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

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91 i

THE GOVERNMENT AND THE BANK Or

ENGLAND.

The following copies of correspondence between the
First Lord of the Treasury and the Chancellor of the
Excheqiier and the Bank of England re3peoting the
enlargement of their issues beyond the limit fixed by the
Bank Act of 1844 were laid upon the table of the Home
of Commons last night :

" Downing-street, Nov. 12.
" Gentlemen,—Her Majesty's Government have ob-
served with great concern the serious consequences which
have ensued from the recent failure of certain joint-stock
banks i❑ England, as well as of certain large mercantile
firms, chiefly connected with the American trade. The
discredit and distrust which have resulted from these
events, and the withdrawal of a large amount of the paper
circulation authorised by the existing Bank Acts, appear
to her Majesty's Government to render it necessary for
them to inform the directors of the Bank of England, that.
if they should be unable in the present emergency to meet.
the demands for discounts ad advances upon approved se-
curities without exceeding the limits of their circulation
prescribed by the Act of 1814, the Government will be
prepared to propose to Parliament upon its meeting a Bill
of Indemnity for any excess so issued.
"In order to prevent this temporary relaxation of the
law being extended b3yon,l the actual necessities of the
occasion, her Majesty's Government are of opinion that
the Bank terms of discount should not be reduced below
their present rate.
" Her Majesty's Government reserve for future °onside•
ration the appropriation of any profits which may aril.
upon issues in excess of the statutory amount.
" Her Majesty's Government are fully impressed with
the importance of maintaining the letter of the law, even
in a time of considerable mercantile difficulty; but they
believe that, for the removal of apprehensions which have
checked the course of monetary transactions, such a measure
as is now contemplated has become necessary, and they
rely upon the discretion and prudence of the directors for
confining its operation within the strict limits of the ext.
gencies of the case.--We have, &c.,

. -
" PALMERSTON.
" G. C. LEWIS.
"To the Governor and Deputy-Governor of the
Bank of England."

" Bank of England, Nov. 13.
" My Lord and Sir,—Having laid before the Court of
Directors the letter received from you yesterday with
respect to a further issue, if necessary, exceeding the
limits of the circulation prescribed by the Act of 1844,' we
have now the honour to inclose a copy of the resolution of
the Court thereupon.
"We have, &c., ,

" SHEFFIELD NEAVE.
" BONAMY DOBREE.
" To the Right Hon. Viscount Palmerstou, and the
Right Hon. Sir George Cornewall Lewis, Bart."

"At a Court of Directors at the Bank on Friday, the
13th of November, 1857 :
" Resolved,—That the Governors be requested to in•
form the First Lord of the Treasury and the Chancellor of
the Exchequer that the Court is prepared to act in confor-
mity with the letter addressed to them yesterday.
" ' JOHN BENTLEY, Secretary.'
" Downing-street, Nov. 27.
"Gentlemen,—ln our letter to you of the 2th inst. i'fo
informed you that if, in thp state of commercial discredit
and distrust which had arisen, the directors of the Bank of
England should be unable to meet the demands for dis-
counts and advances upon approved securities without ex-
ceeding the limits of their circulation prescribed by the
Act of 1814, the Government would be prepared to propose
to Parliament, upon its meeting, a Bill of Indemnity for
any excess so issued.

It appears from the return of the Bank of England for
the week ended Wednesday, the 18th of November, that
the directors had at that time issued from the issue de•
partment to the banking department 2,000,0 A/. of notee
on securities in excess of the limit fixed by law.
" As, therefore, the contingency contemplated for the
proposal of a Bill of Indemnity has occurred, and as the
session of Parliament is now at hand, we are desirous of
receiving from you such an explanation with respect to the
course which the directors have pursued in regulating their
issues of notes since the 12th inst. as they may be able to
furnish to us for the information of her Majesty's Goveru•.
moat. "We have, &c., _

."
PALMERSTON.
"G. C. LEWIS.
"The Governor and Deputy-Governor of the
Bank of England."

" " Bank of England, Dec. 2.
My Lord and Sir,—We have the honour to acknow-
ledge the receipt of your letter of the 27th inst., request-
ing s such an explanation with respect to the course which
the directors of the Bank of England have pursued in re-
galating their issues of notes since the 12th inst. as they
may be able to furnish for the inft,rmation of her Majesty's
Government'
" In complying with this wish it may be well to allude
to the position of the Bank of England accounts anterior
to the receipt of the letter of the 12th.
"On the 24th of October the bullion in the issue depart-
ment was 8,777,000/.; the reserve, 4,079,0001.; the notesin
the hands of the public, 19,76.i,000/. ; the discount and ad-
vances, 10,262,000/.; and the deposits, 16,126,0001.; the rate
of discount at the Bank being' 8 per cent, for bills having
not more than 95 days to run.
" In the following week a great shock of credit and a con-
sequent demand on the Bank of England for discounts arose
from the failure of the Liverpool Borough Bank, whose re-
discounted bills were largely held by the bill-brokers and
others in London. The effects of this and other failures,
however, up to this time, had not occasioned any alarming
pressure on the resources of the Bank, or great disquietude
in commercial affairs in London.
"On the sth of November the reserve was 2,914,0001.,
the bullion in the issue department 7,919,0001., and the
deposits 17,265,0001. The rate of discount was advanced
to 9 per cent., and on the 10th of Nov. to 10 per cont.
" The continental drain for gold hal eea'ed, the Ameri-
can demand had become unimportant, and there was at that
time little apprehension that the Bank issues would be in-
adequate to meet the necessities of commerce within the
legalised sphere of their circulation,
" Upon this state of things, however, supervened the
failure of the Western Bank of Scotland and the City of
Glasgow Bank, and a renewed discredit in Ireland, Causing
an increased action upon the English circulation by the
abstraction in four weeks of upwards of two millions of
gold to supply the wants of Scotland and Ireland ; of
which amounts more than one million was sent to Scot-
land and 280,0001. to Ireland between the sth and 12th of
November.
" This drain was in its nature sudden and irresistible,
and acted necessarily in diminution of the reserve, which
on the 11th had decreased to 1,462,0001.1 and the bullion
to 6,666,0001.
" The public became alarmed, large deposits accumu-
lated in the Bank :of England, money dealers having vast
sums lent to them upon call were themselves obliged to re-
sort to the Bank of England for increased supplies, and for
some days nearly the whole of the requirements of cont•
naerce were thrown on the Bank. Thus, on the 12th. it
discounted and advanced to the amount of 2,373,0°°11
which still left a reserve at night of 581,00.1.
" Such was the state of the Bank of England accounts on
the 12th, the day of the publication of the letter from the
Treasury. The demand for discounts and advances con-
tinned to increase till the 21st, when they reached
their
maximum of 21,616,000/.
" The public have also required a much larger quantal
of notes than usual at this season, the amount in their
hands having risen on the 21st to 21,554,0001.
" The Bank have
since the 12th under the authority of
the letter from the Treasury iseed 2,000,0001. of notes in
excess of the limits of the circulation prescribed by the
Act of 1841,,and have passed securities to the issue de-
partment to that amount.
s' That, however, is not the measure of the amount
actually parted with by the Bank, which has not exceeded
928,0001., the remainder of the 2,000,000/. having been re..
tained as a reserve of notes in the banking departments
which, at the same time, also held 407,0201. in coin.
We subjoin a statement of accounts from the 11th Nov.
to the 28th inclusive, from which it will be apparent that
the Bank continued to meet all the demands for discounts
and advances, on approved securities, to remedy the com-
mercial discredit and distress mentioned in your letter of
the 12th inst., sas occasioned by the recent failure of rar;
tain joint-stock banks in England and Scotland'asZtlealthe
of certain large mercantile firms chiefly connected
Am eaAmerican
traolefa'ragne djoaingt!satovcaktedbanbkys.the subsequent em-
barrassment
between and Doe. 1 amounted the
publicNov.ov.
" In discounts and advances, the sums sup.pnlied to the
N
aggre-
gate to 12,645 0001.
vernor.
BSIIIONEFAIIyELDDONBERAEVE,ED. Gepouvteyrn-Gor.
o
"To the Right Hon. the First Lord of the •
Treasury anti theßight Hon. the Chan-
cellor of the Exchequer."
JAMES WILSON.
Treasury Chambers, Dec. 3.

INVERNESS AND ABERDEEN JUNCTION RAILWAY.
This line from Nairn to Dalvey is expected to be opened
on or about the 9th of December.
ANTI-SLAVERY MEETING AT NEWCASTLE. —On Thurs
day night Mr. W. Craft held a public, meeting in the
Lecture-room, Newcastle. The chair was occupiel by
the Mayor. After Mr. Craft's lecture, which was lis-
tened to with much sympathy. Mr. John Mamma
moved, and the Rev. Thomas Rowland seconded, the
following resolution : —" That Mr. Craft and the Ameri.
can Anti-slavery Abolitionists deserve our warmest
support and sympathy, and that American slaveholding
d,mandd the condemnation of all men, especially of
those professing to be Christians and lovers of civil and
religious liberty."—Northern Daily Express.