The Sun.
London, England, 1833-08-10 00:00:00

BANK CHARTER.

Lord ALTHORP moved that the order of the day for
the going into Committee of the whole House on the
Bank Char►er 8,11 be read.

On the motion that the Speaker now leave the chair,
Mr GISBORNE rose to bring forward his motion
that the House resolve its-If into Committee this day six
months. He wished to give these, who, like himself, were
opposed to the principle of the Bill, the oppnrtu.
nity of recordin4 their opinions on this important
subject. The Bank of England, he knew, was a very
powerful body, and those who started in opposition to it
were described as men who wished to make violent
changes in the inotv tary system of the country, and who,
in fact, were denominated " currency doctors." But that
would not deter him from doing his duty.—(Hear, hear. )
The greater part of the witnesses examined before the Bank
Charter Committee last year, were of characters and pro-
fessions which made i; unlikely th it they would have a
very keen perception of the advantages of a free
trade in banking; yet what was assumed by the Noble
L-rd who relied upon these witnesses w is, that the power
of regulating the currency should reside somewhere, that
the regulation should be governed by the foreign ex
changes, and that, although the long establishment of
country banks in Eneland rendered it impossible to este-
Irish a perfect monopoly, as touch as possible should be
done to attain that object by giving a monopoly of the
metropolitan circulation to the Bank of &Fiend. It
was said that it was necessary there should be some great
body in the country, by which the amount of issues was
to be regulated, in order to keep them from being too
large at one time, and too small at another ; and this
power could only be safely vested in a body like the
Bank. But the evidence itself did not show that the
Bank used this power, even if they possessed it ; for, so
far from regulating the issues, they issued gold when the
mat ket required gold, and paper when the market de-
manded paper. Instead, therefore, of regulating the mar-
ket by their issues, their issues were regulated by the state
of the market ; so that, as far as this matter went, there
was no necessity for the continuance of the monopoly.
He (Mr. Gishorne) had been in Portugal some time ago,
and had had a conversation with the Portuguese Chan-
cellor of the Exchequer on the subject of a monopoly exist-
ing in that country. That monopoly, like the Bank mono-
poly, chi, fly affected the metropolis. Lisbon was supplied
with meat by a monopoly. That monopoly was the
subject of conversation between the Portuguese Chan
(Thor of the Exchequer and himself. The former could
not by any me ins be convinced that it would be ad-
vantageous to destroy the monopoly, and atl the areuments
he used in favour of that monopoly were just as applicable
to the monopoly of the Bank; and indeed, he believed,
(night be found, with the necessary changes of particular
words, in the report of the Bank Committee. The Por-
tuguese Chancellor of the Exchequer siicl, that if fr,-e
competition were allowed, the supply of meat would he
irregueae; at one time the market would re over sup
plied, and at another there would not be enough for the
wants of the city. Now this was just the sort of argu
meat used about the Bank, yet there was proof that in
the money and in the meat market it was the (1: wand, ammo
the demand alone, that regulated the supply. The next
objection was, that if the tneans of supply were not in-
trusted., to one recognised body, there weir d he no respon-
sibility on which the public might depend fur the per-
t,rinance of what they required. Here the Portuguese
Chatleelor of the Exchequer had the advantage of the
Noble Lord, for the monopolist of the meat market at
Lisbon did give a security for the performance of his
contract ; hut the Bank here gave none. It was a
prineriaF in mechanics that action and retie, ion were
goal in opposite directions. The Noble Loi d
might depend that the principle was as true in franking as
in mechanics, and that issue and depression would equal
earl' other. The Hon. Member read several pars of the
evidence, to show that if the country and the pint•stock
hanks hail the power of issuing notes at their discretion,
t, ey would be rest ained from issuing otherwise than ac
voiding to the wants of the country. Whenever free
competition existed, it Call ied in itself the means of ct r
section for the evils that arose from it. Supposing tor o
noinent that ten hankers should agree to throw into the
ni.rket two millions more than it required, their situation
would only undergo an apparent, net a real change; for
rs the money in circulation ant tie thpasits in ;h• it
fran:ers always bore a proportion to each other, they
would tneiely find a greater amount of deposits than he-
roic. If we were to have a naiional hank, he should like
ffiieiunder the Treasure for the issue of paper,
i whch ehouhl not be convertible' at the demand of ilia,
Isdeeer u god,
hut
d atlhew!:lbe c
monopoly.eod ved
the nin platy(miEn itig()l
-
,arid to be most useless, most expensive, and least eel, n-
-able, he should move for the commitment of the Bill on
this day six 'mint, H.
Lord ALTHORP (lid not intend to detain the House
at any length upon the present occasion ; but after the
speech of his Him. Friend the Alemner tor North Derby.
it was necessary tor him (Lord Althorp) to say
something in defence of this Bili. His lion. Friend

( PRICE 7D.)

had several times during his speech called the witnesses
x mined before the Bank Committee his (Lord Althorp's)
witnesses. His Hon. Friend had stated that he did not
use the term offensively to any p d-ty ; hut the term showed
that his Hon. Friend thought that his object in going into
that Committee was to examine persons whose opinions
agreed with his own. He could assure his Hon. Friend
teat such was not the case. When be appointed the
Bank Committee, it was said that he had selected men of
every shade and difference of opinion. It had even been
made matter of objection to him that he land made such a
selection, for it was stated that though he mtlit pet a
variety of opinions, he was net likely to get any definite
conclusions. He thought that this was a proof that the
Government were not open to the charge of partiality
upon this question. His Hon. Friend had gone through
the list of witnesses, and had said that from their situa-
tions they must have partial views upon the subject of
currency. Now, he (Lord Althorp) had not selected
more than one witness. The witnesses bad been selected
y the Committee, and the objection which his Hon.
Friend brought against them was, that they, being en-
gaeed in banking, were likely to have partial views on
banking generally. Now, he contended that it was de-
sirable in an examination into a matter not theoretical,
that a Committee should have before it practical
men experienced in all its practical details. The
House would recollect that when a witness was ex-
amined before a Committee, he was liable to cross-exami-
nation by every member of that Committee respecting
the grounds on which his opinions were founded ; and the
result of such cross-examination was, that it was not the
authority of an individual which gave weight to his
opinions, but the reasons which he advanced in support of
them. His Hon. Friend had made not a few comments
on the evidence of Mr. Palmer. Now, he thought that
the authority of Mr. Palmer, on account of the reasons
which he had stated in support of his opinions, was very
great on a question like tine. Mr. Palmer had applied
his mind to it for years ; and all the reasons which he had
given in support of his opinions appeared to him (Lord
Althorp) to be founded on a mature consideration of the
question. Air. Palmer had spoken of the course which
the Bink had taken, and of the course of banking which
was now considered the best, and had then gone to the
state of the exchanges. His Hon. Friend hail criticised
the whole of Mr. Palmer's statement. He (Lord Al
thorp) admitted that when he first heard Mr. Palmer say
that he (lid not know what the par of exchange was, he
was a little surprised. Mr. Palmer did not mean to say
that the same weight of metal produced the same in two
different countries ; what he said was, that he did
not know how the par of exchange could be defined
in figures—that an exchange below par was the
demand for gold upon the currency of this coun-
try, and that you might then have that demand
for gold at is very high exchange as well as at a very low
exchange; for, undoubtedly, circumstances do occasion-
ally happen in which, when the par of exchange is con-
siderably in our favour, gold is withdrawn from theßank,
and when it is against us, gold comes in. Then his Hon.
Friend proceeded to say, " that the result of Mr. Palmer's
examination proved •hat the Bank did not regulate the
currency at all. but that it allowed the public to regulate
it for them." Now, he (Lord Althorp) contended that it
the Bank were to allow any fancied notion that there was
too great or too little currency to operate upon their trail-
sections, the consequences to which it would lead must he
evil. He thought that the public should be left to
act on the monetary system, and that the Bank was right
in letting the public use the power which it possessed or
returning Bank paper for bullion. " But," said his
Hon. Friend, " what advsnt.ge is there in having only
..ne hank of issue if the public are to be left to regulate the
amount of currency?" Now, he thought that if you tom
a number of rival banks of issue, the currency would not
he regulated on the principles which Mr. Palmer I au
described as the most cotter, principles of banking. His
Hon. Friend had assumed that there should be a large'
amount of currency than the demand. Now, the demand
might lie fair or it might he speculative: if it were speru
lative, that would lea., to an extension of the currency,
and so would alter the value of money. He apprehended
that if there were several banks of issue cc:lapwing with
each other, and discounting; hills as rapidly as bills cool
he discounted, and thereby increasing the circulatioh,
there would be, along with that rapid increase of circula-
tion, a rapid increase of prices, which in the end wool.
turn the exchanges against this country. What be drearier)
was, that the reaction so occasioned wool I he equally
rapid, and that it would thus he greater than was iierea.
say. The more sudden a reaction was, the more fata
were its consequences. Now, with one bank, like th
Bank of England, this could not take piece. The effect
pias otdh tei ceetrire on trirleodßoacendk of
onEnglandthis
would
iconvetitionno be h
of
fbatnkeam.
banks,
the Bank of England would not be called upon, during a
speculative mania. to increase its issues, as a competitor'
of hanks would be expected to do. The effect of the-
Bunk of England being called upon to discount, never
could induce the consequences which he had already de-
scribed. Fur this reason he thought that the currency was
more likely to be equal—that there would be less fluctua-
. 'ion (for some fluctuation there must always be to rectify
the exchange) by having one bank of issue than by Navin',
many. In a stood, he thought th it by one bulk of iassu
we shou'd acquire the minimum of fluctuation. The
object which Government, wished to secure by this
measure was the minimum of fluctuation; and to his
conception it was impossible that a competition of banks
could exist in the metropolis, without increasing the
amount of fluctuation. These were the grounds oh
which he thought that the bank of issue was better
than a competition of =event banks of issue. Once I e
li id been of opinion that a competition of banks was
best ; but he frankly confessed that since he had inquire.
into the subject his opinion had undereone an alteration.
But his Hon. Friend said that, taking away the mono-
poly nt the Bank of England would destroy the connector
between the Bank and the Government. Now, he
thought that the blame which was often attributsd to th.
Bank, was often attributable to the action of the Govern
ment upon the Bank. He likewise was of opinion that
the Bank ought not to change its operations to accommo-
date thy G.,vetnment. If the Government would con
fine itself to using the Rink as a private individual user
his banker, lie sew no objection to its so doing. His
Hon. Friend had also treated the publicity, which was
henceforward to he given to the accounts of the Balk, a•
a matter of no consequence. Now, he put it to th
House whether that publ city would not have a direct ten-
dency to check the connection between the Bink and the
Government. " But," said his Hon. Friend, " the
B nk is nor responsible;" to that he w6uld oc ly rcpt..
" The Aliniatels are." He could not conceive that with
a publicity of accounts there was any d ,weer of the con
section between the Government and the Bank again Pro-
ducing the evils which had been so justly lamented. Con-
-idering how important it was to keep the currency fro')
fluctuation, he thought that a single bank of tcsue in the
metropolis was most desirable; and having that convictioi
on his mind he should support the original motion.
Sir 11. PARNELL stated the grounds which induce
him to vote in favour of the amendment proposed by the
Hon. Memoer fur North Derbyshire. He contended that
sufficient inquiry into this subject haul not been inst:tote,
tor the interest of the public. He informed the Heim,
that he had repeated conversations with the late Al
Ricardo on this suhject, and that Mr Ricardo had agree
either to bring ferward a resolution himself, or to Rlippol
a resolution brought forward by him (Sir H. Parnell;
pledging the House to the fullest inquiry into the Bah
question. He likewise said, that there was a full under
standing in tie Committee that alter the examination of th
witnesses, whose evidence was vow printed, was closer
he shook' he allowed to produce the witnesses on the (iv re
side. Thu ee eentlemen, who were anxious to be examined
had called upon him, when it was too lase to ger thei.
examined, and he was then told that the Commiltre shoo
Ii- re-appointed this year. Taey all knew that the Coo.
tonne haul nut been re appointed, and in c .osegin-nee
public haul been deprived of much valu Ode informatie
xt,jah ought to have been 1.),,f0re it. One objection
:his plan o bs, that by it the G vernment would he ti
use for at least 10 s ears, and uot have the power of remed)
jag any evil which might accrue r a the public how t;
winking of the plan. The Noble Lord looked un y t
prospective evil, but he f d•got the influence th et had me
xercised
we
un that Be in all i
ad, he
convulsions
.ai.,c,onkutsrt es;
tri-fayi
tv.eheve
siihatn(he c
Directors of
had taken
nta,hokit
commercial
ateedri
aibtpyel tai
l,e
colliery florin?, the last forty veers, the
'teen a great cause in producing them. If the inquiry
had been fairly gone into it cold be shown that ur
Bank had been time cause of the stoppage which trod.

/ -
. t • • r. 0,
piece in • a-ed of slytlepreci:... n " the currency
wifh oi ~ . atilt the Bank ha 'en min y the cau-e
of 11,1 c" ' • egcSoefiii, d'+ panic hick too,;;
place in 1824 and 85. ese,'\ifprov —and they
r-t• id have been proved had the inquiry been fully gone
)1,
into—would afford so many strong arguments against the
continuance of the Bink; but those who defended that
monopoly were bound to disprove them, by evidence if
they could. He would contend that if the principle of free
trade were applied to banking, it would work well. If,
when the Bink was first established, 130 or 140 years
ago, the principle of competition had been established
also, our banking system in general would have cone net
with it, and adapted itself to the growing improvo mente
in our trade and commerce, and the public would now
have the advantage of competition in that as in every
other trade. Now, as to having more banks of issue than
one in London, his Noble Friend (Lord Althorp) had
said, what had convinced him (Sir H. Parro-II) that his
Noble Friend did not filly understand the subject, and
thit therefore he ought to have further inquiry. His
Noble Friend had intimated his opinion that if there were
several banks of issue in London, there would be a tea-.
dency to an over issue of paper by them ; but his Isifklec
Friend had not taken into his consideration that it would
not he the interest of any such banks to have an over.
isitte, for if they had they would soon find their notes ra -
turned upon them, and would draw upon them the boat...,
lily of the other banks. He thought that many banks of
issue would supply what the circulation of the country
required, and no more, and that the country m':ost gain by
the competition. He would net, however, under the cir-
cumstances he bad stated, advise that tlle Bank Charter
should he immediately withdrawn. ge would suggest that
it should he continued for three yoars longer from the pre..
sent time, and, in that interval, the House would have
sufficient time to examine whether the reasons for with-
drawing the Chatter altogether, or those for continuing it,
were the stronger.

Mr. STRUTT could not allow this question to go to a
division without saying a few words as to the grounds of
the vote he should give. He had attended the Committee
which sat on this subject, and he owned that he had not
heard any argument to convince him that the Bank mono-
poly should be continued. He had, indeed, heard the
opinions of many highly respectable individuals on that
side of the question; but as they had not been supported
by arguments, he must take them only as opinicns, and
those, too, the opinions of men who, however inteligent,
must be considered in this case as !serial witnesses.
From the evidence of Mr. Horsley Palmer and others, it
was clear that the Bank thought the convertibility of
their notes a sufficient security against over-issue; but it
was rather inconsistent with this that they should turn
round and say that no competition of banks of issue should
be allowed in the metropolis. Now lie thought it but
fair, before they passed a treasure of this kind, to inquire
how far the panic of 182 had been aggravated by the
conduct of the Bank; for he did think that an initity had
been then done to the public which could not hare oc-
curred it competition bad been allowed. What he charged
against the Bank was, that they had not contracted theie
issues when they found their paper largely returned upon
them. He must contend that all the experience they had
had was in favour of free trade, and that the advantage
would be found in a free competition in banking as well
as in every thing else. The onus lay, therefore, upon thosa
who opposed such competition, to show that it would
he injurious if applied to banking. If they adopted
the system of a national bank, the whole of the pi aim
would go to the state ; but if they found that objectionable
on other grounds, then they might establish the principle
of competition, and though in such competition the state
would del ive no direct advantage from the profits, those
profits would go into the pockets of the public, anti the
more extensive the competition was, the mere the public
would gain, as competition would secure the lowest
terms. In the plan now propped by Government there
was neither one thing nor the other—neither the ad-
vantage to the state which a national hank would secure,
nor the advantage which the pubic would derive from
extensive competition. The Government would be
obliged to dal with the monopoly bank, and, of course,
tii get much worse terms than they would obtain if corn-
p-titien were permitted. With resp-ct to the question
ef making bank-notes above a certain amount a legal
tender, he would say that the question should be con-
sidered, not merely with reference to commercial, but also
to political panics. It the commercial panic alone
were to be considered, the question might not admit
of much difficulty, but he owned that he thought
there e as much greater tisk from political than front come
inertial ponies; anti that in the former case the dander
.vould be greater from the circtemetanee of extending the
Rink of England over the greater part of the country.
As to the publication of the Bank issues, he was nit dim-.
posed to think it such an efficient check, at least as it stood
in the Bill, bs the Noble Lord considered it. It was
proposed that the average issues of three months eh, uld
tie published quarterly, but that weekly returns should be
in ade to the Treasury. Now, he theught the public
should have the advantage of the information thus weekly
laid bdore the Government, and he hoped that some
,iteration would be made in the Bill in this respect.
had heaid no argument to eatitey him tha• it. would aloe
t), an advantage to the public to permit the esteblishmsnt
ef joint stock banks of deposit in the metropolis. On the
whole he would support the amendment of his Hon.
f?riend the Member for North Derbyshire,litcause be thought
that evidence should be afforded to convince them of the
necessity of taking so itnportant a step as this before they;
,vere called upon to assent to it.
Mr. HUME said that the chief reason for keeping- up
this Bank monopoly was, in his opinion, one of the
strongest reasons is by it should be ab.ndoned. Why l gill
the continuance of a different system in Scotland been dee
feuded, except on the ground of the advantages which
would accrue to the public from competition ? And why,
he would ask, should not the public in England have the
advantage of a similar competition ? There was evidence,
in his opinion most conclusive, of the many evils which
hal resulted from monopoly. Were they, then, with such
evidence before them, warranted in sanctioning a releatinte
which must have the effect of continuing that monopoly
for at least 10 years longer? It was admitted on all hands
that competition was advantageous to the public in every
trade; why it should be lees so in banking he was utterly
at a loss to know, and certainly he had not yet heard
anything on the subject from which be could come to
such a conclusion. In his opinion there ought to he a
tie ion it bank established, and he could not see why such
an eetafilishinent could not be fairly and honestly conducted
ny a certain number of directors as well as the monopoly
funk was at pre ent; hut if the objections which existed
is the minds of many to a national b ink could not he
teereorrie, why should not the other course already pointed
out be adopted—that of giving to the public the benefit of
eompetition ? That had not been done, and the result
vas that Ministers had made a very bad bargain will the
Bank—a bireain which would never have been thought of
if competition were allowed. 011 e great object which
hey would obtain by putting an end to the Rink mono..
inily
aril
htTieeovuoGiudos:b.,./..•,,:dt.)
etbhnrete_..ck:ut
cause of
fno,ni.xniTanirogne
whichbp eottwtlei,oeannd ther tnhßin::Lnx,
sk.t
.
iusc
travagance in which former Governments had indulged„
aid from the effect of which the country was now suf-
e,rinz. As to a single batik of issue, he fully ceneurred
vith those who thought, that it was much more likely to
n ate a panic than having more such banks than tune. On
ill these grounds he thought the measure should he poste
lotto! to another year. It certainly was propost roils to
wing on a measure of this importance within a few days
.f the close of the session, and with such very inaittqnate
nformatit n on it :is they now possessed.
Mr. FRYER said that this question was react impure
au , for on the d• cision of this would depend the value
ar rent or lind. It Wa3 a measure which should not be
tastily taken up or hastily abandoned. He was for ad.
miming the consideration of it to a future time, when
y would have much mire tune to consider it. If tee
eresure eheuld pass in its present shape, the Bank of
Eegland would bee-me master of all the bullion of the
eitintry, and of all the trade of the country. It would
e toaster of the while gall circulation of the c,un,ry.
de agreed wi h the Noble Lord that one bank of issuo
could he suffieient. but he thought it midst to be a na.
tonal bank. Th.s Bill would have the effeet of renaering
lie gold circulation of the country unproductive. It they
vere to take t e mines of 'rtega amt busy 'hem in the
snivels of the earth—(A kach)—they could not render
.he golf less pi oductive than it wetted be by this Bi!I; but
.early t e sane irect would be produced by the extension
t Bank paper. fle would make the paper of the cotintr
nutavel and secured on the property on tee country,
in of a cettain fixed amount. A mate who has on"'
(0 000/ in gold could scarcely g. t any interes: tor it.
ie Bank stepped in with its cheap rags, and prevented
ii limn using his gold to advantage, This "f."! 1:
it 11011.3 Suit correpsti rem ; it ike t i
t h Boy and the Qulchralver Bi igt too coa
jest,
but
. e Tit
it( Rey t ffered to caret-p tssertar" ‘
)eickstiver • ffered to Nike them for reel. .
tin a -tittle of wine on the road. The R b Roy
it-ell beaten out .11 the fit 1(1
it s and thi-, anti declaredall to I„ef, w
the Q having it - tun away
,h and upset, a" t 8„,„„hed; and that w-ohl e
'
It wit t .; t. r pr.s t tem sy ware pEIS
er'ed in. Under all the circutn,tato..e?, he t-ora;:lit is
measure ought to be po,ttio.wd t,) the next Session. In