The Sun.
London, England, 1837-02-07 00:00:00

THE SUN, LONDON, TIThSnAY, FF,I3IIUARY 7, 1437.

tend the inquiry.—( Hear, hear.) He expected that his motion
for the omission of the clause he had alluded to would have
received some attention from the Committee. He was sorry,
on reading the evidence, to find that not a single question was
put to ascertain what was the effect of the paper of the Joint-
stock. Banks being made payable in the country in Bank of
England notes. If such a question were put, the inquiry
was certainly not pursued. He had no hesitation in saying
he regretted now that his amendment was not carried, and
also the manner in which the present inquiry was carried on.
Ho agreed with the Right Hon. Gentleman that this was a
critical period—he agreed with him that mischief or good
would result according as this inquia'y was proceeded with—
but he must press for inquiry when he saw enactments on
banking which he believed to be fraught with the sacrifice of
millions of capital. He told Mr. Canning and Mr. Huskisson
that they were mistaken as to the sources of the mischief when
they were attributing the panic of 1825 to the country banks
without any proof that it was so. He observed, on that occa-
sion, that the whole issue of the country banks could not pos-
sibly produce the least effect on the circulation. The House,
lie would contend, legislated on wrong information ; and let
any commercial man look back to the withdrawal of the cir-
culation, and say whether that had not been productive of the
most serious and lamentable inconvenience. The Right Hon.
Gentleman told them that an enquiry into the bank charter
would be an incidental inquiry ; his proposition, however, was
not to open the question of the bank charter, but only to inquire
with a view to ascertain what had been the discretion exer-
cised by the Bank of England.—( Hear, hear, hear.) He
knew no individuals more anxious than were some of the
official gentlemen connected with the Bank of England to
do justice and see the duties of their office efficiently per-
formed, yet he had no hesitation in also declaring that he
did not think their proceedings had manifested a knowledge
of the principles on which they ought to act, and, therefore,
whatever changes had taken place in the currency in the last
few years, had been owing to the management of the Bank of
England, and not to that of the joint-stock banks.—( Hear,
hear.) If he could make that out, he hoped the House would
go with him in adopting his proposition, which was to extend
the inquiry .to banks in general—(Hear, hear)—and to the
causes of those changes in the currency which had occurred
during the last two years. His object was to show what ought
to be the principle of banking; to show what ought to,be the
system here, and what had been the results from the system
adopted here and elsewhere. The Right Hon. the Chancellor
of the Exchequer proposed that the Bank Charter should be
the subject of an incidental inquiry ; he would have it the
subject of their principal inquiry. He was prepared to show
that if evils had resulted from a surplus currency, they were
not produced by the joint stock banks, but by the Bank of
England. If he should show that the evils of speculation had
arisen, which had led to a sudden restriction of the currency--
if he should show that great changes had taken place, which
had thrown ail artificial value of five, ten, or more per cent.
on some particular commodities, and in a few months had de-
pressed them to an equal amount—if he should show that any
thing had occurred which had interfered with the public credit,
and placed it, though it had always heretofore been as high,
below the credit of a neighbouring country—if he should
show that the interest paid on Exchequer bills in England
was higher than the interest paid on Exchequer bills in France,
if he should show that till within the last twelve months the
credit of England, as regarded Exchequer bills and the funds,
was higher than that of France, whereas now it was deteriorated,
if, he should show the existence of such a state of things, he
would ask the House was not that a fit subject for inquiry ?
The Right Hon. the Chancellor of the Exchequer said no-
thing had occurred since the last meeting of Parliament to
interrupt the inquiry. Certainly nothing had occurred. His
object was to urge inquiry, not to limit it. When he saw an
attempt made to attribute an evil to Joint Stock Banks, of
which they were comparatively innocent—he admitted they
were not altogether so—he considered himself bound to en-
deavour to fix it on those whom lie considered the real
offenders. He begged to divert the attention of the House to
what must have attracted considerable notice'during the in-
quiry of the Committee of 1819 —ho referred to a portion of
the evidence of Mr. Alexander Baring, who was considered
one of the best authorities examined by the Committee. A
question was asked of him, the object of which was to ascer-
tain whether greater changes in the currency had taken place
in France or in England. Every body knew what changes
had taken place in this country from 1797 till the period when
the Right Hon. Baronet opposite (Sir Robert Peel) intro-
duced his Currency Bill. He admitted that one of the greatest
benefits which had been conferred on this country was that act
of the Right Hon. Baronet by which he placed the currency
on its present footing.—(Loud cheers.) Though the suffer-
ings were great through which we arrived at a sound
principle, those sufferings could not be fairly attri-
buted to the measure of the Right Honourable Ba-
ronet, but were the result rather of the previous misgo-
vernment.—( Hear, hear, hear.) It appeared from the evi-
dence that there was a paper currency in France, but none
below the value of 201.—[Some Hon. Gentlemen intimated
their dissent from this statement]. He believed it would be
found he had stated the value correctly. The circulation in
France was essentially metallic. The paper was issued by the
Bank, according to the demand, and it was never pushed, as
it was in this country, for• the purpose of making a profit by
the issues, or for the encouragement of speculation. It dis-
counted at all times at 4 per cent., and was a commercial
bank. The reduction of the rate of interest by the Bank of
England had been the cause of much of the evil of which we
had to complain. The reduction of the rate of interest and
the amount of surplus money possessed by the bank had in-
creased speculation. The Bank of England currency had
been chiefly paper. Let any one draw his conclusion from the
results of the system in France, as compared with the results of
the system in this country—let him make that comparison,
and reconcile his mind to our system if he could. France had
stood the shock of two invasions—she had to pay immense
sums to the allies in the course of a few years—she had to
hear up against the importation of corn to an immense amount,
in consequence of the failure of her corn crops—she also suf-
fered at another time from the failure of her wine crops,
which were equally important to the industry of that country.
Surely this would have been enough under other circum-
stances to have deranged her whole monetary system.
—( Hear.) Notwithstanding, however, that she had had these
large sums to pay, no such changes in her currency, no panics,
had occurred in that country as had taken place in England
over and over again. The Bank of England availed itself of
its assets to derive profits, and in doing so occasioned that ex-
cess in the currency which led to a restriction, and, the re-
striction being suddenly felt, a panic took place. By such
management as was seen in 1825, as well as at the present
period, the whole commercial community was, as it were,
paralyzed. These were periods of the utmost danger ; no
man knew what to do, and no man knew what might be
the result. He was anxious that they should look, not to
joint-stock banks under the idea that they had created the dif-
ficulty, but that they should inquire into the proceedings of
the Bank of England, which he believed in his conscience had
occasioned it. He would have them ask themselves how it was
that a wealthy country like England should be in a tenfold
degree subject to these violent changes, while France,
while Holland, while every other country, except America,
remained undisturbed ; and America had followed in a
degree the steps of England, in consequence of the facllities
which existed of her getting money from this country ; she
had suffered, but from the information he had obiained from
an American paper he had received this morning, he be-
lieved her sufferings were entirely at an end. He dated the
commencement of the present panic from the period when
the West India loan of fifteen millions was raised in this
country, and it was with reference to that loan that lie
comp:ained of the discretion whic:t had lmen exercised by the Bank.
The Honourable Gentleman here went into an examination of the re-
turns of the issues of the Bank of England (rein June to December,
and compared them with the returns of the issues of the joint-stock
banks. He:complained that the .return, of the Bank of England was
not a fair return, inasmuch as it was made up a week before the divi

•
(lends were paid, which added five millions to the amount of their is.
sues. The Honourable Gentleman also referred to the sth and Gth of
William IV., for the purpose of showing that it was intended the con-
traction of the loan and the payment of the Compensation money
should be so carried into effect -as to cause as little disturbance as possi.
ble in the currency of the countty, Within one week after the loan
was concluded the Bank Directors issued a general notice that they
would make advances on all securities, on stock, minium, and all good
securities, at 31 per cent. This was a temptation to the holders of the
loan, for they took their omninin at 3f discount, and went the next day
to the Bank and got it discounted at 3 j per cent., thus poeketting
per cent, on the whole operation. The effect was that the Bank ob.
tallied ten or eleven millions of this money belonging to the public, and
the Chancellor of the Exchequer, being compelled to pay interest on
the loan, was paying it while the money was lying at the Bank, by
which two interests were paid. But that was not all, for there was
thrown into the Bank a large surplus of money, which induced
them to lend right and left, and no man . was refused. No bank
ever had so much money in its possession as the returns showed
the Bank to have at this period. They had twenty millions of de-
posits at ' one time.—(hear, hear, hear.) In March, 1835,
the deposits had increased to mine millions.—(hear.) In June, to
11,000,0001:; in September, to 13,000,003/. ; and on the 26th of De.
cember, to 20,000,0001. The Bank issued a notice that they were
ready to discount, and they did so, the only limit being that they would
not discount in sums of less than 2,000/. • Any man could go with his
half a million of stock. Bankers taking shares of railroads and all
kinds of securities went and disposed of bank stock, India sto.:k, arid
three per cents., which they got discounted at 23l per cent., they dis-
counting for their customers at 5 per cent., thus eneout.iging specula-
tions with the public money. That led to the great excitement; and he
now came to its application. Up to this period the Bank of England
had an :inverse exchange, and this pointed out the necessity of with.
drawing the money it had been sending out. The Hon: Gentleman then
proceeded to argue from the returns of the issues of the Bank that at a
period when their bullion was decreasing, instead of restricting the
amount of their currency, they added to it, so that between the period
when the loan was -contracted for and the 12th of January, they had no
Las than 71,000,000/, excess of currency. The Bank began to exhibit
their determination to restrict their issues by refusing heavy bills fro.n
America, which they did from the month of August. Dis-
counts were subsequently gradually refused till commercial men
found themselves unable to meet their liabilities and, engagements.—
,
(hear, hear.) Tire bankers, finding themselves screwed up, re-
fused to grant discounts to their countrymen, and this led to
the general restriction which now ells:ed. Ile, therefore, complained
of the conduct of the Bank of England, and be would say that the
House would not he acting wiselyiif it did not inquire into the facts
to which he hail referred. He believed it would be found that the
present state of things had arisen from an excess of currency, and
not fawn any course that had been taken by joint-stock or other
banks. The amount of the circulation of the joint stock banks ill
June, 1835, Was I 0,500,0001:, say 11,000,000/. in round numbers.
What had been their increase during the period of the greatest ex-
cess of discounts by the Bank of England ? The greatest excess of
-the joint stock banks was 1,300,000/. ; it never exceeded. This, too,
happened when the excess on the part of the Bank of England was
7,000,000/. Now, could any man in that House who knew any thing
of commercial matters, and looked to the small increase made by the
Pint atoek banks qnil private banks, declere tint to them 'Tea to be
ascribed the difficulties that had been experietwco 2 a lie evil had nqt
been produced by joint stock hanks, but by the Bank of England:—
(hver, hear,) It wa, he repeated it, to the Bank of England that
they onset to look.—(licar, hear,) In whet state were they At the
present InOlneld ? 1n what state veep
.they in January, ISa7V
thy the last "Gazette" it appeared that the amount of iolue4 by the

Bank of England and its deposits were 21,730,0004--(hear, hear.)
'l'h's was their condition after allowing so much gold to go away,
But then there had been a reduction in the bullion between 15:35 and
the present time. The bullion had been reduced from six millions and
a quarter to four millions and an eighth. There had been a diminution
in the bullion to the amount of two millions, and an increase of two
mill) ors in the circulation. What did the Chancellor of the Exchequer
say to this ? Why, his only answer was this—that there was a complaint
from every part of the country that the joint-stock banks had not capi.
tad; that they ought to have paid up their capital ; and not having done
so, they therefore were not in a condition to meet their issues. What,
he (Mr. Hume) asked, was the condition of the Bank of England ? Why,
they had not one slelling of capi:al ; it was all lea to the Government.—
(hear, heir.) 'finis was a matter which the Chancellor of the Exchequer
was bound to look to. lie cent,' tell the Right Hon. Gehtli man, that if
he permitted the ',resed sysieinto go on, unless that system was changed,
very considerable danger must follow, and they would have to interfere
with the public credit. It was on this account that he considered the
sound policy was at once to look the danger in the face.—(hear, hear.)
Last year the Hon. Memiier for the Tower Hamlets retlirred to this sub_
jeer, and alluded to the difficulties likely to occur to their state of cre-
dit The Right Hon. Chancellor of the Exchequer was quite right in
saying, now, that he 1)1,1 at the period referred to expressed a doubt as
to the state of credit leading to danger and d,fficulties. Ilis(Mr. Hume's)
answer was, that there would be no danger and no difficulty if the
Bank had acted as it ought to Lave done —(hear.) It had been said, in
answer to the Hon. Member for the Tower Hamlets, that the best secu-
rity for the public was the discretion of the able and honest men who
acted as the managers of the Bank. Now, he should wish to know
how the Bank allowed 21 and 3 per cent. on delimits, while upon Ex-
chequer Bills there was only 2a. Public eredit had been injured. It
was, he considered, the duty of the Chancellor of The Exchequer, to
have prevented this, knowing, as lie must have done, the continual
drain of gold that was going on. When the Chancellor of the Ex-
chequer found that Exchequer Bills were at a discount, they ought to
have been instantly raised instead of allowing the matter to proceed as
it bad done. By not doing so, the Chancellor of the Exchequer had to
do that doubly which there would have been no necessity for if done at
the proper time, What situation, then. did they come to? The
Chancellor of the Exchequer paid 228,000/ discount for the loan, and
the consequence was, the money was paid into the Bank, which they
lent ; the Chancellor of the Exchequer then paid 450,0001. interest :
thus, upon both transactions, there was a loss of 70,000/. to the pub.
lic.—(hear.) He had already shown that the present difficulties were
to be attributed to the excess of currency, and not to joint-stock
banks, and that that excess was to be attributed to the Bank of
England.—(hear, hear.) The House under these circumstances was,
he considered, not to be led away by any inquiry into the state of
joint-stock hanks. There had been no failure of joint-stock banks. As
to the Bank which had been assisted by the Bank of England, he
considered the latter establishment would lose by giving that assistance.
The Bank of England he had no hesitation in saying, had endangered
the public, and their issue of paper in that matter would be yet found to
be a drain on the public. It would, he thought, be much better to
have let the Bank take the consequences than run the risk they had
done.—(hear, hear.) Now he observed there was no inquiry as to mi-
rate banks. Had no private bank failed ? Why limit the inquiry
when they went about it ?—(hear.) He felt no hesitation in saying
that he had made out a case of complaint against the Bank of England.
He had shown that there had been a loss to the public in the dealings
on the Exchequer Bills. They paid more as interest now than was paid
in France, a thing that never before occurred in the history of England.
Did they want capital in England ? No. Did shey want enterprise ?
Did they want prudence in the management of their own affairs ? No ;
but there was a body over whom they had no control, that raised and
depressed at their will the value of currency, and of course of every
commodity in the country. He wanted to have, then, an ex-
tended inquiry, to ascertain whether or not such a state of things
was for the advantage of the public. No man could be more
happy than he should be, if it were proved that Isis opinions
were erroneous-on this subject. As to the facts upon which his
opinions were founded, they could not be disproved, because they were
in the returns then before the House. He was quite sure that the
public, who were so deeply interested in this subject, would not be
satisfied unless they looked at existing evils as they really were. They
should front the perils before them—they ought not to leave the danger
behind them; to do otherwise was not the way to pilot the vessel in
safety.—(hear, hear.) If the Chancellor of the Exchequer would take
his advice he would ascertain what were the real causes of the difficul.
ties under which they had how been labouring for upwards of a year.
He intended to move, as an amendment, that there be a general inquiry
into the slate of banking, and the causes for the changes in the circu-
lation itir the last two years. The Hon. Member added that it had
been suggested to him that the inquiry ought to be extended to Decem.
be-, 1833, as the documents before them referred to three years instead
of two. He, therefore, should alter his amendment, so that the inquiry
into the state of banking would be from December, 1833. Be meant
that they ought to go into a general inquiry as to the state of banking in
Great Britain and Ireland, because he could not understand, if a system
of banking answered well in one country, why they were not to have
the benefit of that experience in another. Having used the word
" currency" in his.amendment as originally. written, he wished to say,
lest there might be a mistake on the point, that it was not to the cur-
rency, but to the circulating medium, that he wished the inquiry to be
directed.
Mr. W. WILLIAMS seconded the amendment proposed
_by the
Hon. Member for Middlesex. He admitted there was a necessity
for the inquiry into joint-stock banks being proceeded with. Far as
the information given to the House last year went, he should say of
of it that it amounted to no information whatever.—(Hear, hear.)
He hoped that the Right Hon. the Chancellor of the Exchequer would
not object to the amendment. Though the joint-stock banks, he ad-
mitted, contributed to some extent to produce the dire distress and
difficulty under which the manufacturing, commercial, and trading in-
terests were suffering at that moment—(Hear, hear)—the part that the
joint-stock banks had in producing •these effects was very small indeed,
compared with what had been dare by the Bank of England.—(Hear,
hear.) He considered that their management of the issues was the en-
tire cause tif the' difficulties he so often referred to. The joint-stock
banks and the country bankers had extended their issues ; but the
way had been led by the Bank of England. For the last three or four
years that establishment had exhibited such a want of management,
such a reckless disregard of the interesti of the country, as never yet had
been exhibited by any public body.-'(Hear.) By the returns it appeared
that on the 28th Dec:, 1833, the issues of the bank were 32,600,0004,
and the amount in 'gold-' 10,200,0004 On the 10th March, 1835,
the issues were 28004,0004 In the course of fifteen months there
was a difference in the issues of 4,000,000/. On the 26th December,
in the same year, that is, only nine months afterwards, the increase in
these issues .amounted to 8,800,0004 In the course of nine months
there was an increase of more than ene-fourth in the circulation.—
(hear, hear.) What was the consequence of this ? The great increase
was caused by the avarice of the Bank.—(hear hear.) That was the
period of advanced prices. Every article of import that came to this
country-was raised in price from 40 to 100 per cent. Even on such an
article as cotton there was an advance of 80 per cent. While they paid
thus highly for the'commodities of other nations,the exchange was
against them. When they paid a high price for the materials that come
to them to be manufactured in this country, foreign nations would never
give them a corresponding price to that which they paid for the raw ma..
terial, and the consequence must be a falling off in their export trade.—
(hear,) He found that while the issues of the Bank of England were
31,700,000/., they had got in gold but four millions and some odd
thousands. That is they had to pay the public but very little more than
half-a.crown in the pound: lie asked the Right Hon. Gentleman was
any corporation to be permitted to produce so much mischief to the
country and to every branch in it ? Why were they all to be in such a
state ofalarm and uncertainty ? The Right Hon. Gentleman told them
indeed that he saw no ground for despondency. He (Mr. Wil-
liams) should like to know how the bank issues were to be regu-
lated—how, by reducing the circulation to such an extent, they were to
bring the prices of all commodities down, so as to turn the exchange in
their favour ? He asked the Hon. Gentleman if he did not see any
ground for despondency in looking to the consequences of such a state
of things ? The distress, in hieopinion, was only in its commencement,
if the Right Hon. Gentleman did not give to the question proper con.'
sideration.—(hear, hear.) What had been done in 1824 and 1825 ?
They all recollected the effects then produced by the Bank of England
upon the interests of the country. Ile remembered to have heard it
stated by a Minister of the Crown in that House, that this great and
commercial and manufacturing country "wins brought within eight-
and-forty hours of bankruptcy." What was the answer of their lead-
ing men ? One of their directors stated before the Committee, he un-
derstood, that at last they Iced discovered the safe principle upon which
to regulate their issues. They had discovered the proper mode of re-
gulating them, and that if they kept gold in their coffers, one-third of
the amount of their issues, they would be always safe. He (Mr.
Williams) admitted that they would ; and the Bank went on fur some
time upon that principle. But what was the condition of the Bank of
England now? Instead of having the one-tliird of the amount of
their issues in gold—they hail in gold only about the one-seventh or
one-eighth of their issues.—(Hear, hear.) He asked, was that a state
of things that ought to he allowed to continue? Ought a great
country like this to be thus drove about from pillar to post, and
nothing fixed, regulated, or certain ? He had watched the proceed.
ingt of the Bank of' England and its issues for the last ton years, and
he took upon hirhself to say thi,-,-that the Bank had been so change.
able—so much up and down in their issues, that no man could engage
in any commercial or trading transaction fur six or nine months and be
able to tell what the result would 'be—whether it would bring to
him a large profit, or be attended with a very great loss.—(llear, hear.)
In a country like this same certain principle ought to be laid d iwn, The
currency was the measure of all property. The pr,eveerity of this and
every other country depended much upon (his, that they should keep
the currency in.uch a state as, it, would not• vary, as it had been conti.
nually varying under the managpinent of the Think of England.—(Hear,
hear.) He Ifoped 1-j use wopi,i iustfiute a thorough and searching
inquiry into the causes' -6f` the evili, alai whether they had been
produced by the management of the circulating medium. Such an
inquiry ought at once to be instituted; its result, he trusted, would
be to have a regular currency established.

- .
Mr. ROBINSON remarked that he had frequently before upon such
a motion as was then before them refused to assent to a proposition simi.
tar to that now made by the lion. Member for Middlesex. Without
venturing an opinion as to whether tlie ilouse had been right or wrong
in so acting, he felt, bound' to say that the Hon. Member for Middlesex
_ought to bring forward a direct motion to the same effect as his amend.
and not have it grafted upon an.inquiry of the nature now pro-
posed to them.—(lfear, hear.) The Committee at present proposed was
not one so constituted as with advantage to entertain the motion of the
Hon. Member for Middlesex. From the reviving of the Committee, and
from the experience they had acquired within the I,st few months, he
should hope the result of their inquiries would be legislating upon so
important a matter with material advantage to the country.—(hear,
hear.) Ile was able to say from-his own experience that it was abso-
lutely necessary that there should be some legislation upon this sub-
joof. Ile differed in opinion with the Hon. Member for Middlesex as to
joint_stock banki being_ left to themselves, withoat any interference on
the part of the Legislature. Such banks might be left to themselves if
banks of deposit; but it was different when they were banks of issue.
Being the latter, they were so wound up with the public interests that it
was not only the right of the Legislature, but it was their duty, to inter-
fere with them. He did not mean to put himself forward as the defender
of the Bank of England against the cliarps preferred against it. That,
task he left to the Govei nor of the Bank; whom he saw present ; but
this he felt bound to ray, that during -the late crisis difficulties would
have been greatly increased but fur the conduct pursued on that
occasion by the Bank and the Bank Directors. Ile certainly could
n understand the assertion that the Bank of England was re-
sponsible for all the difficulties hat had occurred, and that the joint-
stock banks and the private banks had nothing to do with them. How
could this be said when the joint_stock banks and the private banks
increased-and diminished their issues simultaneously with the Bank of
England ?—lf they did so, they were equally chargeable with the
Bank of England for the derangement that had taken place in conse-
quence of the extension and diminution of the currency.—(Hear.)—,
It had been obserVed by the lion. Member for Middlesex that Prance
had escaped the late shock ; but then the extensive commercial nections of this country ought not to be forgotten. It was the de-
Pllatunelltin the monetary system in America that led to the whole of
the ditljc ultjes here. This would account for Prance' not being affected white this country had undergone such frightful changes.—(Hear,
hear.) If it were proposed to extend the inquiry further, he certainly
would object to it Ile slid not object to the Bill. of 1819 for restricting
the currency to a pure standard. but he con iidered that the measure which
followed for the.entire suppression of one-pound notes was habit unjust
and injudicious, and be was Inuit decidedly of opinion* and he had tto
hesitationll4 epinimt, that an itilniry might bo advantage.
4tlatls enterer into to see how far that part of the Bill, at least, might be
repealed. If there were no other reasons for this, the existene3 of one
and two,Potind notes its so.tiand and Ireland aftlrdod oue, and he slur
no IT4gtv, wily this
cw.tntry alone should be precluded from the circula.
Hot .uf these small notes. He did not see what object could be gained
by entering into the inquiry proposed by the Hon. lgeellw Or Middle,

sex, unless for the purpose of adding to the existing uneasiness and
alarm on the part of the pubic—(hear, hear, hear.) He could not
therefore, agree to the Amendment. With respect to the question
of making Bank of England notes a legal tender in the country, lit
differed mitirely fi= the Hon. Member for Middlesex. He (Mr. Robin.
son) did not thinkettat measure disadvantageous; on the contrary, he was
satisfied that had it not been for such TI m astire during the groat panic
the country would have been placed in difficulties influPely greater
than those.which had. existed ; and whatever might be the m.rits or
demerits of the Bank Charter, or the question genera:ly, he had no hesi-
tation in giving it as his unqualified opinion—it re.nained so after two or
three years' experience as it was at the time when Lord Althorp intro
ducod it--that that portion of the Bank Charter which permitted tin
tender of Bank Of Etight'nd notes in lieu of gold would-be attended with
great advantaeos. He entreated and implored the House nut to exi en.l
the inquiry beyond the limits proposed by the Bight lion. Gentleman
the Chancellor or the Exchequer.
Mr. GISBORNE would maintain the right of the House to institute
inquiries with respect to the proceediegs of all banks, anti he could
state that many of the most important joint-stock banks were not banks
of i,821C. If this were to be an inquiry, he was ready to maletain that
it was even more important that those banks should be inquired into,
than those which were banks of issue. This reason involved in his
mind, in the strongest possible degree, the propriety of including the
Bank of Englthid in the inquiry. With respect to the banks which
were not banks of issue, the Bank of England was immediately inte-
rested ; and it would, therefore, be an absurd prose: ding to inquire into
the one set of banks, without inquiring into the other. This would be
proved by referring to the answer given by Mr. Gibbons (1,059) before
the Committee, in order to show the connection between the Bank of
England and those banks which were not banks of issue. He said
that inducements were held out by the Bank of England to joint,
stork banks which were not banks of issue. He wanted to know
hether this was not an operation as dangerous and as neces-
sary to be inquired into as any that could arise out of the issue of notes ?
But this was not the only mode in which the Bank of England was con-
nected with joint-stock banks. The Bank cast a particular stigma •on
all those banks that did mint enter into a bargain with them. Not only
would tha Bank of England not discount their bills for them,. but they
would not even discount bills for an independent customer if such bills
bore the indorsement of these banks. He would ask the House, with
this intimate connection between these banks, whether they would
agree to the limitations proposed by the Chancellor of the Exchequer;
or the still stricter limitations suggested by the Hon. Gentleman the
Member for Worcester (Mr. Robinson) ? He had resisted the renewal
of the Bank Charter. He had seen periodically for many years the
Bank getting into troubles and difficulties, and he ventured at the time
upon a prediction as to what would be its future fate. He had not
waited long for the verification of that prediction. The reason was,
that the Bank had placed on its shoulders that for which they were to.
tally incompetent. The Bank of England,being desirous of securing their
monopoly, and of keeping up an adulterous connection with Government,
continued to bear the burden. The consequences were inevitable. He
hoped he would not be considered as speaking disrespectfully of the Com-
mittee if he drew the attention of the House to their Report. His
objection to it, and the inquiry, in the first place was, that it led to
expectations which it was impossible to satisfy.. The object of the
inquiry was, no doubt, to form a gum ndwork for legislation. The corn.
mittee consisted of the same members, with the addition of four merry.
'hers, becanse Ireland was included in the inquiry. He found thirteen
different points enumerated by the Committee, aid suggested as topics
for legislation. He apprehended that if they were going to legislate
they would do .so for the protection of some one. They must either
legislate for the shareholders, or for those who did the business, or,
lastly, they must legislate for the public,that was, the country generally.
As far as legislation could be applied to the two first objects, it was
in his opinion altogether illegitimate ; he considered it totally imposs
sible to promote the interests either of the shareholders or the directors
by dictating to them how they should conduct their business. The
Right Hon. Gentleman, the Chancellor of the Exchequer, had forgotten
that for many years joint-stock banks were disallowed, and that, there_
fore, in their 'childhood he ought to have expected some freaks. The
Right Hon. Gentleman, would not let them get wise by experience ; he
(the Chancellor of the Exchequer) was determined to make them wise
by Act of Parliament But the two species were dissimilar, one inch of
the wisdom of experience was worth a fathom of Act of Parliament
wisdom. There were, as he had stated, several topics for legislation pointed
out ley the Report of the Committee. He found, from
.a question asked w
of the Chancellor of the Exchequer in page 39, that it
as contemplated
having the aid of a settlement devised by competent authorities, in or-
der to see that it contained no clause unjust between ;the proprietors
and the directors. Now lie (Mr. Gishorne) held that this was a busi.
ness with which that House had no concern. The business of that
House was to give the Most, direct remedy against fraud of every kind,
and to give the greatest facilities for the recovery of debts, but they had
no right to interfere in the transactions between man and man except
when they interfered with the public.—(Hear, hear.) The Report of
the Committee complained of the amount of noeninal as compared with
.paid-up capital. He should like to know why banks should not have
the-power of keeping up as much capital as their business required.
The Reportalso complained that the law did not impose any restrictions
on the amount of the shares subscribed. Was it reasonable that there
should be any such restrictions ? The Report also complained that the
laW did not enforce any rule respecting the nominal amount of the shares,
or respecting the amount of capital paid up before the commencement
of business. With respect to this point, he had looked into the evi-
dence, he had read the whole of it carefully, and he would venture
to say that there was nothing in the evidence to establish a better con-
duct in the slightest degree on the part of the banks of large shares as
compared those with small shares, or between those which had a large
proportion of their capital paid up and those having a smal:er paid.up
capital. If the, evidence did not furnish any ground for such a conch,_
'sloe, did the manner in which the different banks were, conducted do
so ? He would refer Hon. Members to the case of the Stourbriclge and
Kidderminster Bank, in which the shares were small, and the amount
of paid-up capital forty-five thousand pounds, which lied two branches
and four agencies, yet the business was flourishing in the highest de-
gree, and the country round shared in its prosPerity. There was an-
other instance in the case of the- Birmingham Banking Company, the
operations of winch were conducted_ on a different principle, there being
no branches connected with it. ;n this bank the capital was only fitly
thousand pounds, yet, besides being 'of the greatest advantage to the
district in which its operations were felt, its proprietary had divided
amongst themselves ten pounds per cent. every year that the Bank had
existed, viz., from 1829 up to the present time. He would ask the
Chancellor of the Exchequer whether he thought he could, by Act of
Parliainent, frame two Banks that would answer those purposes for
which they were created, anti at the same time serve -the shareholder
and the neighbourhood as these two Banks had done ? This subject was
of so technical a nature that lie was afraid he was wearying the Rouse
with it. And the complaint of the Committee was teat the law did not
provide for- the publication of the liabilities, assets, Sse., of the die.
fer nt banks. Now, the concurrent testimony of every witness who
had been examined proved that such returns were perfectly futile ant
deceiving.—(hear, hear.) Did the House expect that a body of men
whose affairs were in a bad state would come forward ant tell the sieople
sop He was surprised that the Chancellor of the Exchequer, who
had so many important subjects to interest him, should keep up this
eternal hammering at this question. There were other reasons why
he objected to the Report of the Committee as a foundation for legis-
lation, and one was, that on every important subject authorities varied
so much with circumstancea that it was impossible to come to any right
and definite conclusion. Some Hon. Members of the Committee
seemed to have hal a great horror of allowing the banks to discount
bills, although he believed that several had come out of the Committee
with their opinions in this respect very much altered. Now, with re-
spect to discounting bills, he would like to know how banks that did
not issue notes could carry on their business without discounting bills.
—(hear, hear.) Why, the discounting of bills was one of the most
legitimate operations of a large bank in a country district. The
Chancellor of the Exchequer had asked questions which indicated a
most infantile simplicity on this subject. He thought the in.
quiry proposed by the ChancellOr of the Exchequer was extremely un-
just, and he therefore would not consent to the renewal of the Commit.
tee. He would move the previous question, and if ally Member were
inclined to support him, he would divide the House ; if not, he would
vote fir the inquiry proposed by his Hon. Friend the Member for Mnl.
dtesex, as, if any inquiry were made, it ought to be effectual, and also
impartial.
Mr. VILLIERS thought that the reasons adduced by the Hon. Mem-
ber for Worcester (Mr. Robinson) for opposing the amendment of the
Member for Middlesex were the moat whimsical be had ever heard. The
Hon. Gentleman did not object to an inquiry into joint-stock banks, but
he objected to inquire-into banking generally. The Hon. Member (Mr.
Robinson), however, was willing to extend the inquiry into the suppres.
sion of one-pound notes ; but what connection there was between the
two subjects he (Mr. Villiers) could not understand. He (Mr; Villiers)
did not expect that any good result could be derived froin the very par-
tial inquiry proposed by the Chancellor of the Exchequer. Ift he Corn.
mittee had it not in view to establish and enforce some regulations which
shrill'd apply to all banking establishments, he thought that their labours
wou Id only tend to confirm the suspicions that prevailed in the com-
mercial world, that the inquiry was instituted with the view to injure
one branch of banking, and to favour another. He was convinced
that the more they taught the people to depend upon Parliament
fur regulating their business, the more it would tend to make them
careless and negligent of their interests. With respect to joint-
stock banks, he was sure that the evils said to arise from them Were
greatly overrated, and time advantages derived from them greatly under.
rated.—(hear, hear.) If anything.tendel to show the impolicy and dif-
fictilty of legislating for joint-stock banks, it was the varioul notions
and nostrums that were prescribed for the evils said to be caused by
them. The Hon. Member for the Tower Hamlets (Mr. Clay) had pre-
ssribed no less than three different nostrums for those evils ; but he
(Mr. Villiers) had never heard a commercial man agree with all three,
few to two of them, many to some one, and many again to none' at all.
The fact was, that Wall these nostrums were adopted they would not
meet the evil complained of. They only applied to the money issue of
these banks, which, upon the evidence of practical men, constituted only
a firth of their liabilities; the remedy proposed, therefbre, would only
meet one- fifth of the evil at the utniost. He was sorry to observe that
his Right Hon. Friend's inquiry entirely omitted the state of the affhirs
and management of the Bank of England. Now if the inquiry were to
be limited, he should consider it a perfect delusion.—(hear, hear.) If
they were to trace all the recent commercial oistresses, and all the crises
that had occurred of late years to their first cause, lie thought it would
be found that they were inanity attributable to the irresponsible footing
of the Bank of England_

Mr. WARBURTON did not agree with his Hon. Friend the Mem-
ber for North Derbyshire in most of his propositions. The question
before the House was not whether they should legislate on the subject of
joint-stock banks, but whether they should have a Committee of 'in-
quiry on the subject—whether there were not in existence evils arising
out, of the conduct of joint.stock banks which, for the sake of public
information and security, it was desirable to inquire into. The evils
attributable to joint-stock banks were of a very didbrent nature from
those which could be laid to the charge of the Bank of England. Amongst
the charges against the managers of joint-stock banks was that of want
of integrity In their proceedings ; but he had never heard, amongst all
the charges against the Bank of England, that of any want of personal
integrity on the part of its Governors. A want of prudence had occa-
sionally been attributed to them, but it had never been alleged against
them that tt:ey had mismanaged the funds intrusted to them by their
customers for their .own personal benefit.—(hear, bear.) He would
not deny that the Bank of England might not be so perfeet in its con_. trol of the currency as might be desirable, and that a time might come
whet, it would be advisable to inquire into such a question.—(hear,
hear.) At the same time, however, he would observe that whilst the
greatest good which could be expected to result from such an inquiry
was that of forming an ellicient board to control the currency with as
much equality as pcSsible, the greatest evil which might be apprehended
from bringing on such an inquiry at an imp,ope.r time was such a ge-
neral feeling of alarm amongst the pailio as might cause a stopp❑ge of
payments at the Bark,—(hear, hear.) For his own, part he did not
think that at the present moment it would be desirable to take up such
atl itiquiry, and therefore he should not vote with his Hon. Friend the
Member for Middlesex.
Mr. T. BARING ,should vote for continuing the inquiry. With
jaint-stoek banks there might be capitals of millions advertised of which
only thousands were paid up, and yet the ',wide of the neighbourhood
would have no means of knowing how far that might be the case. An
inquiry into the constitution of the Bank of England at this moment
would be of a very different nature to this : and to what was it to lead
when it was done it Were they to be calle.! upon to limit its Chartcr ?
no.) If, on the other hand, it was proposed to give additional
powers to the Bank, they would have to go into the whole question of
the powers it was already possessed of. It was very difficult to foresee to
what all this might lead, if they were once to suffer themselves to go
Into this question, its addition to that now before them. The Hop,
Member for Worcester had referred to the change which had recently
taken place in the currency, of the United States, Undoubtedly the
establishment of a double standard was a very great change., and had
doubtless so increased the relative value of gold as to render it a matter
tot consideration whethq scukle atets scold uQG lle takett by us cut the

subject. With respect to the caution which the Chancellor had given
on the subject, he must say that he could v. 1,11 the Right Honourable
Gentleman had acted upon his own suggestion, and net have kept up
ass immense floating debt of thir y miilions in the way he had done.
Mr. CLAY was decidedly of opinion that if the inquiry was intended
for any useful purpose, it ought to be confined to the subject of the mo.
tine. He thought the inquiry, as proposed, should be renewed.
Mr. PA.-11180N said, with respect to the motion of the Chancellor of
the Exchsquer; be thought it It very proper one. He need hardly revert
to the subject of the mismanagement of certain i anks, and par. icularly
of a great bank of issue, which had recently occurred, to satisfy the
House thet there was a sufficient reason for an inquiry of the nature and
xtent proposed by the Right Hon. Gentleman. With regard to the
remarks of the Hon. Member for Coventry, and of other gent!, men wile
had found fault with the management of the Bank of England in con-
trolling its issues, he begged to observe, that since. the re-establishment
of its charter by the recent Act, the accounts o:thebank had been pub.
fished at regular stipulated intervals,and it appeared to him, therefore,
that if the Bank had been so extravag .ntly misconducted as was alleged,
it was the duty or the Hon. Gentleman to bring the subject under notico
at an earlier poi iod. All he could say w: s, that whenever the time
might come when the Wink of England sinned be calied to aecOunt with
the public, he confidently believed that it would maintain the credit it
had always hitherto enjoyed. As yet, however, he trusted that there was
no sufficient call for such an inquiry.
Mr. CAYLEY said he agreed with the Hon. Member for Middlesex,
that the inquiry should be extended to the affairs of the Bank of Eng.
land. The difficulty which the Bank of England had to contend with
under the present system was, that :t had to attend not only to its
own interest—to bank stock, for instance, as well as other property con.
meted with that establishmsnt —but also to the interests ofthe mere
cantile body, The Bank on thelate trying occasion had acted with great
hiimanity, and had attended to its own interests as well as the great in-
terests of the public without drawing the cord too tight. But he would
now ask what was the danger to the Bank at present ? The danger
arose in a great measure from the circumst ince that the exchanges
were not favourable, and consequently so long as this was the case the
tieeessary result must be to create derangement to a certain extent in
the affairs of the Bank. In the crisis of 1825 the slate of the exchanges
was not so bad or so injurious to the Bank. Oe that occasion the rate
of exchange had been unfavourable for only 'six months ; whereas, when
the difficulties commenced last autumn, it had been unfavourable for
twelve or eighteen months, and then, as in 1825, the Bank was com-
pelled to make the greatest exertions to stave off the evil day, and to
counteract the evil arising ft= the price of commodities being higher
than the standard of value. lie considered it impossible that the stan-
dard of value could be higher than the prices of commodities, unless the
circulation has diminished in order to raise the price. He, therefore,
supported the inquiry, while at the same time he expressed it as his
opinion that the Bank of England could not have managed in any other
way than they had done for the last few months. In the autumn
the Bank was in a most perilous state. lie considered it eras yet in
greater peril still at the present moment ; and was it then wise and
prudent to wait ti.l they got deeper into the mud befOre they instituted
inquiry ?
Mr. O'CONNELL said the main question was, whether the House
should institute an inquiry as extensive as proposed by his Hon. Friend
the Member for eliddlesex. He did not think that any one intended to
oppose inquiry. Only one Member had argued it, but he had not stated
that he should vote against it. Every other speaker seemed in favour
of inquiry, and the only difference was as to the extent. This, how.
'ever, he must say, that if the object of inquiry were to declare hosti.
lity to jeint.stock banks, he should feel it his duty to oppose it. lie had
heard something to that effect from his Hon. Friend the Member for
Bridport, but nothing from the Chancellor of the Exchequer. Ile
would also say, that if the'object of inquiry were to legislate according
to the Report of the Committee, he would also be against it. The evils
of the present state of .affairs had induced the Government to recom-
meed the subject
.to the consideration of the Legislature, in order to
provide for the security of joint-stock banks. Now, he did not con-
sider diet much injury had been sustained by the public, in consequence
of these establishments ; a joiet.stock bank in England had stopped,
and another in Ireland. But the bank in Eng:a:id—the Carlisle bank—
had been many years in existence, and, according to all accounts, it
would be able to pay 14e or 15s. in the polled. There, therefore, hail
been little or no loss its England, and lie considered there would beno loss
in Ireland. He thought the great evil arose from the pressure on the Bank
of England, constituted as it was at present. The Hon. Member
for Yarmouth said the country for some time had been in a state of great
prosperity, and it was therefore the duty of the Chancellor of the Ex-
chequer to take seep; to meet any evils that might arise from such a
state of trade. Now what reason was there in such an argument ?
Because tee country was prosperous, it sea; necessary for the Chancel-
lor of the Exchequer to take measures for meeting the evils that might
be pro-lured by it. If such were the state of financial affairs, must
thei.Cnot be something rotten at the bottom ? The country abounded
its wealth, manufactures and trade flourished, the country in every res.
pout was highly prosperous, yet that very prosperity, at stated and regu-
lar periods,' induced great misery, The Bank of England was not to
blame. The evil arose from the system, and the Bank had not sulli-
cient power to counteract it. It had been said of Magendie that he
nailed a dog by the nose to a wall and then proceeded to dissect it. The
Directors of the Bank were exactly its that state ; their noses were
nailed to the wall, and the Legislature compelled them to undergo the
operation. The exchanges went against them, gold left the country,
and they naturally enough endeavoured te, keep off the drain. from
themselves; but they were placed in that position, not from any fault of
theirs, but from the fault of those who refused to alter the system.
Now what was the state of the two countries, England and
'lreland ? It was said there was an union between the countries ;
but what sort of an union was it ? The Government had
a .National Bank, and had a certain cootrol over it, so that
they might act, in harmony, But how were affairs in Ire.
teed ? They had a National Bank in that country, but
it was a monopoly. Individuals might establish banks, but
the number of partners was limited; the law prescribed limits, and
these so strict that if more partners were taken in, to increase the
security the directors were compelled to diminish their issues. The
House were aware that the Bank of England last autumn raised the
rate of discount to 5 per cent., while the Bank of Ireland discounted
at 31 ; and at the same time the joint-stock banks discounted good
paper at d per cent. What was the consequence? Bills came from
Lancashire and other parts in England, and were discounted by the
Batik of Ireland at 3a per cent. ; the person who got the tills dis-
oounted went next door and got gold, and Ireland was thus drained of
gbh!. When a panic took place in consequence of the exei.ement
caused by the Duke of Wellington coming into of it was necessary
to 'send over a million to Ireland ; and what would be the consequence
if it should he necessary to send over gold now, when theae was little
more than four millions in the Bank? Souse Hon. Members approved
of inquiry, but objected to the time. He could see:no reason its that.
Why not have inquiry now ? Why should it I e
postponed s The
Honourable Member fur Bridport, anti the Honourable Member for
the Tower Hamlets, sai I there was danger. Was the Bank of Eog-
land its danger? If so, that was an imperative reason for inquiry.
If the Bank were in danger, was not 1141 community also in
danger, and was it pot the most rational way to get out of the
difficulty by meeting the danger at once ? The great danger
arose from the apprehensions of the public, and the best way to dispel
those apprehensions was to ascertain what the real evil was. Honour-
able Members had spoken of the importance of establishiag great prin-
ciples. Now nothing was worse in many instances than great princi.
pies for individual injury, lie believed the great principle soug'it to be
established in 1819 had caused morettinger andonote injury to many in.
dividuals than any other of a similar nature. It spread its influence
over a vast number of individuals, and reduced many who had been
living its wealth and affluence to the greatest distress. He therefore
wished for inquiry. The Chancellor of the Exchequer said inquiry
would come incidentaly : why should it not came directly ? Let the
inquiry commence without delay; and the more extensive it was the
more would the public mind be disabused.
Mr. CRA WFORD next addressed the Housie but he was very im-
perfectly heard. Atter alluding to the statement, made by the Hon.
Member for Derbyshire relative to the Birmingham joint.stock hank, he
said he was not prepared to address the House at any length on the
subject. He had not had the honour Of being a member of the Com-
mittee which sat last year, but lie heel read every word of the Report,
and from that he had formed hit opinion that it would be impossible tiir
these joint-stock banks to make a remunerating per ceiling° sinless by
the sale of their credit. The amount of circulation was greatly in-
creased by re-discounting, and to this, among other reasons, were to be
assigned the cause of the pressure and the difficult state to which the
country had come,
Mr. PO uLETT THOMSON said he concurred in what had been said
by tho Hon. Member for Derbyshire as to the propriety of re-appoint-
ing the Committee, though he differed as to the necessity of taking the
Report, in every respect, as a groundwork for legislation. The Com-
mittee of last session made a Report, and in that they recommended the
reconstruction of the Committee. On reading the evidence he found
also that but few of the witnesses considered legislation unadvisable.
M. James, one of the witnesses, was asked whether he thought that part
of the law required amendment? and Isis answer was in the affirmative.
He believed that lion. Members would find few witnesses who consi-
dered legislation unadvisaple, though they diftbred as to the mode, If it
were advisable, then, to legislate on the subject, was it not better to re-
appoint the Committee ? Every friend of joinestock banks ought to
assent to the inquiry. All must be aware that these banks had borne up
well, and had gained credit under the trial.—(hear.) As a friend,
therefore, to joint-stock banks, he should vote for the proposed inquiry.
Whatever difference of opinion there might be as to the construc-
tion of some of these banks, it could not be denied that the large
numbers of persons of , wealth and respectability who engaged in
these establishments formed a new feature in the banking system
of this country. No doubt such a number of persons of this class
created a greater degree of security, and no man entertained a
doubt that paper had been pushed farther than it ever had been
before. That circumstance undoubtedly produced such a result ; and
he agreed with an Hon. Member who stated that great disadvantage
might arise from the market being overflnoded with paper at one time,
and too touch curtailed at another. But that was an evil which- could
not be guarded against : no Act of Parliament seeild make people wise.
If people were so unwise as to act in the manner his Hon. Friend had
described, he believed no legislative measures could be found to make
them act more prudently, and prevent t.sem miming into such evils.
Of this, however, there could be no doubt, that numbers of persons
embarxing their whole fortunes in such establishments formed a great
guarantee for their stability mid good management. If the House were
to adopt the proposition of the Hine Member for Middlesex it would
be impossible to say how far the investigations of the Committee might
extend. See what a field of inquiry would be open to them. They
would 'have to inquire into the state of bullion; they would have to in-
quire into the state of the coinage; they would have to determine
whether it was advisable to have re silver standard, or at gold standard, or
a mixed gold and silver standard, or no standard at all. Nothing could
be more injudicious than to found a proposition for so extensive an in-
quiry on a motion the object of which was merely to revive a committee
on a small branch of that inquiry. He objected to the motion of the
lion. Member for Middlesex, also, 011 the groune that the worsts of that
motion went much further even than his Honourable Friend wished.
He objected to the motion, because the Committee for the renewal of
which his Right Hon. Friend had moved would have quite enough to
do If they were confined to the investigation of the state and conduct
of joint:stock banks.' But it ha,l been argued that it was impossible
for such a Committee adequately to discharge the duties entrusted to it
without makilig' an inquiry into the state and conduct of the
Bank of England. Why his Right Honourable Friend had
admitted that, so far as the Bank of England was con-
nected with the question of the joint-stock banks, an in-
quiry must be made into the conduct of the Bank of England ; but
Ho further. In his opinion it would be highly inexpedient to go into
an extended inquiry with reference to the Bank of England. A time
of difficulty--not of difficulty its the condition of the Bank of Eng_
land, but of difficulty in the condition of the commercial world—ova
cettainly not the time to choose for entering into a solemn investiga-
tion of the whole state and conduct of the Bank of England. Nothing
could indeed be more unadvisable. He did not wish to impede the ope-
rations of the Bank of England, nor did he wish to mix up that
house with the concerns of the Bank of England.—(Hear.) lie
wished the Bank of England to be allowed, in the faithful and honour-
able discharge of its duties (and he was quite sure that it would discharge
its duties faithfully and honourably), to take its own uninterrupted
and independent course. An interference with that course would not
be wise, and would not be treating the Batik of England with the
justice and fairness to which it was entitled. Ile would not enter
into the various questions which had been raised by the Hon. Member
for Middlesex and other Hon. Gentlemen. He would not inquire
whether the recent commercial pressure might or might not have been
obviated lay more early assistance—he would say nothing on the general
quusttun of our currency—and he would conclude by expressing his
earnest hope that the ]louse would not agree to the motion of his
Host. Friend the Member for Middlesex, but would confine the in.
quirios of the proposed Committee within the limits recommended by
his Right-Floni Friend.
Mr. GISBORNE explained.
Sir B. rEgr, felt it his duty to support the motion of the j 1 islet