourable Friend, the Member for Taunton, had indulged in some aid: smadversions, rash and unsupported, on what he was - pleased to call the insensibility of the First Lord of the Treasury, and his Right Honourable Friend theiChan cellor of the Exchequer, in respect to the peseta state of the country. It was not necessary to vindicate the' Noble Lord at the head of the Treasury front the impu tation of a want of feeling, either for the difficulties of the country, or the distresses of individuals.— • Both the Noble Lord and his Hon. Friend had com mented eery strongly on a passage in the corre spondence between Government and the Bank, without distinctly understanding the way in which it applied. The passage to which he a luded, was that commencing with the words, 6 , the panic id the money. market having Subsided," - etc. He need not ask his Hon. Friend, who he believed was in London about the middle of 111e:ober, and Was a witness to what was passing, whether there did, not exist at that time, for two or three days, a state of affairs in the money market (contradistinguished hose commercial dis tress), which rendered it impossible to procure money upon even the most unobjectionable security ? He . ;appealed to every Gentl:man present connected with. the City, whether it was not a fact, that during . forty-eight hours it. was impossible to convert into money, to any extent at least, the best securities of the Government? Persons could not sell Exchequer Bills; they:could not sell Bank Stock; they could not sell East India Stock ; they could not sell puSlic, securities oft the funded debt of the country. That difficulty di f n it arise 'from any rational idea of the insolvency of the Go. vet nmen„ of the Bank, or of the other great coporate body, but from that panic to which his Right Hon. Fr end, the Chancellor of the Exchequer, ani the First Lord of the Treasury alluded, in the passage which had been referred to, as having existed and being removed. Was the statement true, then, that the panic—that state of things which he ,had just described—had been ran . London ? No one now beard of two or thtee Lalon Bankers stopping every morning. It was no longer impossible to convert all public securities into money. .The operations of the Royal Exchange had resumed their ordinary course. Did Lord Liverpool suppose that when ihe panic in the money market was over; the com mercial transactions-of the country would not be affected? No such thing. In the conversations whet he had with Lord Liverpool, his Lordship had stated, that the . convulsion in - the money market must inevitably derange the transactions- of commerce, and involve them in difficulties. It the difficulties which existed in the money market a short 'time.. since. had continued tor only On hours longer, he believed, that the effect would have been to put a stop to all dealings between man.and man, except by means of barter. The c„nduct of the 8..0k had. been most praiseworthy, and had in a great-degree saved the country from a general convulsion. He *dull take upon himself to say, that the B ink, throughout their . prompt, efficacious, and public-spirited conduct, had the countenance, advice, and particular recommendation of the First Lord of the Treasury and hi, Right Hon. Friend to assist them. Therefore he had a eight to say that hii colleagues, in their communication to the Bank, alluded to the state of the money Mat ket only, His- Hon. Friend had inferred, from what appeared in the correspondence, that Government was ignorant of what passed in Scotland. Could it be supposed that his Noble Colleague andhis Right Hon. Friend were so • ignorant of the state of the country, as not to know • that the gteatest commercial distress at present existed in Scotland, and that the Scotch bankers, by their mode of affording discounts, were aggravating that distress? It was, however, quite .consistent with tkat fact, that the system of Scotch banking afforded greater securities . than the English system, and therefore it was desirable to introduce the former here. He did not know whether the Noble Lord intended to subject the whole of the members of Government to the charge of ii sensibility for the distresses of the country, but he could assure the Noble Lord that there was no part of his speech in which he so cordially and entirely concurred, as that in which he stated that a system of currency which plc. duced great and violent fluctuations in the price rf, commodities, was one which, however it might all ct the opulent merchant or the man of landed properly, was most to be deplored on account of the marmor in which it operated to aggravate the distresses of the labouring classes. Tuat was the opinion which be had uniformly maintained. -It would be found recorded its the Report of the Bullion Committee of 1816, and it had been awed by him en every occasion when he had been called upon to deliver his sentiments on the subject. There was tie part of the system of the currency at which he lookel with greater anxiety than the manner in which it prejudiced the interests of labourers, and particularly those employed in agriculture. His Hon. Friend the Member for Taunton had given a disserta tion—a very a* one certainly, to which he had listened with great attention, and in some parts o ith great satisfaction—on the general system of bankit g in the abstract. HikHon. Friend then entered upon a state ment of the difficulties under which he supposed the Bank to labour on account of the advances on Exche quer Bills and other advances more or less of a per manent nature, Made by the Bank to Government. As . the question was one of fact, it was material that it should be set right. His Hon. Friend was considered a great authority, and a statement going forth from him was . likely to produce considerable effect. He wished, therefore, that the matter should be fairy stated. His Honourable Friend had stated the advances made by the Bank ou account _of the half-pay annuity .at 8,000,0001. forgetting that considerabse sums were paid by Government to the Bank twice a year on account of that transaction, which, if deducted, would reduce the amount advanced by the Bank to somo,ooc. His Hon. Friend add, that the whole of the ' capital of the Bans was Icncto the'Cimenonsent. - If he mous that ' the whole of the capital which the Bank possessed at tip period of its foundatiotr *as kilt 'to Gooerientent at the psi., paid for their charter he (Mr. linskisson) would not dispose the I