The Sun.
London, England, 1847-12-04 00:00:00

how do you account for this ? Take the history of the
last sixty years, and I will show you that at the time
when protection was at the highest—in times of peace, in
times of war, in times before the standard of value was
established—nay, in the times of an inconvertible
currency—in all these times, I will show you that appa-
rent prosperity and a low rate of interest led to the same
want of money that you are experiencing at this moment.
—(Hear, hear.) Take, for instance, the year 1784. You
had then your old standard ; you had then the power
of paying in silver up to the Amount of 251. and yet, in
1784, in order to protect the convertibility of its
notes, the Bank of England was compelled to
refuse advances upon the loan, and to reduce its
notes from 9,000,0001. to 6,000,000/ Previous to 1784
there had been years of prosperity, and there had been
great speculations, but you had in consequence undue
excitement, and violent action on the part of the Bank
to protect its treasure from exhaustion.—(Hear, hear.)
Then in the year 1793, when the standard remained
the same, when the currency was convertible, when
there had been great prosperity, yet before the war
broke out distress began. Will the House allow me to
read an account of the distress which existed in the
latter part of 1792, and you will see how it corresponds
with the distress in 1846. This is a quotation made
use of by Mr. Tooke in his work to which reference
has already been made. He says—" From the opera-
tion of causes which I will not pretend to explain,
there were an unprecedented number of barkruptcies
in 1792, prodigiously exceeding in amount those of
any former period. In March there were 105 bank-
ruptcies, there were 188 in April, 209 in May,
158 in June, and 108 in July. Many houses of
established credit failed, and their fall involved
vast numbers of their correspondents and connexions.
Houses of undoubted solidity, and possessing ample
funds, which in a little time enabled them to pay every
shilling of their debts, were obliged to stop payment,
and many bankers were obliged to make a pause. It
was impossible to raise any money on the security of ,
machinery, for the value of such property seemed to be
annihilated, commerce and manufactures were at a stand,
and those who had any money, not knowing where to
place it in safety, kept it unemployed, and locked it up
in their coffers." Does not that account correspond
with the state of things existing in 1846? (" No, no"
from Mr. Blewitt.) In what respect does it differ?—
(Hear, hear.) In the year 1810 you had the command
of the whole commerce of the world—you had incon-
vertible paper, but that did not rescue you from the
same distress you suffered in 1793. In 1819 the
standard was restored. If you are about to repeal the
existing Act, you are about to restore the unlimited and
uncontrolled discretion of the Bank of England, to re-
store to joint-stock banks the privilege of an unre-
strained issue, and I presume you would permit in that
case the revival of private banks, giving to them the same
right of issuing notes. Before you do that you will do
well to read the accounts of the transactions of the
Northern and Central Joint-Stock Bank, of the Norfolk
and Norwich Joint-Stock Bank, and of the Manches-
ter Joint-Stock Bank, and others that issued notes
which professed to be convertible into gold, and
you will find that the unrestricted issue of convertible
paper did not prevent serious abuses which called for
the immediate interference of the Government. But the
simple repeal of the Act of 1844 will restore to the Bank
of England the exercise of full discretion, without Par-
liamentary interference. Thus, in 1826, the Bank had
this unlimited discretion, and the advantage of the issue
of IL notes also. Now I will give you an account of the
state of affairs in 1826. I take that account from an
unexceptionable authority, whose name, however we
may differ from him, must command universal respect.
This is the account given by Mr. Alexander Baring
the present Lord Ashburton, of the state of affairs
in 1826, in consequence of undue excitement and
apparent prosperity. Mr. Baring says :—" I have
no hesitation in attributing the distress of the country to
the extent to which paper circulation was put eighteen
months ago, and for which the country bankers and the
Bank of England are answerable. The latter appeared
to have a dangerous redundancy of money—that gave
rise to wild speculations in every part of the country.
It seemed as if Bedlam had broken loose upon the Royal
Exchange—all seemed actuated by the same desire—to
lay out money in whatever way they could; when all
of a sudden the reverse came, and a panic seized the
public. Men would not part with their money on any
account. Others, of wealth and known capital, were
seen walking the streets of London, not knowing whether
they would be able to meet their engagements the next
day, and if the crisis was allowed to pass without speak-
ing the truth, it would only lay the foundation for
future evil." This :was in 1826. Then, in 1836, the
proceedings of the Bank of England almost en-
dangered the stability of that establishment, and
the President of the Chamber of Commt rce at Man-
chester declared that in consequence a loss of 40,000,0001.
on the great materials of cotton, wool, and silk was to
be attributed. Then in 1839 they had been obliged to
apply for the intervention of the Bank of France, the
gold in the Bank of England being reduced to
2,000,0001.; and again the evils that followed were attri-
buted to the departure by the Bank of England from
those rules which they themselves had established for
their own security. Thus, then, I have shown that in
1784, in 1793, in 1810, in 1826, in 1836, and in 1839,
you will find the same causes as now—prosperity, low
rate of interest, great excitement, leading to immense
engagements, which, when tried by the test of a metallic
standard, you find them to collapse, and that stagnation
and distress followed. The same causes, in my opinion,
are operating now.—(Hear,) There has now been the
same prosperity, low rate of interest, undue speculation
—there has been a mode of conducting business—of
issuing paper—of re-discounting bills—(Hear, hear)—
which I believe to be quite novel in the commercial
history of this country.—(Hear, hear.) In this great
country you chose to erect a greater superstructure of
paper currency and credit on a smaller basis than any
European nation.—(Hear, hear.) This country and the
United States attempt, with a small comparative amount
of the precious metals, to have an enormous structure of
promissory notes and paper currency. There is no
country in Europe, in proportion to the extent of its
paper credit, including notes and bills of exchange, that
puts itself to se small an expense by a foundation of
bullion. This gives, no doubt, great facilities to enter-
prise; but at the same time it is accompanied by great
corresponding evils.—(Hear, hear.) The largeness of
credit, the extent of our colonial empire, is such that
when there is prosperity—when there is a low rate of
interest, the temptation of both is encouraged by that
great establishment, the Bank, which is the centre of
credit, The consequences which follow are inevitable.
Establish what rule you please, I know that you will not
go to the expense of greatly widening the basis of your
currency. Why, you are now calling out for relaxation
rather than for restriction—you want more paper in pro-
portion to your gold than you have at present; the more
paper,you have, greater will be your present ease, but
if you insist upon having it, more frequent will be the
recurrence of these disasters.—(Hear, hear.) The
United States attempts the same thing ; and the United
States, with its enormous advantages, its great extent of
land, its growing commerce—because it has a smaller
foundation for its superstructure than even you have—
is exposed to more rapid and more disastrous vicissi-
tudes than you are. But such is the state of your cur•
rency ; and the great object is to reconcile as much of
of ease and of relaxation as possible, with a
permanent guarantee for convertibility. And it
was only after the experience of those years
of distress, then patent to yon, that you were led to
accede to any measure having for its object the pre-
vention of these recurrences ; it was while the
memory of those years was present to your mind,
that you willingly acquiesced in any measure which
should fetter the discretion of the Bank, and appear
to give new facilities, along with a guarantee against
such excesses as might endanger convertibility. It is,
no doubt, painful to refer to individual houses ; but
I have the less reluctance in doing it when I have
seen published, on the highest authority, comparisons
of their liabilities with their assets.—(Hear, hear.)
And I hesitate not to say, that if the commerce of the
country is conducted on such principles, in vain may you
look to any legislative regulations, or any regulation but
discretion, to prevent the evils which must flow from
such a reckless course of conducting commercial affairs.
—(Cheers.) Sir, when I see amongst the mass of houses
(I will not mention names, though they have been pub-
lished in the pablic papers)—when I see one whose
liabilities are to the extemt of 50,0001., and its assets to
the extent of 3,0001. (Hear, hear)—l say, if that is
the practice of your commerce, don't complain of the
Act of 1844.—(Loud cheers.) Is it not monstrous that
the standard of this cciuntry should be endangered, in
order to cover or facilitate such transactions as these ?
What security can I give to a bank that has 600,0001.
of paid-up capital, and lends 500,000/. of that capital
to one house?—(Lles sr, hear.) What is it to me that
the shareholders repose discretion and confidence in
their directors ?—(tlear, hear.) Why do they not
take an active part in the conduct of their own
affairs? They fail; arid then, like this gentleman whose
liabilities are to the extent of 50,000/., and his assets
3,000/., they exclaim- —" This infernal Act of 1844, this
detestable restrictiot i Act of Peel's is the cause of all
our difficulties."—Wheers and laughter.) We want
money, and the Act of 1844 prevents our getting it."—
' (Hear, hear.) To au ch persons I would say—thank the
Act of 1844 that your difficulties are not aggravated.
Just consider what a could have been the state of affairs
if "northern and central banks," and "Manchester
banks," and "Norfolk and Norwich banks," had been
entitled to foster all. these speculations by a
issue of papery—(ldeas, hear.) But you will unlimitedhave these
excitements and th age stagnations; and, depend upon it,
under ordinary cirt aims tances, the native energies of this
country would ent.ble you to overcome this. Why, you
had just the same prophecies in all these years of dis-
tresswere tolet "The sun of England is set; there
i s no.
chanceWe of future prosperity; here are perfectly
solvent persons who cannot get accommodation or money
at even 10 or 15 'per cent."—(Hear, bear.) And some
gentlemen, from whom I should have expected better
things, tell us that the commerce of this country cannot
be conducted:if poople are to pay 10 per cent. for
their money; east' the Government is blamed for
causing it. Why- should not the commerce of this
country pay for money what that money is worth ?
(Hear, hear.) If :it is hard that they should pay eight
or ten per cent., pray, tell rae, by what law
prevent it. You would make the usury- youlaWs wouldmore
stringent, you ear.. I think there is great reason to
doubt whether th-e retention of a portion of the usury-
laws is not telling most injuriously upon those who are
affected by it. lear,
the evil effects of th hear.)
We had experieno of
usury-laws in 1826.—(Hear.)
Many houses of I. he first respectability and solvency
sank, in 1825 and t 1826, because of the usury-laws—
because there we ,snot
ita waspower
w oorfthb.orrvvowhaintgwmasontheye
and giving for it what
consequence ? T hose who obeyed the law could not
lend their money ; and those who evaded it required a
still greater into* rest in order to cover the risk which
they incurred, —(Hess; hear.) Then, how can you
I Possibly proverA this high rate of interest ? But, we