The Sun.
London, England, 1848-02-18 00:00:00

' this been done before ? He must say that her Ma-
jesty's Government had not acted, in his opinion, so
fairly or frankly to the House as he thought they
ought to have done.—(!fear, hear.) There had
been an evident desire upon their part to
avoid any debate upon the subject.— (Hear, hear.)
Upon the very first night of the session the Right
Hon. Baronet the Chancellor of the Exchequer had
made a sort of a rush down to the House for the
purpose of appointing a Committee to sit upon the
question, instead of having a debate upon thelsubject.
But still this Committee, though appointed, would not
touch the point which he now brought before the
House. He felt it his duty, therefore, to bring for-
ward this subject with a view to its being properly
discussed and a deliberate opinion recorded upon it.
It was maintained by some Members of that
House that the Act of 1844 did not create
the difficulties that occurred last year. Well,
if that were so, what necessity was there for
relaxing its provisions in October ? Upon what
other ground could Government justify the policy
they then pursued than that the Act had produced the
mischief?—(Hear, hear.) But there could hardly
be a doubt that the Act brought into existence
the mercantile difficulties this country suffered
under last year, and he would venture to tell the
House that had the relaxation of its provisions been
delayed one week longer, the commerce of London
would have been stopped. Ihe reduced state
of the Bank securities had given rise to the
utmost alarm, and those who had money in their
possession were exceedingly cautious to whom they
advanced it, if, indeed, they would lend or part with
it at all. But it was said this state of things was
not necessarily the consequence of the Act of 1844,
but arose out of the mismanagement of the Bank.
Now he thought lie should be able to show that it
was no such thing, and that no skill or ability on the
part of the Bank directors could have averted the
crisis which happened last year. He would
give a simple relation of the events that oc-
curred in 1847. The Act gave rise to dis-
tinctpanics sit two distinct periods of the year.
In the early part of the year the demands made upon
the Bank for the purposes of food gave rise to the
utmost alarm, and when the coffers of the Bank be-
came reduced to the lowest point tolerated
by the Act, a crisis arose that shook many
noble commercial houses in the country.—(Hear.)
It had been said that great mismanagement had taken
place on the part of the Bank of England ; he had
looked most carefully into the subject, and he
saw no reason for saying that there was any
mismanagement on the part of that establishment.
Added to this, he was convinced that the acts of the
Bank had not led to the monetary crisis that took
place last year. He believed that the inherent vice
was in the Act itself, and not in those entrusted with
carrying it out, and believing such to be the
case, he should move the suspension of that Act.
It was probably true that the issue of bank-notes
had not conformed itself to the fluctuation of the
bullion. The real effects of the operation of the bul-
lion upon the issue was in direct opposi-
tion to the theory of the Bill. The
Hon. Member for Portsmouth had himself admitted
that although there was a considerable reduction in
the amount of bullion in the coffers of the Bank,
still there was no corresponding diminution of the
issues of bank-notes.—( Hear, hear.) The rule was
thatfor every million of bullion decreased in the coffers
a corresponding restriction of one million in the cir-
culation should take place. Now the decrease in
the bullion at one period of last year was
about 9,000,0001. ; there ought therefore to
have been a corresponding reduction in the
circulation of 9,000,0001. What would have been
the effects of such a reduction in the circulation of
a country where it was assumed that 20,000,000/.
was a sufficient amount to meet all the
demands for the circulating medium of the country ?
The operation of the Act of 1844 prevented
the Bank of England during the late pressure
from issuing a single note to relieve the pressure
of the crisis, although at that time 8,000,0001. of
bullion was lying idle in the coffers of the Bank.—
(Cries of " Hear, hear.") It had been said that the
Bank of England had acted in error in reducing
their rate of discount to so low a sum as 2i per cent.
It might be that for the interests of the country they
had anted erroneously, but the directors were bound
to act in the best manner they could for the pro-
motion of the interests of their constituents.—(Hear,
hear.) The framers of the Act had no right to com-
plain of this conduct. When the Act passed there
were 16,000,000/. of bullion in the Bank of England,
and although they charged a low rate of discount,
still up to the middle of 1845, not only had no
diminution taken place in the quantity of bul-
lion, but it had actually risen to the sum of
16,600.0001.—(llear, hear) —a larger amount
than the Bank had ever possessed during the
whole period of its history.—(Hear, hear.) At the
same time these was no doubt that the Bank of Eng-
land was in some measure responsible for the undue
expansion of commerce, which was consequent upon I
the low rate of discount which they chargel—(Hear.)
The rate of 2i per cent. discount was, however,
continued ashen there was a sensible diminution in
the amount of bullion, caused, no doubt, by the failure
of one of the staple articles of food in this
country. The rate of discount then rose to three
and a half per cent. Again the bullion rose in
amount to the sum of 16,356,000/., and the discount
was again lowered to 3 per cent., which was conti-
nued from that period to the month of January, 1847.
On the 26th of December, 1846, there was more than
15,000,000/. of bullion in :the Bank. But in January,
1847, the pressure upon the metallic resources of the
Bank began to be severely felt, for it fell from upwards
of 15,000,0001. in December to almost 14,000,0001. The
Bank was not wanting in taking precautionary mea-
sures, for in January, 1847, it raised the rate of interest
to 3i- per cent. The next week the drain continued, and
the Bank once more raised the rate of interest to 4 per
cent., at which they kept it until the diminution of the
bullion to 9,867,0001. in September or October, when it
was raised to 5 per cent. He thought he had now shown
that there had been, at all events, no neglect, no absence
of watchfulness, upon the part of the Bank; that, with
the rise and fall of their bullion resources, they had
diminished or increased the rates of interest; and that,
in short, they had sedulously followed in the very foot-
steps of the Act, which, it could no longer he dis-
guised, was the real cause of what had occurred.—
(Cheers.) But it had been said that if the Act had failed
in securing the public against a great monetary derange-
ment, it had at all events been effective in one respect—
securing the convertibility of the paper circulation. Now
he (Mr. Herries) would say with great deference, that
the Act had done nothing whatever to secure the con-
vertibility of our paper circulation.—(Hear, hear.)
There was a great difference between saying that con-
vertibility was secure, and saying that the Act had
occasioned that security.—([leer, hear.) The Act was
passed when there was 18,000,000/. of bullion in the
Bank—in its progress that bullion had declined to less
than 10,000,0001. Were they to laud this Act for its
having prevented a still further decrease?—(Hear, hear.)
If they would give it such praise, they were bound to
show upon what grounds it was entitled. to that praise.—
(Hear, hear.) But in what state was the Bank in
October last? Why did the Government send their
persuasive or recommendatory letter to the Bank if this
Act worked so well? Was there not a want of con-
filence? Was there not a general want of credit? Was
there not an altuost universal fear and distrust? and
where then was the security afforded by the Act, amid
where was the use of securing money which could not
be used?—(Hear, hear.) lie would contend that they
were much better off under the old system; and he con-
tended, with great deference to the high authorities by
whom his opinion was opposed, that the country would
have been in a much better position if this Act had never
been passed.—(Hear, hear.) That was his strong, sin-
cere, and matured conviction, after the fullest and most
careful deliberation upon the subject. He thought
it would not be altogether useless to endeavour to show
to the House what might have taken place under the old
system under similar circumstances. What would the
Bank have done under similar circumstances to those
which occurred between January and October, 1847, if
it had been unfettered by those now regulations and re-
strictions, and if ii had been at liberty to make use of
all its resources for the purpose of discharging all its
liabilities ? It would have looked to the circumstances
which bad occasioned the drain, to the possible pressure,
to Or, causes of the drain, and the probability or im-
probability of its duration ; it would have considered all
its resources, its gold, and notes—its reserve ; and it
would have, as on all former occasions, have done its
utmost to meet the exigency, and to have provided, not
only for its own internal interests, but for those of the
public, which, he felt bound to say, the Bank had never
neglected.—(Bear, hear.) Between January and April,
1847, the Bank would have carefully looked to
the state of the foreign exchanges, and if it
had it would have found them favourable—it would
have looked to the course of commerce, and would have
found that no great falling-off had taken place there ;
it would also have considered the failure of one of the
principal articles of food, and seen that great exer-
tions would be made for procuring provisions from
abroad—exertions that 'would require a considerable
drain of gold. But the Bank, if lett to itself, would not
have caused alarm by suddenly raising the rate of inte-
rest to u high figure—they would have felt perfect con-
fidence in their own resources—they would have felt
perfectly assured that there would he full convertibility,
and they would have altogether prevented the demand
which unfortunately arose for internal purposes.—(hear,
hear.) lie hoped the. Government would not eltoe,ether
trust to the Committee which had been appointed. Ife
believed the danger still impended, and that the mone-
tary affairs of the country were on wrong principles, and
that there was no guarantee that what had happened
last year might not happen again in the present year, or
in the next.—(Hear.) The Government might, perhaps,
find it more convenient to wait until the Committee had
reported, however tedious that delay might be.—(lleer,
hear.) The Government might wish to avoid the
responsibility of any interference with the pre-
sent Currency Laws, and might wish to throw the
responsibility upon the Committee ; but immediate
legislation upon the subject was necessary. They
were, beyond:all dispute, in a position of great dan-
ger—([fear)—they had, he repeated, hanging over their
heads the possible recurrence of that catastrophe which
L had occurred last year. It was the duty of the Govern-
, ment and of that ilowe to do all they could to remove