The Sun.
London, England, 1857-12-04 00:00:00

tween the creation of money and the dealing in money be-
cause of the inconvenience which might arise from the
transference to the Government of the management ;
but the little he had seen convinced him that it would be
better to carry the principle out to its fullest extent, and
he was therefore for separating in account and in appear
ance as was actually separated in practice the creation
from the dealing in money. He did not agree that it was
the prerogative of the Crown to create the money of the
country. He believed it rested on sounder principles—the
principles upon which the Act of 1844 was built. The two
principles upon which that Act was founded were, first,
that gold was the money of England ; and, secondly, that
the quantity of gold which the country should have for its
money should not be under the control of any Govern-
ment, nor of any body, nor of any private individual, but
should be subject to the free competitive action of the
whole community. Any man might bring any quantity of
gold into the country for the purpose of having it made
into money, and any man might take out of the country
any quantity of money so made. Thus free trade was esta-
blished in money, and they relied for a proper supply of
money upon the same principle as that on which they
relied for a proper supply of provisions. (Hear.) If the
provisions of the people fell short and prices rose enor-
mously, what would be thought of a Government who said,
"You have been suffering great inconvenience from a
shortness of provisions awl paying higher prices than usual,
and seeing your difficuties, and being convinced we ought
not to allow those difficulties to proceed too far, we have
undertaken to store provisions ourselves, and to supply
all and every one to as great an extent as they choose,
upon the condition of their paying the present prize ?"
That was precisely what had been done by the issuing this
letter. Circumstances arose in which persons went to the
Government and said, " This principle of free trade in
money will not apply. You (the Government) mg=t give
an artificial supply at the present price." The Irish
famine was an analogous case. When that great emer-
gency came the Government did interfere in that anoma-
lous and unlawful manner; but many had grave doubts
whether their interference was beneficial, and whether it
would be repeated a rsecrnd time. They ought in the
matter of the currency to carry out general principles ;!and
how could Government interference, he asked, be recon-
ciled with those general principles? It was quite impos-
sible not,to acknowledge that the suspension of the Act on
two occasions was a subject of grave consideration. He
understood the noble earl opposite (Earl Derby) to say that
he did not complain of the Act of 1844 as having anything
to do with the creation of difficulties, but that in periods
of famine and pressure it was not sufficient to meet those
difficulties.

The Earl of DERBY—That then it aggravated the diffi.
cut ties,

Lord OVERSTONE—But it should be remembered that
the power of issuing the letter was derived from the Act of
181 e, and that the Government would not, without that
Act, have bad such a power, and also without that Act the
public would not have permitted the Bank of England to
raise its interest to anything like 10 per cent. If the inte-
rest had not been raised to 10 per cent. the exchanges
would not have been corrected, the store of bullion would
have diminished, and the Government could not have issued
the letter. It was impossible to deny that the suspension of
the Act twice repeated did eteiteeserietis difficulty, and he
thought the Government 'were mutated to say that the
committee which was in existence ought to direct its at-
tention to the question whether, while keeping the provi-
alone of the Act of 1841, which were essential to maintain-
ing
the solidity of the monetary system and placing the
exchanges under proper control, they could not add, with-
out relaxing those principles unsafely, au elastic power ap-
plicable to peculiar and exceptionable circumstances. It
was a very grave inquiry, and should only be entered on
with the greatest calmness and judgment, unaffected by
the passions of debate. If they meant to treat this ques-
tion in a really wise and statesmanlike manner they would
not apply their attention to concocting palliatives, but
seek a remedy by tracing these evils to their source. He
would advise them to learn wisdom from the history of
the present disturbance. It commenced in the United
States, and no man doubted that that the monetary
crisis there had been fomented by a vicious system
with regard to banking, currency, and trading.
(Hear, hear.) The condition of things in the United
States was closely analogous to the condition of things in
England previous to the passing of the Act of 1814. The
object of Sir Robert Peel was to extricate this country
from a system analogous in all its principles to the sys-
tem of the United States, which twice in twenty years
had produced the universal suspension of specie pay-
ments. Therefore, whatever they did they should
do nothing which tended to place the monetary system of
England on the same condition as the monetary system of
the United States. (Hear, hear.) The next point was this
—what was the circumstance which weakened the power
of the Monetary system under the Act of 1844 to meet this
pressure ? It was the abstraction of 3,000,000 sovereigns
to meet the panic in Scotland and Ireland, with regard to
the issues of local notes. Supposing this country when.
menaced by foreign invasion on its southern shores was re-
quired to detach a largo force to meet an insurrection in
Scotland or Ireland, would not its power of defence be
weakened? That was precisely the case of the late dis-
turbance in the money system. At the critical moment,
when all its stores were required to maintain it against
foreign pressure, there came a demand for 3,000,0001. for
no really useful purpose, but solely in consequence of these
local issues of notes in Scotland and Ireland. The panic'
in the United States arose, extended to this country, and
where did the malaria first strike us? At our p'rts—at
Liverpool and Glasgow, where joint-stock banks soon
proved the unsoundness of their position. The cause of the
difficulties was to be found there, and unless some remedy
could be devised for it any attempt to deal with our mone-
tary laws would be utterly deceptive. There had grown
up in this country and had been rapidly developed within
the last 10 or 15 years a false system of credit and of hold-
ing deposits at call carrying interest, a system which had
grown to an enormous extent, and which was still grow-
ing, and if that evil was not corrected it would certainly
overturn our monetary system altogether. That was not
an isolated opinion of his own, for there was scarcely a
man of enlarged views and experience in the city of Lon-
don who did not entertain the same views. It was indis-
pensable that the attention of Parliament should be directed
to that subject. L-A them look at the difficulty in which
the country was placed, notwithstanding the relief sup-
posed to be afforded by an exceptionable dealing with the
Act of Parliament. He did not mean to say that the Govern-
ment ought not to have taken the step which they had, but
he did say that if the Act had been maintained only 24 hours
longer the whole of the vicious system to which he bad re-
ferred would have been got rid of by the crumbling to
atoms of the institutions which fostered it. (Hear.) Irre-
trievable ruin would have followed, and the commercial
atmosphere would have been cleared. But to prevent that
it was deemed necessary to] interfere, and to suspend the
operation of the Bank Act. By so doing they had antici-
pated the natural action and legitimate remedy for this
unwholesome system, and therefore had rendered it in-
cumbent upon Parliament to find some other remedy fur
the future. What that remedy should be he could not tell,
and he greatly feared that whatever it might be it would
only have the effect of creating a new disorder, and his
serious apprehension was that the very next monetary dis-
turbance would inevitably lead to a suspension of our specie
issue altogether. In 1847 the mere permission to issue ad-
ditional notes was sufficient without that permission being
made use of. The present was a crisis of greater magni-
tude; the evils were also greater, and the Bank had not only
been compelled to avail itself of the permission accorded
to it by the Government, but had actually exceeded its
legitimate issue by some 6,000,0001. or 7,000,00)1. ("No.")
Ho knew exactly what he said, and he maintained its ac-
curacy. The Bank had issued ;000 0001. beyond the fixed
amount without leaving any supply in the Bank till. Now,
the Bank of England was in that peculiar condition that it
ought to have a largo banking reserve, because it had a
large amount of balances of an ephemeral and uncertain
character. To place the Bank of England in a proper bank-
ing position in reference to the deposits it held would re-
quire an amount which justified him in saying that it had
exceeded its proper limits of issue by 6,000,000/.. or
7,000,0001. The next occasion of pressure upon the Bank
would probably occur before the exchanges were rectified,
and then the crisis would be greater than that which we
had shrunk from meeting upon the present occasion. There
were serious and formidable difficulties hanging over this
country, and in warning the house of them he desired to
call their earnest attention to them. It was a subject of
vast and national importance, and should be considered in
a candid spirit without regard to prejudices of any kind,
but with a determination to contribute to the adoption of
a plan which would best maintain the character and inte-
rests of the country. (Hear, hear.)
The Earl of EGLINTON coal .1 not perceive in what
degree a relaxing power, such as had just been exeacised
by the Government, could bo said to be incompatiole
with the Bank Charter Act. The late Sir Robert
Peel, in sketching out his plan for that act, expressly
stated that he thought there should be a relaxing power
vested in the Government, and surely, nothing could be
easier than to create such a power. ifee( Lord Eglinton)
was not one of those who- favoured free •trade in banking
and cntrancy, but he certainly conceived that the system
propounded by the noble lord who had just spoken was the
most opposed to free trade that could be devised. He con-
sidered the Bank Charter Act of 1844 in one respect as a
beneficial measure, inasmuch as it tended to place a re-
striction upon the business of banking ; but the amount of
circulation limited by that act was not sufficient for the
wants of the population at the present time. (Hear.) He
thought also it would be a wise measure to assimilate the
English system to that of Scotland by enabling the Bank
to issue 11. notes. (A laugh.) The noble lord had referred
to the drain -upon the Bank -of England by the Scotch
banks ; hot there was no ground of Complaint upon that
score. A senseless run for gold took place in Scot'and ; the
banks there did not ask the Banked England to assist them,
but they sold out stock which they held, and then went to
the Bank of England and asked for that gold which was
their own. The noble lord had spoken of the effects which
would have arisen from a maintenance of the Bank Charter
Act in the crumbling to pieces of all unsound institutions,
but he (Lord Eglinton) believed that had not that takenrelaxa-
tiono
however, that the t !eplactehinwethrEyeanmnii:ustAltiedhiaavwlelagsthe commercial establish-
ments
condi-
tion. Parliament was called on tiaok'nevnoutnwesaaaytllisifnalootartynhoictiloythfdotirl
relaxing that act, but they were not told for what time the
relaxatiognreer
tat3to endure. He had invited the house last
this subject, but
year to a
and he believe
aPeosition for a royal commission upon
then the existing evil unfortunately it did- not adopt his mo-
tion,that had that inquiry taken place
could' tell what events now about to enters would not have arisen. They were
upon a protracted inquiry, but no one
the next session of
Bank Charter Act woulc7
paerienight occur before the advent of
talent. He thought a repeal of the
renderhoped thatit
i itor wouldmore
conformable
t
e modified
jail
oc change ainug ea fmoratuhueewr otrhsuet, bwuotubl
would
Lord MONTEAGLE thouothatth.ethwaatnitfs hisand
ninterests e
friend
the whole nation.
opinion respecting the late actvoirigt propounded his own
who had spoken last but one
Government was
nevertheless prepared to give Cu unhesitating approval to
placed himself was certainly most positionextraorcr
the proposed Bill of Indemnity thewhich he
noble friend admitted that every suspension olinajey; Bank
Charter Act had not only weakened the act itself, but had
weakened it in a manner most damaging to the best inter-
ests of the country. The noble lord did not leave the
country without a remedy, but the application of that
remedy must have crumbled and crushed our prevent sys-
tem to atones, and would have stopped the Bank of Eng-
land, and ;he ruin and destruction of many of the best-
conducted and most respectable establishments in the
country would have followed. The Bank Act was de-
fended on the principle of being the perfection of free-
trade in money, but it was in fact a complete restriction
on all freedom. He objected to that act on the ground
that it applied one invariable rule to totally opposite and
distinct circumstances. ([leer, hear.) This he stated on
tne authority of Mr. Huakisson, a man second to none in
experience and wisdom. To establish a rule which would
act with the same stringency when the exchanges were
against us as when they were favourable was to run the
rick of seeing the Bank drained of its last penny. It was
not the amount of circulation only, but the activity of it,