The Sun.
London, England, 1832-09-05 00:00:00

s.

there is a great quantity of securities thrown upon
the market, it must affect the value of the whole.
Does not the operation for the purpose of getting
your bullion, become simultaneous with your opera-
tion fur meeting his demand, and do not the two to-
gether produce what is commonly called distress
and difficulty in the commercial world ?—Provided
that be his action, it certainly would have that effect.
When the Bank is placed in any way so as to
make it necessary to strengthen their amount of bul,
lion, how do you rank your securities according to
their realizable qualities, that is to say, which do you
consider the most, and which the least commandable
for your purposes; do you begin with your dis-
counts ?—No, the Exchequer-bills would be the first
resorted to.

When should you come to your discounts ?
Last of all ; but we should never come to the dis-
counts till we had arrived at the maximum of the
rate of interest.

Would the rate of interest come into your calcu-
lation in a case of that nature ?—Certainly.

Have you, of lace years, been in the habit of re-
fusing discount of good commercial paper, from a
desire to decrease your circulation ?—Not that I am
aware of.

Should you not think it a bad system for the
Bank of England to be established upon, to be
obliged to refuse to the commerce of the country
the discount of good paper ?—Certainly ; but there
is no alternative, provided the market rate of in-
terest should advance beyond the maximum allowed
by law; then it would become necessufy to limit
the amount or description of bills to be received by
the Bank for discount.

Have you ever seen that alteration in the market
rate of interest, that discounting at five per cent.,
the extent to which the law enables you to go,
would not meet ?—Not since the peace.
Supposing there was no maximum rate of interest,
could you check the demand for discount gradually
by advancing the rate of interest ?—I think that in
such case, by advancing the rate of interest, that
effect might be produced.
In 1523, during the height of the panic, when
you raised the interest to five per cent., what effect
did that produce ?—None whatever.
Do you mean that the same amount of discounts
took place after that as before ?—Yes, I should
think at that period a much larger amount of
discounts.
What was the reason at that time that induced
the Bank to raise it ?—As I was not in the Court
at that time, I cannot answer the que,tion.
What was the general nature of the securities
upon which the Bank advanced 7,000,0001. at that
time ?—I believe there were all sorts of securities ;
but as I was not a party to the advances at the time,
I merely answer from information. When Pole's
banking-house stopped, they deposited their title-
deeds. I believe every sort of security was ten-
dered to the Bank at that period, upon which ad-
vances were made without much inquiry as to their
nature, provided they were deemed to be eventually
secure.

Were the advances upon the deposits of deeds
considerable ?—I think they must have been consi-
derable, but the period for which such general ad-
vances were made, was limited.

It appears, from the papers before the Committee,
that the Bank is in the habit of buying stock ; is
not that a novel practice with the Bank ?-1
merely one sum of 800,0004; that is the only stoG.,
they possess.

Then they are not in the habit of buying nd
selling stock ?—They never have so acted.
At what period did that purchase take place ? —I
think it was about t‘vo years since.
Do not you hold it not to be desirable that the
Bank should be buyers arid sellers of stock ?—Cer-
tainly.
Do you think it desirable that the Bank should
vary frequently their rate of interest, with the altera-
tion in the market rate ?—No, I think not. I ern of
opinion that, with the object of keeping their secu-
rities fixed and steady in amount, it is not desirable
frequently to vary the Bank's public rate of inte-
rest ; I should deem it to be preferable that the
Batik's public rate of interest should he generally
above the market rate, and thereby riot interfere with
the employment of money actually im existence.
llave there been periods when the Bank's rate of
interest has been considerably above the market rate
of interest, of late years, and what has been the
effect ?—Yes, and the effect has been, that the
Bank have had very little demand for discount, spe-
cial cases excepted, for some years past in the Lon-
don market.

Does it not throw a worse description of bills in.o
the hands of the Batik?—ln some respects it does;
at the same time it enables many persons whose
bills, though good, cannot be ditcounted at the mar-
ket rate of interest, to obtain accommodation from
the Bank.

Do you not hold that the di.,,count of private paper
is one of the worst means which the Bank, as a hank
of issue, can adopt for regulating its notes ?—Yes ;
provided they are adequately supplied with other
marketable securities.

Upon what grounds do you form that opinion ?
Because such a system materially interferes with the
action of the private bankers of London ; and further,
it tends, in my opinion, to that extension of the cir-
culation, which might prove prejudicial to the Bank.
Then your answer applies only to a state in which
discounts can be easily obtained from private
bankers ?—lt applies to those periods.
Would it not have a considerable effect upon the
commerce of the country, if there were a scarcity of
cash for discount in the marker, and the Bank of
England did not come in to supply that deficiency ?
I know no scarcity as affecting the circulation of the
Bank of England, except discredit and such as may
arise out of the foreign demand for bullion in times
of an unfavourable exchange.

la case of a deficiency of capital for carrying on
the concerns of the country, and that it cannot be
procured from private bankers or brokers, would not
the aid of the Bank of England in discounting bills
be very advantageous to the country ?—I do not
know what is meant by a deficiency of capital as
respects the Bank. In a time of discredit it is
extremely desirable that the Bank should grant the
requisite aid to the public, by an increased issue of
their notes : and there are times when the Bank
may afford considerable facilities to the commercial
interests through discounts, by changing a part of
their Exchequer-bills into securities of the former
character.

Then you think that the Bank of England should
he a bank of discount only in cases of emergency ?
I think so, with the exception above referred to.
Is riot the accommodation of discount to the corn-
merce of the country, one of the main objects for
which the Bank has ever been instituted, and for
which all banks are instituted ?—As an exclusive
bank of issue in the capital, it appeared to me that
it cannot beneficially conduct a discount account to
any great extent with individuals, except in times
of discredit. When the circulation is full, a
competition with the bankers would, in all probabi-
lity, lead to excess, in addition to other difficulties
which would occur in the attempt on the part of the
Batik of England to regulate their issues through
that channel.

Then you consider that it ceases to become the
paramount duty of the Bank, because there are other
bodies, in the shape of private bankers, and so on,
that do it ?—Yes, who employ the circulation.
What do you consider as the principal function
which it is the duty of the Bank to perform ?.—To
furnish the paper-money with which the public act
around them, and to be a place of safe deposit for
the public money, or for the money of individuals
who prefer a public body, like the Batik, to private
bankers.
Are not those functions the functions cf a Go-
vertmient rather than a private company ?—That is
for the Government to determine.
Then the benefit conferred is merely the substi-
tution of paper-money in the place of specie, and
not the bi:nefit arising from accommodation to the
industrious classes ?—I think the Bank cannot satis-

factorily offer that accommo.lation while their circu-
lation is so employed by other establishments.
What establishments do you allude to ?—The
bankers of London and the country.
How do those other establishments manage it,
without being issuers ?--By the employment of de-
posits.

Then they employ that money through your
notes ?—Yes, they do.
By what means does the Bank of England keep
its notes in circulation ?—By the securities they
hold, or by the bullion they posess.
How do they provide for the continual issue of
paper ?—By purchase in the market, when any part
of that which they may hold is redeemed or paid off.
Are those purchases necessary for any public pur-
pose ?—Yes, for the due regulation of the general
currency of the country, and for furnishing an ade-
quate quantity of paper-money for the purpose of
the circulation.

Then they take place for the purpose of supply-
ing the circulation, as a substitute for supplying it
by the common means of banking, by giving accom-
modation to commerce P—The paper-money is chiefly
supplied by the Bank of England through the pur-
chase of securities. [See explanatory answer to the
foregoing question in a preceding part.]
Are you aware that during the whole of the war,
when the interest of money was high, and when five
per cent. was rather a low interest to pay, the Bank
of England were very large discounters in commer-
cial paper ?—I believe that the Bank of England
could not have been discounters of commercial paper
at that period if it had not been for the Restric-
tion Act.

Supposing money to be worth more than five per
cent., which during the greater part of the war was
the case, and the interest demandable by the Bank
being limited to five per cent., would not there na-
turally have been a great demand upon the Bank for
discount ?—Certainly.
Do not you think that the Bank of England
would have very little answered the purposes of its
establishment if it had not been prepared to give
circulation to the commerce of the country by means
of those discounts ?-1 hold it to be impossible that
the Bank can ever, with any propriety, issue upon
discounts below the market rate of interest, without
leading to an excess.
Did not that excess take place during the Bank's
restrict ion ?—Certainly.
You do not mean that if the Bank had paid in
specie it could not have discounted bills, but that
it coned not, paying in specie, go on to discount bills
under the market rate ?—That is my meaning.
Would there be any more danger to the Bank by
having its disposable money lent nut upon discounts,
than upon any other security ?—Certainly not.

. .
Did the Bank discount under the market rate d u -
ing the Restriction Act ?—I believe so, for the mar-
ket rate of interest was frequently above five per
cent. during the period of the Restriction Act.
You do not mean to say that one of the objects
of the Bank of England is not to afford accommoda-
tion to the commercial classes, but what you mean
to say is, that you do not consider it advisable that
the Bank should found their issue upon commercial
discounts, that that is a bad means of establishing
the issue, but that, under peculiar circumstances of
pressure, the Bank may come forward and assist
most materially by discounting private paper ?
That is precisely my view. The Batik of England
is required to provide a requisite supply of paper-
money for the average circulation of the sphere in
which it ac►s, and to uphold public and private
credit when called upon. When commercial credit
is affected, it is in such times that the credit of a
great body like the Batik of England is available, and
has the power to uphold the credit of the country.

FROM LAST NIGHT'S GAZETTE.

ST. JAMES'S PALACE, Auo._3l.

This day the Chevalier de lea BermUdez, Envoy Extraordi-
nary and Minister Plenipotentiary from the King of Spain, had
an audience of his Majesty to deliver letters from his Sovereign :
To which he was introduced by Lord Viscount Palmerston,
his Majesty's Principal Secretary of State for Foreign Affairs,
and conducted by Sir Robert Chester, lint. Master of the
Ceremonits.

ST. JAMES'S PALACE, AUG. 31.
The King was this day pleased to confer the honour of
Knighthood upon Francis t'algrave, Esq. Civil Companion of the
Royal Hanoverian Guelphic Order.

HANOVER, AUG. 20.
His Royal Highness the Duke of Cambridge has been pleased
to appoint the Rev. J. It. Wood to be one of his Royal High-
ness's Chaplains.

OFFICE OF ORDNANCE, Am.:. 31.
Royal Regiment of Artillery.
Second Lieut. E. W. Crofton to be First Lieutenant, vice
Boger, resigned, Aug. 29,

Commission by the Vice-Lieutenant of the East Riding of the
County of York, and Town and County of the Town of King-
ston-upon-Hull.
J. Tweedy, Esq. to be Deputy-Lieutenant, Aug. 31.

DECLARATION OF INSOLVENCY.
WILLIAM MARSHALL and JAMES ELLIS MAR-
SHALL, Horton, Bradford, Yorkshire, worsted-spinners.

BANKRUPTS.
JAMES FRASER, Leadenhall-street, ships-hearth-manufac-
turer, to surrender Sept. 14, at half-past twelve, and Oct. 16, at
half-past eleven, at the Court of Bankruptcy. Johnson and
Weatherall, Temple; Fearnhead and Campbell, Nottingham;
Cannan, Lothburv, official assignee.
JOSEPH \VLSDEN, Brighton, builder, Sept. 28, and Oct. 16,
at one, at the Albion Hotel, Brighton. Colbatch and Upperton,
Brighton ; Ranier and France, Bedford-row, London.
WILLI A M HEWES, Newark-upon-Trent, Nottinghamshire,
miller, Sept. 14, at eleven and at one, and Oct. 16, at eleven, at
the Monson's Arms Inn, Gainsborough, Lincolnshire. Shear-
man, Gray's-Inn, 1 ondon ; Spurr, Gainsburgh.
WILT LAM PATTEN, Heaton Norris, Lancashire, druggist,
Sept. 24, 25, and Oct. 16, at nine, at the Royal Hotel, Manches-
ter. Milne, Parry, Milne, and Morris, Temple, London ; Wood,
Bullock-Smithy, Stockport.
%VILMA M. FR A N CIS, Bristol, builder, Sept. 14 and Oct. 16,
at eleven, at the White Lion, Bristol. Goolden, Bristol ; Hen-
derson, Surrey-street, Strand.
BENJAMIN WAKELING PUCKRIDGE, Southampton,
coach-maker, Sept. 11, at three, and Oct. 16, at one, at the
Court of Bankruptcy. Pope, Gray's Inn-square; Belcher,
King's Arms-yard, official assignee.
FRANCES SHARP, and LEE 800 THOMAS SHARP,
Brighton, lodginghouse-keepers, Sept. 12, at twelve, and Oct. 16,
at two, at the Albion Hotel, Brighton. Greene, Brighton ;
Sowton, Great James-street, Bedford-row, London.
MARMADUKE FOSTER, Liverpool, chemist, Oct. 2' and
16, at eleven, at Messrs. Dewhurst and Todd's offices, Preston,
Lancashire. Dewhurst and Todd, Preston ; Jeyes, Chancery_-
lane, London.