The Sun. — London, England, 1832-09-10 00:00:00

J' ~~, . ". ,//, 20 ' Pt h r( ill! e' ' ; ' %e iii, sNOIA . 1 1 to gi -i ' -'. zl ' I' i - r e • dm l cause for over-Aettea..? 0 the 417 4Ce7 of • a perfect concord, certainly.,. , ,. ---, ' -' 4 4-' / -2;446 l e ' In the case of there beinKa iivally bet .11.1 y banks, d es it not lead to th e coneltiet i 9n,thttt Nvi y banks there is a greater chance of tiverAsitoe'thh vith one ? That may be controlled, I think, by other causes. What causes?—Such as the separate interests of the different banks. (►y,'~,~ THE LANCET. TRAVELLING CHOLERA COMMISSION. THE LANCET of September 9, submits a proposal to Government for the formation of a MOVEABLE BOARD OF CONIMISSIONERS, ap pointed to visit the worst scenes of the pretailing pidenk at a moment's notice, to inirbstigat,g payticolai rnAs practice, with a view. to an IMPROVEMENT in the METHbD of TREATING the MALIGNANT titIbLERA. _ _ : f ps -a - l• • • . -- 1 • ), 0 • " - - • , L • 1 1W 0: 77 1 % ' 1 111 , ort ,t 4 "NJ By the EDITOR. With several Papers on the Cholera, communicated by the Government Board of Health, and various Surgeons and Physicians—Reviews of Stevens on the Blood, and Toil on the Ear—An Exposition of the new Duties of Anatomists and Inspectors—A Lecture on the Nervous System, delivered at the London University, by Mr. Youatt—And a Case of Carcinoma of the Uterus success fully treated. Price Bd. Edited by Mr. Wakley, and published by Ge L. Hutch• Inson, at the Lancet-office, 210, Strand. COMMITTEE ON THE BANK OF ENG. LAND CHARTER. Examination of JOHN EASTHOPE, Esq., a Member of the House. You are a stock-broker ?—I am. Are you acquainted with the trade of banking ?--Ye., in some degree ; before I was a stock-broker I was engaged Its a country banker for several years. At wh it - place ?—At Tewkesbury, in Gloucestershire ; at Eveshatn, in Worcestershire; and at Alcester, in War w•ickshire. What is your opinion respecting the expediency of re newing the charter of the Bank of England with its pre sent exclusive privileges ?—My opinion i. decidedly against the exclusive privileges of the Bank of England. What is your reason for that opinion conceive that they are injurious to the public interest, on principle as well as in practice ; on principle, because I conceive that the principle which would be safest to the public interest :wonld comprise small profit•, but the system of tl , e Bank is to make large profits; and in order to secure that, they appear to me to have lost sight of the principles necessary for the public safety. This is strongly illustrated in their practices, particularly in 1825, and also, I believe, subse quently- Previous to the year 1825, the issues of the Rink were very large, unnecessarily and injuriously so, and then suddenly centracted in a way to be ruinously destructive. Then it is your opinion that the Bank has been more guided with a view of securing large profits than with a view of doing what would he best for the public interest ? --I think that must be manifest from the circumstance of the Bank being choked up with securities that cannot be made available to them in case of necessity. Some of the great evils that have happened have arisen from the Bank being thus choked up with a species of security, which if there was a necessity of availing itself of, it could not do, end the attempt to do se is necessarily ruinous to indivi duals, and destructive of public interests. In point of fact, have not the Bank realized large pro fits? —It is so understood, but every thing about the Bank is so much involved in secrecy, and there is so much con cealment, that it is only now and then that we can have a peep into any thing of that kind. I apprehend it is a positive fact that they have realized large profits; we have returns demonstrating that. That is, in addition to the dividends, there have been large bonuses ?—Yes. What do you consider to have been the amount of the increase of the issue of the Bank previous to 1625, and the amount of contractions ?---Th e positive amount of the increase in bank-notes perhap s was not very large ; but I conceive there is a great delusio n on that point, because there was a very large drain upon the Bank for gold, and that gold all went out of the Bank coffers, whilst there was also, if not a very large one, yet there was an increase of their notes. Now to have acted safely and fairly, there ought to have been a large contraction when the Bank was largely called upon for gold; if they had looked at the thin g in time to have prevented the evils that followed in December, 1 conceive that there would have been a large contraction of their notes as they issued the gold. I believe there was a large diminution of gold, and not at any t ' rn e any thing like a proper comparative contraction of their notes. That iP, you mean to say that after there was a decided indication of a redundant currency by a demand for gold, the h B ank continued to issue paper ?—lt is manifest that P Y did, because there was no contraction of the paper, wbtilat th ere was an immense quantity of their paper taken f o them, f or w hi ch they paid gold, and yet the amount thei r notes in circulation, by the returns delivered to Parli ament, was rather larger after than before the gold went out. At what time in 1825 was that P—l forget the exact dates. Did it not take place in 1824 ?—Yes, in 1821, and in the early part of 1825. That is to say, there was a great tendency in the ex changes to fall, and there was a demand for gold ; and, notwithstanding those two circumstances, the Bank in la op and th e b eg i nn i ng o f 1825 no t on ly k e pt th e circu ion up to its former amount, but actually increased it ? M y i mpression is, that th e re was, though not a very large one, an actual increase, whilst I am under a con victi‘n that there ought to have been a decrease, if they had du lY consider e d th e e ff ect lik e l y t o ar i se f rom t h e amount of gold which they paid. Then, on the whole, is it your opinion that the Bank, by its conduct during the years 1824 and 1825 contri buted much to the distress at the latter end of 1825 and the great commercial convulsion that took place at that % hue ?—lt is my decided opinion, nor do I find any person, unconnected with the Bank, that appears to have a doubt about it. In former instances of commercial difficulty and of great fluctuations in prices and in the currency, are you of opinion that the Bank contributed to produce those effects?.--My belief is, that a system so regulated as that of the Bank must necessarily be connected with evils of that description. Have you examined historically those instances of com mercial distress and fluctuations in the currency which took place in the years 1782, 1793, 1797, 1800, ISI6, and ISIS ?—I have examined them generally, so as to have only a general impression; 1 have not examined them with that minuteness that would warrant me at this tim e i n giving any positive evidence arising upon that exa- Mtnation. Is it your general impression that the Bank in those in °trances conducted their affairs upon a wrong principle ? That is my general impression. Do you believe that the management of the Bank direc tors subs equent l y to 1825, has prevented a recurrence of simil ar ev i ls to those which occurred in December 1825? J%ly belief i s , that the fears of lePublie have materially to the same extent, ° Perated to prevent th ose Yet simil ar ev il s , and not the e careful vils'l conduct of the Bank. is if not We common ly u nderstand wh a t meant by a burnt child dreading the fire; now I believe it has been in no slight degree attributable to that kind of fear that we have not tot into some of the evils in question. Ido not subscribe to the opinion of its being sufficient for the Bank directors to regulate their conduct by a regard to foreign exchanges " l a y ; my b e li e f i s th a t suc h i s th e la s t stage, k t and n atage, by w hi c h th ey oug ht t o regu l a t e t h e i r conduct the t , h4 t may be sufficient for their own security, but then if t.iey leave the thing till it comes to that stage, I think it very probably w ill occas i on the ru i n of an i mmense num ver of persons. I cannot help thinking that the e ßa s n . k . ou g h t to regulate th e i r system o f managemen t in a byt erable degree by th e returns upon t h emse l ves , that on e amount of their deposits. We have been led to un derstand that the deposits of the Bank of England were very large and hav e b een so for many years; I cannot help thinking that ought to be viewed as evidence of a re dundant currency. If there were to be large speculations founded upon a reduction of interest, and the consequences which arise from a redundant currency, and people go into speculations which lead to an export of gold, then the Bank take the thing in hand, and begin to operate upon the money-market, so as to prevent the export of gold ; but then it follows that they ruin the speculators, as was the case in 1825. I think that the Bank ought to take the thing in the earliest stage; though it may secure them ties, to go and sell all they can of their available securi ties, and contract their curr,ney, to prevent the export of g o ld, it solely is proper and fair that the public should re quire some security aga i nst an appearance of things which ktturally induces people, without having the same means ti k nowledge as B ank directors, to go into those specula ons by which they become ruined. What do you mean by regulating their issues by the ak iount of their d eposits?—Supposing the Bank to have ' , sued 20,000,0 00/. of notes, and 8,000,0001. of notes are d eposited with themselves, for all the purposes of liabili ties of the Bank it is 28 ,000,000/., and for all the pur ,poses o f c i rcu l at i on i t is 28,000,0001., because the Lond o n B ankers and others have a claim upon the Bank for I b o oo,ooo/. ; when the Bank of England has 8,000,0001. °f notes brought back opon them as deposits, I think they 'tight to come to a determination that there is too much Nrrency; it they had done so, they would nut have lent t h e Lond on -b r id ge C ompany a million of money ; the tit '1,111; lent th e L on d on -b r id ge Company a million of money of the time when we understood they had many millions deposits ; but Om ) In it remerubtredi we are obliged to L' (No. 12,180.) LONDON, MONDAY EVENING, SEPTEMBER 10, 1832. speak of every thing with an immense degree of caution, because it is only once in seven years that we have a peep at the fact ; but we understood that at the time the Bank lent the London-bridge Company a million of money, they had many millions of deposits. I contend that their hav ing mint' millions of deposits was an evi knee of an exten sive circulation, and their lending the London-bridge Company a million of money was calculated to increase that excess. _ _ _ You mean, that deposits are made by bank-notes, and that the return of bank-notes for the purpose of deposits is the first natural effort of the public to diminish a super abundant currency?—lt is thereby evident there is too much currency ; and if the deposits had been called out and employed as in 1825, in all those adventurous specula tions which then ended in so much destruction, if the per sons that had claims upon the B ink for those deposits had put them in activity, the presumption is, that it would have produced some evils similar to those that arose in 18.25, and the Bank then, to have prevented a recurrence of danger to themselves, would have resorted to a sudden contraction, which must have ended in the ruin of the parties who had engaged in the speculation. Then are you of opinion that the Bank ought not to wait, as a rule for diminishing its issues, till the action of the demand for gold upon it takes place?—l think that is the last stage; it is something like setting a house on fire, and then-finding the necessity of putting it out. Do you mean that wheat-the deposits in the bands of the Bank are increasing they ought to contract their circula tion, and that when the deposits in the Bank are dimi nishing they may more safely expand it?—When the de posits are increasing they ought to contract, considering it a sign of superabundance; but when the deposits with the Bank are diminishing, the circulation is increased by the action of drawing out, and therefote it does not follow that the Bank should then also take other means to expand the currency; it may then likewise appear needful for the Bank to contract, to prevent any ill effect from the in crease occasioned by the drawing out of the deposits. Supposing the deposits in the Bank diminished between February 1825 and August 1825, to the amount of nearly 4,000,000 L, should you conceive that would have justified them in increasing their issues at that time, notwithstand ing the exchanges were against the country ?—I think it possible that other causes might operate, and that other causes did operate at that time that would have made it improper for them to have increased their issues, because it is certain that the deposits must have decreased at that time, and the gold was decreasing at that time, and that was a sufficient reason why they should not increase their notes. Would not a spirit of commercial enterprise cause a di minution of deposits of such a nature, as not to be an index of the necessity of diminishing the currency ?—lf by com mercial enterprise is intended a speculative increase of prices, that would be an indication of a redun lant cur rency ; hence it follows that in such a case the Bank should draw in their notes as fast as the depositors draw them out. In point of fact, can any other conclusion be drawn from a great increase of deposits, than that of a redundant currency ?—As a general rule, I should think a large in crease of deposits would be an indication of a redundant currency. Is not a fall of the foreign exchanges the consequence of a redundant currency ?—Yes, as a general rule. Then if the Bank govern themselves by the foreign ex changes they overlook the cause of the fall of the ex changes, which cause itself ought to govern them ?-1 du not intend to say that the Bark Directors, in governing themselves by the fall of the foreign exchanges, necessarily overlook the cause, but in so governing themselves entirely they delay their controlling cheek too long. Is it not a matter very difficult to foresee when the foreign exchanges are likely to turn against the country ? —The difficulty I conceive to be considerably increased by the existence of foreign loans; formerly when there were no such things as foreign loans, it could be much more easily foreseen, because the trade would be much more easily ascertained, but now a❑ immense number of ships would be unequal in value to one parcel, either consigned to or received by Mr. Rothschild ; it must he obvious that when such an immense quantity of these securities are afloat, which are negotiable abroad and also here, it must affect the question of the exchanges, so as to make it much more difficult to ascertain or anticipate, than before those loans existed. If there is great difficulty in foreseeing what the state of the exchanges will be at any approaching period, would not that render such speculations upon that event very dangerous as a rule for the management of the issues of the Bank; for example, would it be safe for the Bank in the month of February to regulate its issues by what it apprehended the foreign exchanges would be in the month of March ?—I conceive, to lay down any one principle, and rigidly adhere to it, in a case of so much difficulty, must be very obviously exposed to mistakes, because one thing may arise to counteract another ; that which may appear probable to take place at a future period may in practice be prevented by the intervention of some other cause. Are the causes which operate upon the foreign exchanges so easily to be ascertained as to enable any commercial body to regulate their conduct by the observation of those causes?—lt must be very obvious, as it occurred to me in one of my former answers, that kir. Rothschild's opera tions, which are so enormous, and which must necessarily be conducted with great privacy, must increase the diffi culty of anticipating the probable state of things, so as to regulate the conduct of any bank of issue with perfect secu rity, by any one determined principle. You have stated that the Bank ought, when their depo sits are incre as i ng i n amount, to curtail their circulation ; are you of opinion that they ought to observe that course management, when under such a state of thing s the foreign exchanges are in favour of this country, and gold is coming from abroad ?—I stated the reasons ; and I should rather re-state my reasons, that if the course of conduct which the Bank profess to have observed, as to regulating their issues strictly by the foreign exchanges, if that is a safe course for themselves, I think they ought to begin at an earlier stage, for the sake of the public ; if, when they perceive a large quantity of unemployed circu lation, by the amount of their notes returned to them as deposits, they take no notice of it till those are drrawn out, and the exchanges are turned very much against this country by the speculations entered into in the operation of which they are drawn out. The Bank thus, for its own safety, ruin the speculators without notice, and the people engaged with them. If the deposits are placed in the Bank by the payment in of its own notes, does not that operation, pro (auto, diminish the amount of the circulation of the Bank ; for example, if a person deposits in the Bank 10,0001. in Bank of England notes, does he not diminish the circula tion of the country to the amount of 10,0001. ?—Ten thousand pounds are deposited in the Bank of England, and there are 10,000/. leas in circulation. If, then, the Bank, looking at their liabilities, consider the deposits as part of their liabilities as much as they con sider the circulating medium, is not that a correct view of the case ?—Certainly. Do not the deposits of the Bank of England, and of every banking establishment, form a source of profit to those banking establishments by the use of those depo sits ?—Yes. Is it not therefore a sound principle of banking to em ploy the deposits of their customers either by the discount of bills, or by the purchase of Government securities ?—lf by the question, whether it is not a sound principle of banking, it is meant whether it is not the usual way of making money, I say yes, but it is a most unsafe principle fur the Bank to go upon, because the Bank of England ought to take into account whether by that employment they will be enabled to sustain their credit, provided their credit is put to the test by any extraordinary circum stances ; and that constitutes one of the great objections that I have to the present system of the Bank of England. The position taken in this question is one which I think highly objectionable ; that sort of employment of the de posits with banks which is proper on the part of any other bankers, is entirely improper and unsafe to the public on the part of the Bank of England, and creates an amount of danger that is incalculable. It appears to be your opinion that if the circulation of the country without the Bank is diminished by the pay ment in of b an k. notes to increase the deposits of the Bank, it is not prope r for the Bank to make use of any means in older ' to in crease t h e circulation again to the sam e amount as it was before should think it very unsafe, in refer ence to the stability of the Bank. If, then, the Bank do not endeavour to increase the amount of securities in their hands in consequence of the increase of their deposits, you would think that a prudenr. course of management ?—My great objection is in the Bank choking themselves up with such securities as they cannot avail themselves of in case of need. If they can employ their money in available securities, then, of course, there can be no objection ; but if they employ their money in securities that are not available in case of need it is ma nifest there must be corresponding danger. Do you think there is any objection to the Bank in conse quence of the increase of their amount of deposits increas. ing the amount of their available securities ?—lf the se curities could be available, it does not occur to me there can be any danger, but then I scarcely know what is meant by available securities. By available securities are meant Exchequer-bills and other commercial securities ?—There are periods when Exchequer-bills would not be available in the hands of the Bank. Why would not Exchequer-lulls be available in the hands of the Bank of England ?—Just for the reason that they were not available in December, 1525. Are you aware that the Bank of England sold a very considerable amount of Exchequer-bills in the course of last year, and also the early part of this year ?—I do not know how I should necessarily be aware of it. That con stitutes another of my objections to the Bahl( system. ' I do happen to have heard it as a great secret, but I am one out of a thousand or five thousand persons who happened to be aware of it ; but then I, say that such a system as that is not safe and beneficial to the public. How do you reconcile that fact with your former an swer, that - Exchequer-bills are not available in the hands of the Bank of England ?—They were available last year, because we had not reached such a crisis as in 1825 ; but if, for instance, any great claim was made upon the Bank for gold, and the Bank was obliged to contract its circulation very suddenly, they would not be available, be cause there would be no market. Then practically at the close of 1825 you did not con sider that Exchequer-bills were available in the hands of the Bank?—lt is a matter of fact, that for a few hours we could not get money for Exchequer-billF, or for India bonds, or for stock. Then upon that principle you could not say that there was any commercial security that was available ?—Not at such a period as that. • Then at the very period when the Bank of England have most occasion for making Exchequer-bills available, they are not able to do to?—They are not. You have stated that an extreme case may arise when no commercial security is available, would that be any reason for the Bank not laying out its money in any se curity at all? —I conceive that if the Bank was managed with safety to the public intorests, its profits must neces sarily be small ; and that to be managed upon a principle that is safe to the public interests, it must not employ its fluctuating deposits as other bankers are necessarily obliged and fairly entitled to employ them, but mast have a special reference to their capability of paying in gold when called upon. If it should be the rule of the Bank never to increase the sum-total of the securities in their hands, is not that one mode of effecting that object ?—lt is. What should you consider the most available securities in a time of a run upon the Bank ?—The most available would be bills of exchange, because they expire, as a mat ter of course, at a fixed day. You consider that that is the most proper investment for the Bank .o make of its capital ?—I do. Is the mode in which you would recommend the pro fits of the Bank to be reduced, in order to give additional security, by increasing considerably its store of bullion ? —I thick that whenever there is an increase of its wealth it ought to be manifested by an increase of bullion in the bands of the Bank. May not the Government, in making, if it should be disposed, a new bargain with the Bank, fairly claim that the rate of profits of the Bank should he reduced, by re quiring it to increase its store of bullion beyond what it has hitherto been ?—I think that one of the evils of the present system would be cured by that regulation. You have stated that you think it a safe course for the Bank to pursue, to keep the sum total of the securities in their hands as nearly as possible at the same amount?— Yes ; and I think so for a very great variety of reasons. If, then, an increased demand for commercial discounts is made upon the Bank, would you prefer that they should refuse to discount the bills ; or, having discounted them, bring into the market a different class of securities which they hold, in order to prevent the securities accumulating in their hands ?--I should think it would be desirable that they should bring in a different class of security into the market, and employ their capital in that species of se curity that appears to be the most consistent with banking. If they sell Exchequer-bills, do they not take out of the public an equivalent amount of currency?—Certainly. Do they not, by taking out of the hands of the bankers an equivalent amount of currency, distress the money market to that extent?—.lf there is no more than suffi cient beforehand. Then, where is the difference of the effect upon the abundance or scarcity of money, whether by selling Exche quer-bills they take an equivalent amount of currency out of the money-market, or whether they refuse to snake an issue by discounting commercial bills to the same amount? —ln the case of selling Exchequer-bills, they withdraw bank -notes; by refusing to discount bills, they refrain from increasing. Then, if there be no difference in the effect upon the money-market, why is it that, in your former answer, you have stated that you thought the most expedient course for the Bank to adopt would be rather to dispose of its Exchequer-bills, and to discount an increased number of commercial bill,?—lt has always appeared to me that capital to be drawn from a bank should be only temporary, that a bank should furnish that sort of temporary capital, being a medium between the party who wanted ternpor iry capital and the party who had too much; and that that was a legitimate employment of the money held by a bank. It the Bank is for commercial convenience, it Would appear to me more desirable that they should be en gaged in affording those facilities to commerce which de• rend upon t h e discounting bills of exchange, than coming into permanent advances to Government, whether in the shape of E xchequer -bills or any other mode. The question is, whether by selling Exchequer-bills, and increasing t h e discounts to the same amount, it really does give increased facilities to commerce?—lt would ap pear to me that negotiating between the party who for a short time has too much money, and the party who for a short time has too little, was giving a facility to com merce; that I conceive to be the effect of discounting bills. If that money which is taken out of the hands of the public by the Bank selling Exchequer-bills remained in the money market, would not the holders of that money be employing it probably in the discount of commercial bills ? —They probably would. Then as far as meeting the wants of commerce are con cerned, it appears that the effect produced by the two modes of conduct of. the Bank would be nearly the same ? know there is a difference of opinion about that. On the ground, however, that commercial bills are the fittest investment for a body like the Bank, you would pre fer that they should rather discount bills than continue to hold Exchequer bills ?—What I mean is this, as well as I can appreciate all the bearings of the subject, I should prefer that the Bank should he in a situation to afford libe ral discount rather than by one steady advance refuse all discounts. That is, you mean to say that a bank that deals in dis count will be more beneficial to trade than a bank that deals in public securities ?—I think so. In objecting to the renewal of the charter of the Bank of England with its exclusive privileges, what other plan do you look to for supplying London with bank-notes? — I did not contemplate to go into any opinions upon that subject. I confess that I cannot help thinking that the Scotch banking system would be much safer than the pre sent system of the Bank, whilst I by no means am confi dent that evils may nut arise out of that ; but still, upon the whole, I think the securities are greater than in the continuance of the Bank upon the present plan of its ex clusive privileges. Tnat . is, by the Scotch system, you mean a system of flee banking?-1 mean a system of free banking; but I think the great thing would be publicity. Do you think the system of free banking would give greater facility against excessive issues and consequent re vulsions ?—Yes, I think by one checking the other. Taking into consideration what have been the effects of the monopoly system, and what may be looked forward to as the proper and natural consequences of an entirely free system, you would depend rather upon the latter than the former ?—Yes. Do you think that under such a system there would be sufficient protection against over-issues of paper ?--I have a qualm on the subj.ct ; I am not so perfectly satisfied about that an 1 could wish to be, yet I do think that the system of the banks checking each other, and especially if it was controlled by publicity, would present most security. Suppose several banks with large capital, if their paper returned upon them as it does now upon the Bank of Eng land in the shape of deposits, would not that circumstance force them to diminish their issues instead of leaving them at liberty to do as the Bank of England now do, increase their issues under such circumstances ?—I think it would, and especially if it were controlled by public observation. In point of fact, the return of paper upon banks deal ing under competition would in this way more effectually protect the public from over-issue of paper and a redun dant currency than the Bank of England now protects it ? —I think decidedly more than the Bank of England now. Do you think that periods of great distress and convul sion would so often arise under a free system of banking as they have arisen under the monopoly system ?—I think certainly not ; and I think so for this (to me) obvious reason, that if the free system were controlled by public observation, and completely mixed up with public know ledge, there would not be the same kind of jealousy and distrust that must always attend any system that is in volved in mystery and concealment. Do you think that under a free system it would have been possible to have increased the circulation in defiance uf a►l the indications of a redundant currency, as the Bank of ; England ofte❑ has done ?—I think banking upon a free system, controlled by public knowledge and by public ob servation, could not have led to those mischievous expan sions. Then, under a free system, the instances would be more rare in which the trade of London would be placed under the necessity of seeking relief ?—Certainly. Would a system of free banks in London be capable of affording considerable assistance to trade in times of diffi culty ?-111y belief is, as contra-distinguished from the present system, that it would ; that if there were many establishments, and those establishments conducted with publicity, and well managed, not with the privacy of the present Bank establishment, but with an almost general knowledge, there would be no motive for distrust, and in practice would not he distrusted, as naturally is the case under the present system, from its privacy and concealment. Do you conceive that it is part of the duty of those who issue bank paper in London to manage the foreign exchanges ?—I should be very glad of a system of bank ing that did not require that the Bank should trouble themselves with any thing but their own business, but, as it now stands, of course the Bank of England must look at the foreign exchanges. Then in your opinion it would not be an objection to a free system of banking in London that such banks would be less competent to manage the foreign exchanges than the Bank of England is ?—lf there were no other checks upon the many brinks it must be obvious, if the foreign ex changes are necessary to be managed, that if there were ten companies to manage them instead of one, there must be more difficulty in ten companies managing that which one company would be otherwise called upon to manage; but my own belief is, that there would be less necessity, from the intervention of other checks, to have reference to it; but the ten companies, when they found it was neces s try to have recourse to it, would do as the bankers in London I believe now do; it is understood that there is that sort of strict community of interest among the bankers which enables them to exchange their opinions freely. Inasmuch as the foreign exchanges contribute to regu late the amount of currency under the present system of the Bank monopoly, would they not equally contribute to do so under a system of free trade ?—Yee. Do you think there is any reason to doubt that if the exclusive privileges were withheld from the Bank of Eng land, a number of banks would be established in London with very considerable capitals ?—No doubt at all. Do you think that the amount of capital that would be so invested would be sufficient to render those banks per fectly solvent and safe ?—I should think so. And that all operations of banking under establishments so supported by large capital might be carried on benefi cially to the public ?—I should think so; I see no diffi culty whatever in it. Do you believe that previous to 1825 the Scotch banks made any great increase of their issues ?—I do not posi tively recollect that, but my impression is that there was some increase. . You have stated that the essential benefit to be derived from competition of different banks would be from the publicity of their proceedings ; do you think that the ad vantage of having a competition of bankers over the pre sent system would be diminished considerably if the Bank of England were compelled to make their proceedings public ?—Certainly I do consider that there would be a less necessity, and that there would be less advantages in an alteration, if publicity pervaded the present system. If the Bank of England were compelled to publish their affairs, should you wish to deprive them of the monopoly of the circulation of the metropolis ?—I confess in such questions I should be slow in trying experiments ; and therefore that which would be the least change, with ma nifest improvement, perhaps is fairly entitled to be tried first ; upon that principle, if the present system of issue was tried with all the advantages of publicity, it would, as being the least change in a case in which considerable doubt and great anxiety must prevail, therefore be fairly said to be the expedient course. Do you apprehend that there would be any danger to the Bank of England from a periodical publication of the amount of bullion in its coffers ?—I believe the great dan ger is from the secrecy, because there is just enough secrecy for the purpose of mischief, without there being secrecy for the purpose of good. You stated you thought that if ten banks were esta blished in the metropolis, as there is at present between the great bankers of London a communication and an ex• change of their opinions, that exchange of opinions would take place if there were ten banks of issue acting at the same time ?—I cannot see any reason why there should not be, always keeping in view that publicity should per vade the operations of all banks of issue. If there were such a change of opinions, would not that in fact be a combination of banks, rather than a rivalry of different banks ?—lt would be a sort of concord of the banking interest, but I do not see why it should neces• sarily become a combination to prevent rivalry. Would it not in fact be a system of monopoly divided among a great number of persons, instead of a system of monopoly, as it is now, in the hands of one body not think it would have all the injurious character of mo nopoly, though it would comprise the advantages of com munication. Would it have the advantages of a competition f—l do not see any reaso❑ why it would not. Would not the principle of private interest and making profits have the same operation in banking when free as it has in every other trade when ftee ?—I can see no reason why it would not. In point of fact each banker will gain just in propor atimonout n o tt of fe businessex ent o f ashis a business, wh oi whole, thean and larger re share eg each a per son ce rt ain has of it the more profit he will make ?—Yes. Is not one principle mode of the Bank of England ob taining profits increasing the amount of its issues ? Certainly. When there is a rise of prices, and when consequently there is a tendency to speculation, is it not in the power of a banker to increase his issues more than at any other time ?--That, of course, presents a facility of increasing, but there may be other causes in operation. Then, if it is the interest of a banker to increase his issues as much as he can, in order to make profit con sistently with his safety, would it not be the interest of any or all of those bankers, at a period of a rise of prices, to increase their issues simultaneously ?—lt would be their interest, but then I conceive it would be checked by a re gard to their s ifety ; that must in practice operate against their embracing the facility that may be presented to them by a rise of prices. If they made their issues upon good security, would they not be acting quite consistently with their own safety? —That must depend upon the state of their concerns, to what extent they increase their issues; if they increase their issues upon securities that are always available, clearly so. At a period of a rise of prices, is there not necessarily an increased detna +A for the discount of good bills?— There is natural! 'so. a Th en, facility when ofi n p e r r i e c a e s s were their rising issues he pngo odbankers w would have and lls, therefore quite consistently with their own security ? They may discount more bills than would be consistent with their own security ; it is quite manifest that if they have no regard to their capital, or their certain ability to obtain discount themselves if required, that in discounting bills they may he in a situation of obvious difficulty. Would not every bank, when its interest appeared in the Li metanee to be that of increasing ite ism, take into consideration what would be the ultimate effect of its doing so, and of other banks doing tie same at the tame moment?—l think in practice a wdl-reguyatcd bank would say, we are called upon for such an amount of dis count, now how does that comport with our own private ability ; they would look to the money they had, and to the money coining in, and they would measure the ac commodation wanted by a regard to their own peiuniary circumstances. If, in point of fact, any bank or set of banks, in fluenced by the motive of their own apparent interest, issued more notes than it was really proper to issue, would not the immediate return of their notes show that the currency was redundant?—l i es. Then, after such an evidence of redundancy, would not cease to be their interest altogether to continue to issue largely ?...-They would immediately check their ac commodation of every sort. So that though it may be stated in the abstract that it is the interest of a bank to issue as much paper as pos sible, it is not correct to draw from that circumstance this c unclusion, that a bank will, whenever it has an opportu nity, increase its issues without looking to the result ? Judicious banking will always lead a banker to look to his means in lending hie money. With regard to the result of a rise of prices in leading to a demand on banks for increased discounts, will not thr banks take into consideration the effect which acceding to that demand will produce upon the general currency, and to the injurious consequences to themselves, of making it redundant ?—That is more a question about what is pro battle under another state of things than that which has existed. It must be obvious that the first principle of a banker is to make the largest sum of money that he can, consonant with his own security ; every thing I want to require of a banker is, that he shall have regard to his own safety, that he shall not mix up the character of a legislator with that of a banker. This constitutes one of my objections to the present system, that they (the Bank directors) are in part legislators as well as bankers. Will not the security of a bank, or a system of banks, be essentially dependent upon their taking the strictest care not to over-issue paper, and thereby not to have a redundant currency ?—Certainly, their own safety wil oblige them to look to certain rules, which, if they disre gard, will bring their awn credit into danger. Is it more likely that a number of banks acting in coin, petition will act upon such fixed rules, than it is that one company, subject to publicity, would?—That is a ques tion, I confess, I have some difficulty in answering ; a great deal may be said on both sides. In regard to one company, is it not entirely free to do as it p'eases, and to act without any control, whereas where there are several banks, is not that control established by coin petition ?—Certainly. My difficulty in answering the question in favour of one company, arises from the diffi culty of my looking to a state of things which will make that company keep to rules that will be safe; and I am inclined to think that more security would be attained from the division of management and from the increased publi city that would be gained from the ten companies. With respect to the bearing of a state of high prices upon the issuing of paper, will not every bank act upon the same principles in its calculations as to high prices as every merchant would in trade; that is, when he found a great demand upon him in consequence of high prices and great enterprise and speculation, would not he be induced to act with great caution in trusting to their continuance? —I think a wise banker would necessarily act with consi derable regard to that principle; but I should hesitate whether he would act to the same extent of caution as a merchant, because the profit of the merchant depends en tirely upon the fluctuation of price, the profit of the banker depends upon the use of money, not so directly upon the fluctuation in the market price of commodities. As the general result of a fall of prices would be injuri ous to bankers, and as that fall will be great in proportion as prices have been excessive, would not that be a sufficient reason with him to be cautious bow he issued his paper when it WAS in great demand from a state of high prices ? —Clearly ; the banker would look at the parties to whom he lent his money, be would look at the sort of paper pro posed to him for discount, and if be perceived that the parties to that paper were connected with speculations which were likely to be ruined by a revulsion consequent upon the existing state of things be would be shy of such paper. Does not the history of the trade of this country show that every instance of very great prosperity, arising from very high prices, has been followed by a very sudde❑ fall of prices and a consequent revulsion ?—As far as my knowledge extends. Then, in point of fact, experience should teach a banker not to yield to a demand for issues in a state of very high prices, but, on the contrary, to be cautious how he kept his issues to their usual amount ?—Yes, I conceive the caution would operate practically in reference to the qua lity of paper proposed to him ; a prudent banker, if there was a mania such as existed in 1825, would look at the quality of the paper proposed to him ; if he perceived it was paper connected with adventurous speculation he would be shy of it. Would not he look to the general state of enterprise and speculation going on around him ?—I have in my imtne diate view a certain class of bankers who would look a: that ; and I can imagine another class of bankers, who know little about the subject, and who would be governed entirely by the other more direct considerations. You have been comparing a single bank without pub licity with many banks coupled with publicity ; is it from the publicity, or from the increased number of banks, that you would most expect an increased security ?—I think the publicity of the utmost importance, but I do think considerable hope may be indulged from the rivalry of the increased number. If there were a single bank with publicity, would not this be the best form of publicity, that they should make known the principles upon which they intend to act ; and that by frequent publication of their accounts, the public should then be able to judge how far they conformed to those principles ?—ln reference to a single establishment, I conceive that that is the only efficient system of publicity, and I think that every body, using common diligence, with common means of judgment, should have it in his power to form a fairly confident opinion of the natural operations of industry, and of the fluctuations of public concerns. Suppose the case of a single bank in any district, subject to publicity, and acting upon fixed rule., will not that bank be liable to make an increased issue when prices are rising, and to contract its issue when prices are falling?— The rise of prices, of course, affords a facility to the in crease of its issue., and a contraction of prices, of course, presents a state of things that requires a smaller issue. Of course, with whatever prudence the affairs of such bank may be conducted, this will occasion a fluctuation in the amount of its issues ?—Unquestionably. Supposing the case of the same district, and the bank ing business of that district to be divided amongst several banks, equally subject to publicity, conducting their affairs with precisely the same prudence as the single bank, those banks exchanging their paper, like the Scotch Banks, at certain fixed intervals, in what respect would the multiplying the number of banks give to the public an increased security against over-issue ; would increasing the number of banks alone, supposing the same degree of prudence, coupled with those other checks, any way tend to make the danger of over issues less in the case of the many banks than in the case of the single bank ?—I should rather decline any answer to that question : not that I am without an opinion, but I have also some doubts ; there is a great diversity of opi nion about it. lam under an impression, arising from one view of the case, that a number of banks, checking each other by the over issues, acting to expedite returns, would tend to repress over issues. Then 1 can imagine also a state of things by which there may not be that union and that concord, and in which different rival issues may for a time thereby be increased, as well as from a variety of other causes, such as every person accustomed to banking must remember in the course of his life, which will temporarily operate to increase the issues. Prudence may be lost sight of by some part of the ten banks, and this of itself may for a time lead to over-issue. Then, again, as it respects a single bank, though it be subject to publicity, yet I can imagine that the persons who are in the management of the concern may overlook the rules of prudence and their responsibility to public opinion for a time, and also depart from the proper course. So that I have great difficulty about it ; it is quite, in my view, a speculative question. Supposing there is perfect union among the many banks, and that daily or even hourly they adjust the balances one with the other, does it not reduce the case of the man:, banks precisely to the case of a single bank, giving then character for equal prudence, and that there is no conipe titiou or rivalry amongst the many which gives an with- (PRICE 7D.) How do those separate interests tend to a contraction of the issues ?—The separate interests controlled by the particular fears of each body, may lead to contraction. Then you mean to say that it is not merely increasing the number of banks, and frequently balancing, that tends to check over-issue, hut that there are other circumstan ces attending many banks, which lead you to think that such wou'd be the effect ?—I would rather not answer that question, Although increasing die number of banks and balanc ing the notes will not in themselves prevent an over-issue, is not the necessary consequence of such increased number, and such balancing, to produce such evidence by the return of notes of a redundant currency, if redundant, as will stop those banks from increasing their issues ?—I wish, as I said before, to state to the Committee that its what I have heard and read about the Scotch banking system and its adaption to London, there are some diffi culties that I do not see my way clearly out of, and I think they will have information from other individuals who are snore competent than I am. Do you think, that if there were several banks ti.e re sult would be their acting in perfect union with each othei?—l think their interest would be to set in union with each other to a certain extent. Do you mean that they would so far unite as to act upon certain regulations contributing to their own secu rity ?—lt would be manifest that they would. I judge it from the present state of things. The bankers in London now have a certain confidence in each other, attended with all those civilities and freedom of communication which I should imagine naturally leads to their interest and pro tection. Would not there be separate interests amongst such banker•, as amongst other traders P—Certainly. Would not those separate interests lead to rivalry, and in that way give a greater security to the public against over issues, than the public now has from one bank ?—I am inclined, if not with full confidence, to think that such would be the result. What security has the public, under the present system of the Bank monopoly, against over-issues, and againstan y other abuse that can flow from an over-issue of paper, x - cept the discretion of 24 individuals who happen to be di rectors ?—None at all. Do you think that is a safe principle to trust the whole currency and property of the country upon ?—A most unsafe one. Then, in point of fact, while you have one bank you have nothing to trust to but the discretion of the directors ; Ind if there were several you would have competition ? If I was asked which I considered the safest, whether the ten banks as it is proposed to manage them, or the one bank upon the present system of the Bank of England, I should certainly say the ten banks. . . . Take the case of one bank in a district, which should ever-issue to the extent of one-fourth or one- fifth of its previously existing issues, and then suppose that was split into five or six different banks, established in that same district, which ehould over-issue to the extent of one fourth or one fifth of the previously existing issue, would not the over-issue in either case, if it were in the same proportion, be speedily returned ?—Yes. Putting rivalry aside, would not the rate at which those notes were returned be the sante in both cases ?—I am not quite sure how that would act. You have stated it as your opinion that it would be great check upon the over-issue of notes by the Bank of England if they were to publish their accounts; in your opinion would it act as the same check if all banks of issue were required to publish their accounts, or do you limit your opinion to the Bank of England only?—I think' .t would manifestly act as a check upon over-issue in all cases. Do you think it expedient that all banks of issue shout I publish their accounts?—Yes, I do decidedly ; but not so important as in relation to the Bank of England. I see no good reason why the Government of the country should not thoroughly understand the currency, and why the pub a! should not have positive information as to the amount if the currency in the country. But I think it is much more important in relation to the Bank of England to pub lie!, its issues, and to have them always under the view of the public, because the credit of the country is based mainly upon their issues. Is it not an evil to the country to have an over-issue, whether that over-issue is by the Bank of England or by country bankers ?—Yes, but I think that the over-issues of the county bankers are grounded upon the over-issues of the Bank of England. Upon what grounds do you form that opinion?—Upon observation and experience; when I was a country hanker, we were always (as I conceive country bankers necessarily must) led in some degree to govern our issues lay the ficilities of obtaining money in London ; if we under• stood that in London there was great difficulty in ob taining discounts, and great apprehension in conse quence, we immediately dealt out our e.ecommodation with a more sparing hand ; and if money was exceedingly abundant in London, we were more free in discount ing bills, because we could calculate, in case of need, upon their being reconverted. If we heard from our hankers in town that considerable difficulty was likely to cake place, and that it would require increased caution in making advances, it naturally operated so ; if there was no difficulty apprehended, we then could discount, and let safe customers overdraw with more freedom. I be lieve it is the practice of country bankers to let their cus tomers overdraw to an extent (in comparison with the ex tent of the business) much beyond what is the practice in town, and that I conceive to be always more or less checked by the state of money in town. Did you regulate your issue a by the state of the foreign exchanges, or only by the state of the money market in London?—Country bankers, I conceive, generally have inure reference to the state of the money market in Lou don than they have to the state of the foreign exchanges. You have stated, that you consider that the issues of the Bank were unnecessarily large previous to the y-ar 1825, to what particular years do you limit that opinion ?—I oave not got the documents before me sufficient to answer that question, but generally I conceive that the issues of the Bank were large, and I think my answer wits con nected with its having led to the panic of 1825. Do you consider that in the beginning of the year 1822 the issues of the Bank were unnecessarily large ?--I have not the documents before me, and theretore 1 cannot an swer the question. Do you recollect what were the prices at that time ? I have not them immediately upon my recollection. If from the 3d of January, 1822, to the 3d of January, 1824, it should appear that the issues of the Bank of Eng tend had only increased 1,600,000!., and that their bul lion had increased 2,100,0001., would you consider those circumstances as indicative of an over- issue of paper on the part of the Bank of England?—Those circumstances, that is, the circumstance of the bullion having increaed in the proportion mentioned, ani the circumstance of the wank-notes having increased in the proportion mentioned, would not be the single and alone causes by which I should be entitled to say that there was an over-issue. Would not those circumstances be a proof that there had not, in that interval at least, been an over-issue of paper on the part of the Bank of England, namely, the bullion having increased 500,000/. beyond the increased issue of paper ?-1 am not prepared at this moment to say that those circumstances would be decisive of no over-issue, it nay be attended by other circumstances that 1 have not immediately in my view. You have stated that the Bank of England acted inju diciously in lending 1,000,000/. of money to the city of London, for the repair of London-bridge; are you aware when that loan first commenced, and when it ended ?—I can be only aware of that which the public are aware of. Are you aware that that loan was to commence in 1828, and it only ceased the other day ; and that the conditions of that loan were, that a large sinking fund should be established, to redeem a considerable portion of it an. nually ?—I forget all the circumstances; I know at the time that it was negotiated there was a question about whether the Equitable Insurance Office or whether other individuals should lend it, and the Bank of England lent it, to the surprise of a great many people. You have stated it as your opinion, that it would be advantageous if more j tint-stock banks of issue were esta blished in London, and the number of 10 has been men tioned ; what do you think would be the effect of such establishments upon the private balking establishments in London 2—lt must be very obvious that if another system of banking, more safe to the public, be engaged in, and that they obtain business, there would be a diminished business for the private bankers. Would not you calculate that upon those ten establish ments there would be included the leading capitalists of London, and that consequently those leading capitalists must withdraw their accounts from their private bankers? —Unquestionably if it was engaged in by the leading ca pitalists, the presumption is that they would support it. And if it were not engaged in by the leading - capitalists it would not be productive of those advawages which your calculate would result from it ? —I do not ttliok , e , litit Iva oecses ay consequence, if by the leading capitalists are meant some dozen individuals, or saint hundred indivi-