The Sun.
London, England, 1839-07-09 00:00:00

!7_IrENING EDITION.

Iwith banking, they would not have f..llen into such errors,
nor would the public have suffered to the extent which
they had done. But they advanced between 5,000,000/.
iand 6,000,000/. in or(:er to pay the dissenti-
!uts, thus deviating from the principles of bank-
-Ins and lending money on stock security.
The evil did not stop here, but went on gradually increas-
ing till it arrived at an unprecedented height. Ile had
calculations showing the gradual increase of paper money.
He took his estimate of the issues of the Bank from their
securities, he thought there could be no better criterion. He
had found that as the Bank securities were increased,
beyond what was the fair amount for the market, in the
same ratio had the bullion disappeared. Now the Bank
had increased their securities in a most unprincipled man-
ner, in a manner that is contrary to all rule. In the
year 1822. the paper currency was—Bank of England
24,000.0001., country, 6,000,0001. ; total, 32,000,0001.
In 1824—Bank of England, 30,000,0001., country,
11,000,0001. ; total, 41,000,0001. This showed an in-
crease of 9,000,000/. in the general paper currency
of the country. In 1821, there had been an issue
of 28,000,000/. in sovereigns ; but few of them re-
mained, for the currency had been so debased by the
large increase of paper, that the gold rapidly ran
out of the country. Could there be a clearer proof
that, in proportion as the value of paper was lowered,
so that it was no longer exchangeable for gold,
the gold disappeared out of the country ? The general
currency having been greatly increased, all things assumed
the appearance of prosperity, which, however, did not last.
When the Four per Cents. were about to be reduced, which
led to a double increase of currency, on the 28th Feb.
1823, Consols were at 731 ; in April, 78; Feb. 1824, at 92i ;
in April, 961-; but in 1825 the bubbie burst, they fell to 28
and 23. Of course an property was depreciated in the
same proportion. What was the situation of those posses-
sing Government Securities, when there existed in any body
the power of working such sudden changes—of so tampering
and dabbling with the currency against all principle and
rule? What was the state of the currency in 1825 ? He
would show them an account which was beyond the pos-
sibility of doubt or question, and which would prove to
them the cause of the lamentable results which took place
in the course of the following year—he meant between the
23d of February 1823, and February 1822. In one year
the increase in these securities was 2,300,0001. On the
25th of February 1826, as compared with 1823, the in-
crease was half a million. When the dead weight money
was paid by the Bank in 1825, the increase was 6,079,000/.
showing that the increased issue of paper currency up to
rebruary 1826, was 7,967,0001., so that from February 1822
to February 1826 the increase was 16,9.15,0001. —all that
would be proved by the returns on the table. He would
allude to the country bank paper by and by—he was at
present confining himself to the Bank of England, be-
cause .at that time it had not made itself responsible for the
country banks. On the Ist of July 1825 the Bank paid
6,500,0004 by an issue of bank notes. They had also made
an advance on stock to the amount of 2 ,000,000/. They
had advanced on mortgages and other bills 1,500,0001, and
there was an increase of commercial bills discounted, as
compared with 1.923, of 1,500,0001., making altogether a
sum of 17,217,0001. which included a payment of 4,200,000/.
I to the holders of Four per Cent, stock. So little did the
principles of sound banking appear to be understood or
recognised, that it was understood at that very period, in
imitation of England, France had determined to reduce
her Five per Cents., and Mr. Rothschild and Mr. Alex.
Barinr, had contracted to supply money to carry them
through. The Bill passed through the Chamber of De-
puties, and it was lost by a majority o. one in the Chamber
of Peers; and the fact was, that Mr. Rothschild had re-
c.'ived from the Bank Directors a promise to advance them
a ..sum of tvro millions for that purpose. and it was only
that morning a gentleman told him that Mr. Rothschild
said i; was a most fortunate thing the Bill was thrown out,
beeau,se the payment of two millions to the French Go-
vernment would have occurred during the commercial
crisis in England, and would have been utterly ruinous to
that country. There, then, was an accession to the issues
of 76 millions. He had a most important document
which he would read. The great issues made by the Bank
produced a degree of speculation unequalled in this coun-
try. He had a return laid on the table of the jdouse
by Mr. Huskisson in 1825, from which it ap-
peared that in that year the increase in the im-
portation of flax amounted to 44 per cent. ; tal-
low 71 per cent. ; tobacco 81 per cent. ; cotton 52 per
cent. ; and sheep's wool 94 per cent. All those articl el
Were thrown into England because the prices had been
unnaturally raised by such immense issues, and foreigners
obtained
in 1825,
the largely advanced prices. When the bubble
bullion-1825, and the Bank had nearly ceased to pay in
when their stock of bullion did not amount to
500,000/.—that very Government which bad so reduced
the interest, were obliged to borrow 8,000,0001. at 4 per
cent, at 94/., being a loss to the country of 1,600,000/. by
forcing that scheme. The revenue had fallen off two mil-
lion and a half, the interest of Exchequer bills fell to 2 per
cent. discount, and the Government were obliged to
raise the interest up to 3 per cent. The 3 per cents., also
ifell 20 per cent., and the dockets struck in the Court of
Bankruptcy increased to a ten-fold degree. All this arose
front the causes he bad just stated, and it was to prevent
such an occurrence that he was anxious long ago have an
inquiry, in order to bring proof before the House. While
the ruin was taking place, however, in the country, that
Bank flourished, for the moment the difficulties began, they
raised the interest 5 per cent., and it was only last year that
the Governor congratulated the proprietors on the profits
they had made during the years of the panic. It might be
said, that this had taken place, but that there were no
means of preventing it ? Could any one doubt the
Power of the Bank to prevent the difficulty ? The
currency ought to yield to the wants of the country.
Ile might be told the Back did not know of the change
that was going on in 1825, but if they looked at their
own returns, they would see the most distinct notice that
could be given to any body was given to them. On the
26th February, 1824, there were 13,700,0001. worth of
bullion in the Bank of England. Oa the 26th of May, it
declined to 13,000,000/., and went on gradually decreasing
till on the 22d February 1825 it Warm 8,800,000/. On the
26th May in that year it was 6,000,000/. On the 26th
August it was reduced to
.3,500,0001., and they all knew
there vas a panic. So that in the beginning of 1824 the
creation 'of paper by the Bank had become so large that
the bullion was forced out of the country. On examining
page 88 of Report 32, it would be seen how very slowly
the prices advanced, and that notwithstanding the increase
of the paper currency in 1824 of 9,009,000/., the decrease
of bullion from' February to November was only 3,000,0001., 1
but from November 1824 to November 1825 the decrease
was 8,000,000/., and the Bank had only 8,000,000/.
in bullion. It was impossible they could have a
better test of the increase of the issue. The
result was that they obtained an increased command over
the property of the country. In proportion as the amount
of securities was afterwards decreased, did the gold re-
turn ? Commerce was brought back, but under such enor-
mous suffering that he trusted it would never be witnessed
again. So much for the Bank of England. But they
had been in the habit of throwing all the blame on the
Joint Stock Banks, and he admitted they were
not without blame. The following was a statement
of what they contributed to produce the failure at
that time. Ho had stated that there was a difference
of 17,000,000/. in round numbers in the securities
of the Bank of England. The creation of paper
money by the country banks during the same period was
6,415,000/., which, added to the sum of 17,206,000/.,
made an aggregate of 23,621,000/. Was it to be won-
dered at that they should witness the ruin which was
caused ? Had this ptvved a salutary lesson to the Bank
it might have been looked back upon with feelings of
something like complacency, but no sooner had the coun-
try been relieved from one misfortune than another fol-
lowed. The misfortunes of the country in 1836 and 1837
were all attributable to the Bank of England, and the
facts which he would relate would make this matter clear
to•the mind of every person.—(Hear, hear, hear.) He
Would lay it down as a rule that when the Bank
securities and their bullion were of equal value—the ex-
changes would remain in their natural state, and the com-
merce of the country would go on prosperously. In the
Year 1833 Lord Altherp renewed the Bank Charter, and
be (Mr. Hume) looked back with satisfaction to his con-
duct on that occasion. He had opposed it in every stage,
and had then stated what would be the result of that mea-
sure. Two considerable alterations had been made at that
period. One was the establishment of Joint-stock banks.
These Joint-stock banks had been blamed as the authors
of the misfortunes of the country. Now, although he
would admit that they had sinned a little, yet their sins
were but little indeed when compared with those of the
Bank of England. All that the three volumes of evidence
could make out against them was that in one or two in-
stances there had been individual mismanagement • and
was it to be expected out of so many establishments Of this
nature that such should not be the case in one or two in-
stances ? but he would say, let those parties who had en-
trustee the management of their affairs to the hands of in-
, competent persons take the consequences of their own
i neglect, there was no case made out justifying public in-
terferenee. Another alteration which took place was the
1 making Bank of England paper a legal tender, and the
Joint-stock Banks were only required to pay their
own paper, by tendering Bank of England paper in
exchange for it. He bad foretold what would be the
result of this measure, and had begged of the Bank Direc-
tors not to allow that clause to remain in the Bill, because
by throwing the providing of the whole of the bullion to
meet the circulation of the country on the Bank of England
when the pressure came it would be felt no where more
severely than at the Bank, and 88 by that clause the care
1 of providing bullion for the whole circulation of this
1, country, and of Scotland and Ireland as well, had de-
volved upon the Bank of England, they ought to have
been more circumspect than ever. It was thought the pub- 1
liaising of the Quarterly Report of the amount of bullion in
the coffers of the Bank would be a sufficient protection, but
every one now knew and admitted that it was of no value,
no attention was paid to it, it was no check to keep the cur-
rency in a proper and healthy state. He believed the
Branch Banks had been useful ; but when they looked at
the manner in which the Bank had lent their money, it
was no wonder that we had constant fluctuations. They
had four principles of interest going on at the same time.
They lent country banks a sum of from 300,0001. to 350,000/.
at three per cent—then for the same advances to another
class they charged three-and-a-half per cent, while they
I were discounting another class of bills at 4 per cent—a pres.
sure came, and then they raised the price of money to five
and five-and-a-half ; and who could say it might not soon
reach six per cent. ? Now, bow absurd to be raising the
rate of interest in London, while they allowed so much of
their paper to remain upon loan in the country—that was
acting partially, unequally, and therefore unfairly; and
these were the errors which produced such disastrous
results, which rendered the currency unsteady, and ought
not to be allowed. He charged the Bank with breaking
through their own rules. The Hon. Member quoted from
the evidence given by Mr. H. Palmer to show that the
Bank was established for the purpose of supplying the
country with money according to its legitimate wants, and
he said it was necessary that the amount of securities
should always be the same. Now, how had they carried
out that ? He did not agree with Mr. Palmer, for he
Would not confine the Bank so much ; but he thought the
securt:ies ought always to bear a proportion to the amount
Of bullion and the currency of the country, yet within a very