The Press.
London, England, 1857-12-12 00:00:00

THE BANK ACTS.

The CHANCELLOR of the EXCHEQUER moved for a
select committee to inquire into the operation of the
Bank Act of 1844, as also of the acts relating to Scotch
and Irish banks. He met by anticipation the amend-
ment to be proposed by Mr. Disraeli, maintaining
that the inquiry into the large subjects connected
with currency and banking as still uncompleted ;
and describing at much length the various conclu-
sions at which experienced witnesses already ex-
amined before the committee of last session bad
respectively arrived. He showed cause against the
adoption of sundry schemes for a new system of
paper circulation which had been proposed on different
sides ; and while maintaining that the present
commercial crisis had not arisen from the operation
of the currency law, denied the assertion that it
had entailed on the Goverament any duty of imme-
diate legislation on the question. The estimation in
his own mind was to leave the law as it at present
stood.

Mr. ThsalEei asked why, if currency had nothing
to do with the pending crisis, had Parliament been
summoned by the Government at so inconvenient a
period ? The cause of that summons was that the
country had found itself in a state of commercial
collapse, which had already extended into the manu-
facturing districts, and led the Ministry to sanction
a breach of the law. Under such circumstances it
might have been supposed that the Government
would have either undertaken a legislative measure,
or, at all events, asked from Parliament a definite
opinion touching the causes and remedies of the
existing distress. How futile was this conclusion
after all the promises of care and attention to the
interest of their constituents so lately lavished by
hon. members on the hustings ! The session con-
vened in such an emergency was expected to pass
away without result, and almost in silence. This be
could not consider either serviceable to the country
or compatible with the dignity of Parliament. He
had wished to separate the discussion of the currency
question from the formal passing of the Indemnity
Act. Mr. Disraeli then denied the allegation, urged
by the Chancellor of the Exchequer, that be had
impugned the value of the evidence collected
by the late committee on the Bank Acts. On the
contrary, he so fully appreciated their labours that
he believed they had exhausted the subject. It was
on this very ground that he objected to the reap-
pointment of that committee. He was convinced
that further investigation was needless, and the time
was come when the house could bring the question
to a distinct and definite conclusion. Even the
Chancellor of the Exchequer seemed to have made
up his mind on all, or almost all, the principal points
involved. The right hon. member wished to retain
the present act ; but he forgot that the law, having
twice been broken, had lost all its moral value, and
could not possibly regain any practical efficiency.
He called on the house to declare that they would
not stop legislation—that they would not, by appoint-
ing a committee, debar themselves from proceeding,
after the recess, with an attempt to bring the ques-
tion to some practical conclusion. The appointment
of the committee would act as a padlock on the mouth
of every member who wished to speak or had any
suggestion to propose on the subject of the currency
laws. Crises which many could remember, and all
had read about, had occurred in 1847,1837, and 1825.
But in none of these instances was the distress so
serious, or the causes of disturbance so multifarious.
At present credit was shaken and trade prostrate in
the United States, and nearly over the whole Euro-
pean continent, and the consequences reacted
disastrously upon the commerce of England. In
1847 a list of failures, including liabilities extending
to seventeen millions sterling, occasioned infinite
dismay ; but during the last two months houses had
suspended with liabilities, at least, amounting to
fnrty.five millions, or more than double that sum.
It was, he submitted, clearly the duty of Parliament
without delay to inquire into the causes of this com-
mercial distress. if such an investigation had been
proposed, he would have at once acceded to the
motion. But, seeing the inquiry included in a
general investigation of the currency question, he
knew too well what would be the result. In 1847
such a committee sat for several weeks, and spent
the whole time in a wrangle concerning the issue of
bank-notes. If a committee was now again nomi,

rated the result would be equally abortive. Next
year the house would fiud itself just as unin-
formed as it was now, and not at all more pre-
pared to find means for obviating the measure
of commercial disasters. Mr. Disraeli then pro-
ceeded to examine the sources whence, in his opi-
nion, the present crisis had arisen. First he placed
the enormous quantities of the precious metals that
had been poured into Europe since 1818. This he
computed at 180,000,0001., and this accession to the
metallic wealth of Europe and America had stimu-
lated the undertaking of vast and costly works, rail-
ways almost everywhere, splendid constructions in
Paris, and extensive public works in various parts of
Southern Europe. Enormous capital was thus
employed, while a huge superstructure of specula-
tion was raised upon the basis which these works
offered for investments. New descriptions of busi-
ness, and institutions of vast pretensions, such as the
Credit Mobilier in Paris, had been established for
the conduct of the speculative dealings thus origin-
ated. Fictitious wealth was in this mode erected,
leading to improvident expenditure, and raising the
price ot all descriptions of produce to an unnatural
pitch. An enormous inflation of credit was at the
same time generated, which went on increasing
from year to year, until the period of collaps3
could no longer be postponed. For three
years past the commercial crisis had been
living on the verge of a crash, which was only
adjourned for a time by the arrival of further cargoes
of gold from Australia or California. At length the
evil bad reached a point which no importations of
metallic treasure could appease. As other causes of
the crisis, Mr. Disraeli adverted to the drain
occasioned b) the Russian war, the occurrence
successively of three bad harvests in France, and the
failure of the wine crop and the silk crop in
Southern Europe. The Chancellor of the Exchequer
was the first Minister who ventured to assert that
the crisis was not connected with disturbances in
capital and credit. The commerce of England must
be reckoned by hundreds of millions ; and how could
this vast series of transactions be affected merely
by the incidents of a currency amounting at utmost
to twenty millions :0 1n118.25 commercial convulsion
was attributed by the Government to the imprudent
issues of country banks; in 1837 it was attributed to
the joint-stock banks ; andl in 1847 to the mis-
management of their issues by the Directors of the
Bank ot England. It was a too general fault among
controversialists on this question to confound capital
and currency, and attribute every consequence to
the least influential of their principles. The
leaders of more opposite schools ot com-
mercial economy agreed with one another
only in assigning every convulsion to some fault in
the system of paper circulation. After tracing the
origin and effect of this misapprehension, referring
to the resumption of a specie payment in 1819, and
the report of the Bullion Committee which sat in
1810, Mr. Disraeli pointed out the essential differ-
ence between inconvertible paper issues and bank-
notes convertible at par. The latter could not be
depreciated. The latter could not be over issued,
and the regulations of their management would have
no effect upon a commercial crisis. As a broad prin-
ciple, the right bon. gentleman laid down that com-
mercial convulsion was never occasioned by over issues
of notes, but by imprudent advances of capital. This
position he illustrated by reference to various incidents
connected with past visitations of commercial crisis.
The trade of the country has more than doubled
since 1847, as tested by the returns of exported
values, and yet not a single bank-note has been
added to the circulation. Bank-notes were, in fact,
a form of credit that was falling into desuetude.
Every improvement in railways, the Post-office, and
the electric telegraph enabled the public to transact
an enlarged business with fewer notes than before.
He wished to treat the subject with perfect freedom
from party feeling or prejudice of any kind. With-
out condemning the Bank Act on principle, he was
convinced that in practice it aggravated the disasters
occurring during periods of convulsion, and created
a degree of apprehension which tended to produce
panic. The framers of the act evidently believed
that a banker could force an unnatural quantity of
notes into circulation. As this was impossible, there
was no excuse to retain the restrictions imposed by
the act upon the Bank issues. The course he had
adopted with regard to the present motion was, be
considered, strictly parliamentary. It was not pos-
sible to bring in any measure during the preli-
minary session ; but he trusted that the house would
accept his amendment, and thus leave itself free to
discuss and legislate upon the question after the
recess. Mr. Disraeli concluded by enjoining on the
Bank Directors the prudent management of their
securities, as being far more important than any
question of paper issues, and urged upon the
Government the necessity of providing for the pre-
servation in the Bank vaults of a sufficient stock of
metallic treasure to mee ttbe demands of a temporary
pressure and secure the perfect convertibility of the
Bank of England notes.