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

IHE
,StflNT,' LONDON, SATURDA V EVENING, DECEMBER'

profession of faith on the part of the Government on this
11th day of December which did not exist at the end of last
session. Well, but oven if we admitted that We late com-
mereial crisis imposed upon the Government the duty of
declaring a policy, I could not admit that it affords any
reason for an immediate alteration of the act of 1i44. I
can comprehend the arguments of those who object to the
act of 1841 upon general grounds. I understand the argu-
ments of Mr. Newmarch and Mr. Tooke, who say,—" We
rely simply upon the convertibility of a note against the
stopping of the Bank; but no such security can be obtained
except as a security against over issues of paper." No doubt
there are arguments of considerable weight to be urged in
support of that view; and, in fact, unless such arguments
could be urged, I need scarcely say that men of such emi-
nence as Mr. Tooke and others who agree with him would
not adhere so stedfastly to it. They are not men to be de-
luded by shallow fallacies, or to found a theory upon a
very narrow induction of facts. There is something un-
doubtedly to be advanced by those who say we are to
carry the principle of free trade to its fullest extent, and
to have a free currency—(loud cheers)—we rely exclusively
upon the convertibility of the note, and we will not ask for
any limitation made by an act of Parliament. I do not
myself agree in that view, but I mention it as a view which
is entertained by parsons entitled to the highest respect
from their ability and knowledge of the subject. That view
is capable of being supported by arguments of considerable
weight; but such arguments are in no way applicable to a
commercial crisis, nor are they in any way strengthened
by the occurrence of a commercial crisis. (Hear, hear.)
Their view goes to the very root and foundation of the Act
of 1841. It is an objection, not to the failure of that Act
under circumstances of extraordinary pressure, but to its
mai:aridness in times of ordinary operation. (Hear, hear.)
Therefore I cannot for a moment admit that the occurrence
of an extraordinary crisis, in which all the ordinary laws
with regard to the currency must be considered as sus-
pended, affords any ground to call upon us to legislate
upon the subject of the currency. Take, for instance, the
obvious case of the policy of the Habeas Corpus Act, or
protection against unwarrantable imprisonment. We all
know there have been periods of great disturbance—times
when there has existed a state of things approaching to
anarchy, in which the greatest sticklers for constitutional
forms would admit that the suspension of the Habeas Corpus
Act was a less evil than its enforcement. But I will refer
to a case of the presentday, about which, no doubt, gentle-
men in this house will be divided. I mean the suspension
of the freedom of the press in India. lam not now going
to argue that question ; but everybody will see that there
may conceivably be reasons to justify the measure of Lord
Canning during the existence of a military mutiny thathas
nearly become a general revolt, which might not in bias
smallest degree justify such a step in the ordinary state of
India. Therefore I cannot for a moment admit that, be-
cause we have passed through a commercialcrisis—because
that commercial crisis may have rendered it necessary
to suspend the Act of 1844, that circumstance affords
any ground for the appeal made by the right honourable
gentleman to the Government to bring forward now
legislation on the subject of the currency. There
appears to me toy be an excessive disposition to expect
benefit from legislation at a period of commercial crisis.
There is no time, in myopinion, when it is more incumbent
on a prudent Legislature to be upon their guar ,t in respect
to legislation on commercial matters than at a moment of
that sort. (Hear. hear.) During a commercial crisis the
executive Government may perhaps be able to do some-
thing ; but I believe it will in general be found that the
Legislature are comparatively powerless (hear, hear)
and that they must wait the return of a more normal state
of things before they can apply any remedies with effect.
No error in legislation, it seems to be, can be greater thin
that of supposing that it is in the power of Parliament *to
devise some sudden panacea for the evils engendered by
commercial discredit—(hear)—or that such a period as that
which, we have just pass d through constitutes any ground
for calling upon the Government to come forward with
some cede of laws to regulate- our currency and place it
upon a new foundation. Least of all can I admit thatthat
demand is in any way justified when no distinct and precise
proposition is submitted to the house; and when a mere
vague and general appeal is made to the Executive. unac-
companied by any statement of the remedies which it
might be expedient to a !opt. Supposing, according to the
phrase of the Scotch laws, we descend from these lofty
considerations and condescend to enter upon particulars—
(a laugh)—it will naturally occur to the house to inquire
what specific alterations of the law would suggest them-
selves for consideration at the present time, independently
of that other change of system which I have described
as the development of the Act of 1818. The question
is whether there. should be a relaxing power engrafted
upon the Act, to be called into activity at moments of
oommercial crisis. The plan which seems to have been
ultimately acquiesced in after the debates of 1)47 was
that the matter should be left to the discretion of
the Executive Government, to be exercised in cases of
emergency. Now, the power of relaxing the legislative
limit might either be vested in the executive .Govern-
went, or, as has also been suggested, in the directors
of the Bank of England. As to the latter alternative, it
really seems to me that to impose certa;n restrictions upon
the Bank of England, and at the same time to give them
the power of dispensing with those restrictions, is almost
equivalent to making no law at all. (Hear, hear.) Teere-
fore, if there is to be a relaxing power, we aro driven, I
think, by the necessity of the case to vest it in the execu-
tive Government. The course recommended by the com-
mittee of the House of Lords which reported on this sub-
ject in 1818, after the inquiry consequent upon the com-
mercial distress of the previous year, was described in
these words : --
" To leave these cases when they do arise to be dealt with
by the irregular exercise of the mere authority of the Crown
and its advisers, setting aside once in five or six years,' or
even at periods more remote, the express provisions of a dis-
tinct statute, appears wholly inconsistent with that fixity and
order which it is or ought to be thembject of all law to secure.

" The committee are of opinion that the principle on which
be act of 1844 should be amended is the introduction of a

discretionary relaxing power ; such power, in whomsoever
vested, to be exercised only daring the existence of a favour-

able foreign exchange." -
Stich was the conclusion of the committee of the Upper

Honge.

Tho committee of the HOUBO of Commons came to

a directly opposite conclusion. They say—
" Your committee havehad under their consideration whe-
, her it is advisable that powers should be conferred by law

upon the Government to enable them to meet the occurrence
of a,,y circumstances which,may call for extraordinary inter-
ference ; but they have come to the conclusion that, looking
to the impossibility of foreseeing what the precise character
of the circumstances may be, and also what may bo the mea-
sure best calculated to meet them, it is more expedient to
leave to those with whom the responsibility of the Govern-
ment m'iy rest at the timo to adopt such measures as may
appear to them best suited for the emergency."
I will now trouble the house with the opinions of two very
eminent witnesses on this subject. The one is Mr. Hubbard,
who, when examined before the select committee on tho
Bank Acts in June last, gave the following evidence :
" At present it is the established practice of the Govern-
men. not in way to interfere to control the discretion of the
directors with regard to the management of the Bank I—Not

at all, -
Assuming that this is the rulg, and also assuming that
it is conceivable that some extraordinary circumstances
might arise in which it might be desirable for the Govern-

ment to release the Bank from the restrictions that are im-
posed upon it by the Act of 1844. would you prefer that the
Government should interfere upon their own responsibility,

as they did in 1847, or that the power of interfering in cer-
tain cases should be conferred upon them by Act of Perna-

meat ?—I think that to introduce any provision to meet a
contingency would be highly undesirable, because it would
have the effect of detracting from the moral influence which

the Bank Act now has in enforcing the prudent conduct of
all banking and commercial operations.
" Therefore, with r spect to the question of power being
given to the Government to interfere in extraordinary cas s,
you would rather that the law should remain iu its present
state 7 If any events were to occur, from whatever cau9e,

which suspended the whole action of credit throughout the
country, the Ministers of the day would, no doubt, held it
to bo their duty to apply some immediate and powerful
remedy ; but I think it undesirable to enter upon the contem-
plation of events which in the ordinary course of things are
not likely to occur, and the entertaining of whiejr can only, I
think, be detrimental totho proper e:ongideration of the Bank
itself.
" Does it not appear to you that such a crisis, if it ever
were to occur, would be of so extraordinary a nature that it
almost lies out of the domain of the law to provide for it
Exactly so."
Therefore Mr. Hubbard's opinion is in favour of leaving the
law in its present state. The next witness whom I shall
quote is Lord Overstene, but I am afraid that I am weary-
ipg the house with extracts. [" No, no."] In the evidence
given by that high authority before the committee of the
House of Lords in 1818 he is asked :
" Assinning that the Act of 1844 is to continue to be the
law of the land, and assuming that it is necessary that a dis•
cretion should from time to time be exercised, under possible
circumstances, to suspend the action of that law, in which
way aro you of opinion that that discretion can be moat safely
lodged, with the view to insure as little as possible a depar-
ture froni this statute ?"
Lord Overstone replies :
" I think it important to render a recourse to the suspend-
ing power extremely difficult, and such as will be resorted to
only under the last and 'most extreme necessity. I think
that by leaving the Government. to do it upon its own re-
sponsibility, and as a violatioh of au existing Act of Parlia-
ment, we obtain a better protection against the too easy and
ready an exercise of the power than by lodging the discretion
with aniether

" At what period of
pressure do things not become amen-
able to principle? —When the actual conduct of parties be-
comes suh that you cannot bring it under the test of any
ordinary principle. When people act, not from any rea on-
able motive,
their cobnudtuuctn
There appears, under
asntohte
eaubleinuclablionflouepnrienecoipflep.ranie, I con-
sideranswer—(hear ; but it marks with tolerable distinct-
ness the circumstances under which the noble lord thinks
the Act.of 1844 ought to b 3 departed from. Lord Over-
stone is next asked
" Do net you think that if the discretion is only to bo ex-
ercised under circumstances so extraordinary, it is almost
impossible to anticipate them by legisla, ioul—The circum-
stances under which it would be necessary to exercise the
discretion cannot be defined beforehand. There is also this
difficulty—the very
knowledge that such a measure may be
resorted to tends to check the introduction of the natural
and proper correctives, Therefore, though you cannot alto-
gether get_over the diffieulty, I think it is obvious that the
true policy is to do nothing that shall in any way whatever
strengthen the feeling in the public mind that under pres-
sure they will have this relaxation ; for in proportion as they
anticipate it, in the same degree they will abstain from the
proper And natural correctives ; and to whatever degree they
abstain from resorting to those; in the same degree the ulti-
mate pressure w ll be augmented."
These opinions aro in favour of not interfering with the
existing law. Now, perhaps, I may b 3 permitted shortly
to express my own opinions, intimated as they have boon
on a previous occasion to the house. I confess that, look-
ing at the precedent of 1817, and having regard also to the
manner in which this house has agraod to the Indemnity
Bill lately pas;cd, I do not believe that if any commercial
crisis flionld hereaiter occur any great practical differ ~nee
will exist in,the f6si tion- of a Government between their
vie x of the effect of these two pecedents and the conduct
winch tliey would pursue if they had legislative authority
to suspend the act but were called upon to assemble Par-
liament within a fortnight or throe weeks after exorcising
that authority. If the suspendin ©sewer were, as it ought
to be, treated as one proper to beised only on extra•
stwwoyebtatf ifs
tht :at s
mould
upirdanctoiteabl
,3d terry-
te,nriclienbareytwoececnatime
iniTterrtsanret4 asla ythelync.,liionau.ttioAswenotu.ld,(atheearre)foreA,tbtehetsaaraleet
ttlionue
a,
hi ft iatnwuenree
otuhset
igtetintei
or general
xe rshfi s
ipaotuweenrt part
onPet
thifit warn
of the Executive to suspen.l the law, and then afterwards
to corne for atiindetnnity—altnottah I cnnfess it seems to
lie that the passing of an Indemnity Bill condones what-
ever constitutional offence may havo boon committed —if

that view should prevail, I should feel no insuperable ob-
jection to the adoption of such a coarse. At the same
time, as far as my Wan opinion is concerned, I see no rea-
son for disturbing the present state of things. Then there
is another remedy which may be resorted to in extraordi-
nary cases, which has sometimes been resorted to in periods
of commercial distress, and which I have heard suggested
as a substitute for a temporary suspension of the Bank
Act. I mean an issue of commercial Exchequer-bills. Of
course, if Parliament were sitting, end such a remedy were
thought advisable, it would be in the power of the execu-
tive Government for the time being to ask Parliament for
a power of issuing such Exchequer-bills, and of lending
them to firms which might be in temporary difficulties.
But let me observe that Exchequer-bills are not money—
they are securities—(hear)—and that what houses in
difficulty require at a moment of commercial crisis is
money itself, and not merely securities. (Hear, hear.)
Therefore, although commercial Exchequer-bills would be
of some advantage, nevertheless they are not the moat con-
venient or appropriate remedy for the evil. Well, but then
it has been suggested to me that, instead of the Bank
making over-issues beyond those which the law authorises
at a period of this sort, a power might be vested in the
Government on such an occasion to issue Treasury notes
in the nature of bank notes. and being a legal tender.
That, it is said, would be doing by authority what has
been done, as it were, surreptitiously and under a cloak by
the letter recently written to the Bank. I have heard that
suggestion from a gentleman -whose name would, I am
sure, command great respect if I mentioned it to the house;
but it seems to mo to be open to this objection should
be sorry to authorise the Government by Act of Parlia-
ment to issue inconvertible notes. (Hear.) If these notes
were peyable on demand it is clear that the Government
at a moment of crisis has got no gold. It possesses no
means of paying notes on demand, and therefore the only
way by which it could discharge its obligations would be
to place itself in the hands of the Bank and say, "Be
good enough to allow our notes to be presented to you, and
we will borrow the use of your bullion, and will pay you
a certain price for the notes which you may be called upon
to cash." Knowing the disposition of the Bank to do
everything by which they can promote the public service,
I say that an arrangement of that sort might be effected if
the Bank reserve of bullion would admit of it. At the
same time it appears to me that the difference between
that state of things and what has actually taken place
would be iu name rather than in reality—(loud cries of
" Hear") ; because if these over-issued notes, called Trea-
sury notes, wore payable at the Bank of England with
their bullion reserve, I dc' not see what we should gain by
calling them Treasury notes. It would be batter to do as
we have done—authorise the Bank to increase their note
circulation. (Hear, hear.) If, therefore, the appeal for
another currency policy and for some grand scheme of
legislation is founded upon any notion of that sort. I can-
not admit that any great public benefit would arise from
it. (Hear, hear.) Then we come to the question of the
enlargement of the limit of 14,500,0001., or, as is some-
times proposed, the substitution of either 16,000,0001. or a
larger number of millions of notes to be issued by the Go-
ose nment in place of the credit notes of the Bank of Eng-
land; and it is alleged that in that manner, if the quan-
tity were sufficiently increased, the difficulties now expe-
rienced in times of commercial panic might be removed.
This plan of making a large issue of inconvertible notes
was brought by several witnesses before the attention of
the committee of last session ; and on a former occasion I
happened, erroneously as it seems, to ascribe to my hon.
friend the member for Warwickshire (Sir. Spooner) the
opinion that he was in favour of inconvertible notev. Now
ho altogether disavowed that opinion, and there is no mem-
ber of this house whose opinion I should be so unwilling
to misrepresent as his. I think, however, he will admit
that my error was not an unnatural ones when I recall his
attention to the evidence given before the committee of
last session by one of the witnesses (Mr. Twells), who, as
I understand, represented the opinions of my hon. friend.
This is the last. extract with which I shall trouble the
house, but it contains opinions altogether different from
those which I have previously adduced, and I therefore
feel it is but fair that I should give an example of witnesses
of all classes of opinions who were examined before that
committee. Now, these are Mr. Twells' opinions with
respect to the policy of enabling either the Bank of Eng-
land or the. Government to issue 20,000,0001. instead of
14,500,000/. of, bank notes of the character which he de-
scribes in his answers. In order to avoid the possibility
..f misrepresenting my hon. friend's opieions, I desire, if
the house will allow me, to quote Mr. Twells' answers in
his own words. Ho is asked :
" You recommend the issue of 20,000,0001. of bank notes
not payable in gold on demand, but receivable by the Govern-
ment in payment of taxes ? —Yes.
"Of course it would be necessary to omit the words, I
promise to pay,' because the e notes would not, in fact, be
promises to pay on demand ?—QUite so.
(A laugh.)
" Do you think that that currency would run the risk of
ever being depreciated in value--that is to s ty, that incon-
vertible 51. notes would n exchange for fivo sovereigns I
I do not know as compared w;th sovereigns ; that, I think, is
of no consequence in-the world." (Laughter.) "We want it
for our internal commerce, and we want it to pay Govern-
ment their taxes.
(Laughter.)
"I thought you said you could conceive that it might hap-
pen that under the system which you recominetcl the Si. note
would. not exchange for five sovereigns ?—That I think is not
material. A bank-note, I conceive, is convertible into every-
thing. If you wanted to convert it into gold, you would go
to a bullion merchant, and he would give you the market
value ie gold, as he would in any other commodity ; it might
be more or it might be less tLan five sovereigns."
The house will see that this is rather an interesting ques-
tion to those who have the collection of revenue, if the
notes should not be exchangeable for five sovereigns.
(Hear, hear.) Then the witness is asked—
" What do you conceive to bo the advantage of making
those inconvertible notes received in payment of taxes?—The
advantage is, that it keeps them at a steady price. I go by
experience, and I am looking at the 20 years when eVe had
no gold.
" If you make these notes receivable in payment of taxes,
is not that a violation of the principle of inconvertibility?—
No, I conceive not.
" You compel- the Government to take ono of these 51.
notes for a tuns or five sovereigns, do you not? —For five
pounds." (A laugh.) "If the; tax ma they do not say, We
require you to pay five sovereigns, but five pounds. It is a
term of account, and I give them five pounds.
(Renewed laughter.)
"Then you think that a pound is something independent
of the value of the gold which it represents ?—Quito ; we had
the term pound' in account when we had nothing to repre-
sent it ; it is only recently that we have had the sovereign,
which represents the pound.
" Do you think that a pound then meant a piece of paper
with c ertaiu words priuted upon it? —lt had a superscription,
which ave it a value in the country payable for all taxes.
" Then your view of a pound is that it is something quite
independent of any value in metal ?—ln gold ; as completely
now as it gas in the early part of my experience.
" And you think it desirable that a currency shoukl be
estaledshed. upon that principle ?"
Now here is the important point. His answer was—
" I would have it established upon that principle ; but, as
I have stated, it' there can be any amendment suggested it
will be very desirable."
(Laughter.) I think, bearing that evidence in mind, the
house must see that my error in supporting my hon. friend
to be in favour of an inconvertible currency was not an
unnatural one ; but of course I don't dispute the accuracy
of the statement he has since made. If, however, we do
lays
eowned lest inoent ofte ibeemTawdeel ltsh-e- iffe the
md
ap
trii
enn-
icmheetltahe goof vDereneemenhteirs,
perhaps it may be
eniopti
ea iwl ohpite
ht hheer e co
oc
as
should
loltuehtlled onnbOw3t oacdpuoirepert,eleildccse iulneeglitil,silifasotcriiolernxraewnmhtp
mid that a moriee,liamaitethdepiraosepeosiptieorn.
milted under the Act of 1814 should be increased by a
million or two, or something of that sea. Now, I admit
that there is nothing in the principle of the Act of 1844
which was fixed on grounds repeatedly
1w41:
sroeoql.o i r
(Hearth.)
a.
)t T theher e
is
ee amountm should
magic
elkknow
wbe
of ch atcht
aly
yt
particular amount,
fsrtaietnetallyattethtehetipuirie ;
he
I
amount more than 14,030,000/. (Hear.) ahyatsius'ag mattertmhaayt
faiTrplersou,
ewihtoanis
iapil led o haed mAictt
would be d
an alteration
for the consideration of the house but Iwhiceohnfmesasey gen-
tlemen doubt extremely whether the advantage
anticipate from such
•001,
r), repro-
in w
are two objectsin view. One is from that se
Yfr• SPoone
I must not number my lion. friend ( •
rived from it. So far as I understand the matter, there
sented by Mr. Twells. They consider that Itvheestiamg
thatpe
country and increases the wealth of the nation ; letoatulbege-
'mentation of the paper currency is an rr
iandcdr e2a,soiotiog,ot
oe limitte the
hoef
aßank
nits
ee uf ens
t2e,aooioe,Ot
hooe hands
/ .yon wky
of o wooly
public. That I take to be an entire delusion. ([!sari) Ido
not believe that the Bank of England would induce tpublic to use more notes than they do at present, and if e
thele
power were given, unless some stronger occasion than we
have yet :witnessed were to occur the present number of not es
in the hands of the public would not be increased. But it is
said the Bank of England would have a larger reserve in
the banking department, and that in a moment of crisis the
necessity for resorting to extraordinary measures ore the
part of the executive Government would be avoided. It
would not be avoided, however, if the Bank of England
diminished its bullion reserve in proportion to its increased
power of issuing notes, which it would have an undoubted
right to do. (Hear.) The Bank would have a right to
keep 2,000,0001. less of bullion in reserve, and the only
difference would be that there would be. 2,000,000/. of
notes issued on securities instead of upon that amount of
bullion ; and the banking reserve when a crisis arrived
would be exactly what it would have been if such an
arratigemeut had not existed. (Hear.) But the strength
and resources of the Bank would be less, for the bullion
on which its strength rests would be 2 030,0001. less than
before. If the Bank were to act in that state of the law
exactly in the same manner as it did in the present state
of the law, then, undoubtedly, on the occurrence of a com-
mercial crisis its bullion would be the same, and it would
have 2,000,0091. more to work with; but we are not
entitled to reason on a state of things so uncertain ; it
would be hazardous to form any expectations of that kind,
and therefore I am not in favour of altering the amount
specified in the Act of 1844, though it is is fair question
for the consideration of the House and the committee
which I propose we should appoint. There is another
question which may be very properly considered at the
present time, and that is whether it would be expedient
to require some additional guarantee for the issues of coun-
try banks in England and of the Scotch and Irish issues.
This subject hes been imperfectly investigated by the select
committee of last session, and therefore when the pro-
posed committee comes to the subject of the condition of
issues it will be one deserving of their consideration. An-
other point is whether Bank of England notes shall not be
made a legal tender in Ireland and Scotland. The circum-
stances out of which the present law has grown were
fully and accurately stated by a noble lord in another
place in the course of yesterday. He stated that the
original enactment by which the B ink of England
note was mate a legal tender included both Ire-
land awl Scotland ; but, inasmuch as doubts arose
as to the construction of the Act, it was held
to be confined to England, awl in 1845 an express
enactment was passed by which the operation of the
clause relating to legal tender was limited to England.
(Hear, hear.) It seems to me that no good reason can be
allegejl why that clause should not be modified, and why,
we shoul I not revert to what seems to have b ten the de-
sign and intention of the original enactment. (Hear,
hear.) There is another question, too, which ban been
raised by tho bun. member for Dublin (hr. 'Vance), and
that is whether it would not be proper that in Ireland the
notes of the Bank of Is eland should be made a legal tender.
That seems to me a fit subject also for the consideration of
the committee. I have been forced most reluctantly, after
the indulgence which the house showed me last week, to
trespass at considerable length upon their time. I have
seen the interest that the general question has excited, and
having necessarily paid much attention to it, I thought it
my duty to state my views thus fully to the house.
(Cheers.) It appears to me that if the house should adopt
the motion that I have made, accomp micel with en in-
structibn to inquire into the ca, sea of the commercial dis-
tress—if they appoint a committee that will follow up the

' inquiry of last session and report on the general principle
of the Act of 1814, which will investigate the subject of
provincial issutisin England, and also in. Ireland ani Scot-
land, and which- will, so far as they think it expedient,
illustrate the general operation of the Act of 1341, and so
far as they can report on the causes of the recent commer-
cial crisis, they will make the best provision for legislation
that this house can possess, and, the exigencies that called
for the Indemnity Act having passed awaY, they will have
done all that the circumstances arising out of the late crisis
required. (Cheers.) The right hon. gentleman then
moved that a select committee be appointed to inquire into
the operation of the Bank Act of 1344 (lth and Bth of
Victoria, cap. 32), and of the Bank Acts fur Ireland and
Scotland of 1815 (Bth and 9th of Victoria, caps. 37 and
38).
Mr. DISRAELI—It seems to me that the arguments of
the Chancellor of the Exchequer rest upon a rather incon-
sistent basis. The right hon, gentleman rises and acknow-
ledges, without any qualification, that it was his opinion
that the present commercial distress originated in a
disturbance of capital and credit. Why, then, says the
right honourable gentleman, is our attention attracted to
the question of currency ? Ono would have supposed that
the right hon. gentleman had forgotten for the moment
the circumstances under which Parliament W3B assembled,
and the reasons for our meeting at this inconvenient time
of the year. If currency has nothing to do with this ques-
tion, why did the right hon. gentleman'and his colleagues
violate that law which regulates the circulation of bank
notes? And therefore if the right hon. gentleman tells us
to-night that he cannot understand the reason why criti-
cism is offered, Ican only suppose that while he was speak-
ing he had forgotten the cause of the present session of
Parliament. Considering what the cause is, and that the
country finding itself-, not in 'a state of distress, but of ab-
solute convulsion—considering that the state of the com-
mercial world was adverted to from the Throne, and that
that conameicial state has already operated upon our
manufacturing districts, and that the Government, in con-
sequence of the state of affairs; have recommended the di-
rectors of the Bank of England to violate the law which
regulates the circulation of bank notes, I can scarcely sup-
pose that there is any member of this house who does not
imagine that it is the first duty of Parliament to express
some opinion upon such important events. It seems how-
ever that we have been called together merely to consider
the indemnity bill, but not to express any opinion aseto
what has taken place, or sugeest any remodia. measures.
I cousiderthat to pursue such a course would not bo to the
honour of Parliament. I anticipated from the first day of
our mee ides that there would, beet discussion upon the
subject ; and if I avoided mixing up this question with
the debate on the iudenanity bill, it was because the house
thought that it would be more convenient to keep the two
portunity would be afforded to consider this question. I
subjects separate, ant upon the understanding that an op•
wish the house to understand in answer to a remark which
has fallen from the right hon. gentleman, that he seems to
misconceive some of my observations the other night. He
supposes that I or some one else made an attack upon the
evidence taken before the committee of last session, of
which, be it remembered, I was myself a member. The
that committee
hon, gentleman says that the evidence taken before
committee is' not inferior to that taken before any
other committee, notwithstanding that it has been spoken
of in terms of derision. The right hon. gentleman,
if he had sat on former committees on which I have sat
before he became a memb. r of this house, and whose evi-
dence was of a very valuable character, would have still
found the evidence of the last committee not inferior to
that of any former committee on the same subject; but what
I would especially urge is, that we have in the evidence of
the last committee the same witnesses, the acme informa-
tion, the same facts, and the same arguments that we had
in the evidence of the committee upon commercial distress.
(Hear.). Let him understand that so for as I am concerned
I greatly appreciate the evidence of the committee. It is
because that evidence is most valuable, and has exhausted
the entire subject, that I think any further inquiry unne-
cessary. He says that the committee, at the conclusion of
the session, presented their report, and recommended that
they should be reappointed this session. lam not answer-
able for their having done so. I was not present when that
resolution was come to I will not, however, avail myself
of that excuse. The right hon. gent/truest' will not however.
Pretend that what has since occurred in the commercial
world—if I may use so confined a terme-does not justify
any gentleman, who at the end of the last session was wil-
ling to listen to other witnesses going over the same ground,
in now asking for legislation. He will not, lam sure,
maintain that the events which have occurred' during the
recess may not fully justify any gentleman in now coming
to a conclusion that is is a aubject which requires no further
investigation, but an immediate and distinct dotermins-
Lion. I cannot understand why he is in favour of the re-
appointment of the committee. So far as I could follow
him, he seems to have made up his mind upon every subject
connected with the question of circulation which can pos-
sibly be offered for the consideration of a committee.
([Tear.) On ono point, however, he has not satisfied me.
He will, he say e, leave the law as it now stands ; but how
will he restore it to its moral influence? He cannot forget
that it has been twice violated, and that consequently
people now I.ok upon it WI an obsolete law, and no
human boilsg believes that it can bo carried into general
practice. The right hon. gentleman must know as well
as ao.y other gentleman in his house that the Dimwit
a law loses that moral influents which all laws ought
to possess, that moment it becomes, to all intents and
purposes, is dead letter. It is the duty of the house, I con-
ceive, to arrive at some definite conclusion upon the matter,
and when I am told that by the amendment which I have
brought forward I delay inquiry, and am not prepared to
enter upon legislation, I say that my amendment is, in
every sense, a proper and sufficient motion, and the only
motion that can b 3 made and which puts the house inn
clear and intelligible position. What I want the house to
agree to ia, that wo will not stop future legislation, which
we do if we ask for future inquiry. I would-induce the
house to say that we will not now appoint a committee, to
be stopped from expressing our-Opinions upon the question
of currency when Government meets again after Christ-
mas, for every cno knows that it will then be impossible
for any one but a member of the ,Crown to bring in a bill
relating to it. It is, however, in the power of the house to
come to a practicable course, and prevent us when we
meet agaiu on the 4th of February from having our mouths
padlocked on this question, and an obstacle thrown in the
way of any party or any combination of men who may
wish to commence immediate legislation upon it. I wish
the house to remember what has occurred in the commer-
cial world within the last few months. I remember the
commercial crisis of 1847, and I was here when the commer-
cial convulsion of 1837 took place, and I have read, as you
all know, what happened in 1825 ; but there has been
nothing in those periods of commercial distress to at all
resemble in force and extent of circulation the distresses
of the last few months. In 1825 there was a great deal of
overtreeling, and speculation was excited by the fact that
then, for the first time, commercial relations with. the
Spanish States of South America became open to us In
1837 we had extended commercial relations with the United
States of America. Iu 1847 we hid a famine coincident
with an extended investment of capital in public works.
But on all these occasions, great as has been the suffering
—great as has been the distress and commercial convulsion
—you could place
your fine
had a share in bringing ter on one or two causes which
them about. What do we find
now ? We have a disturbance of credit, not limited to
England or to some foreign countries, but, in a manner,
general. You have suspension in the United States of
America ; you now have a commercial republic tran-
sacting its business upon the basis of a metallic currency,
pe, and in some portions
iu a state of bankruptcy. There is no country in which
credit is not more or less prostrate. It is prostrate in the
Baltic States. The tam Larne is the case in Spain, in the south
of Germany, in the centre of Euro
of the north of Germany. In 1817 there was a document
published from which he gathered that the failures which
took plice between August and the end of November
amounted to 7,000,0001. The other evening it was my
painful duty to call the attention of the house to the list of
failures which have taken lace during the
present crisis,
and I aria • pry to say that sepveral other houses may now be
ad !est to the black catalogue. These failures amount to
the sum of 45,C00,000/. This is a sum much more than
double the failures 'which oecurred in 1817. Under these
circumstances, it seems to me that it is the duty of Parlia-
ment to inquire Into the causes of this strange convulsion
—(hear, bear, -from the Ministerial benches) --ant if the
right hon. gentleman had come forward and appointed a
committee to inquire into the causes of commercial dis-
trsss alone, I would support him in doing so;'. but when I
find a committee appointed to inquire into commercial
distress, and as to how far it has been occasioned by the
circulation of bank notes, I know by
experience what is in
store for us. In 1847 the Chancellor of the Exchequer
proposed a committee to inquire into the commercial dis-
tress which then existed, and into the effect which the cir-
culation of bank notes had in producing it. What hap-
pened ? For days
did that committee sit, and its pro-
ceedings were a mere jumble of opinions upon the currency.
It was, in fact, a currency committee, and it diverted the
attention of the house from the consideration of the Act
of 184 t, and the consequence has been that you have had
that set in use for the last 10 years without the slightest
amendment; and if we now act in the same manner, the
great probability is that when another crisis may occur,
and we may not have to wait atenther decennial period for
it, produced and aggravated by:the same cause, we shall
not find ourselves more advanced than we were in 1817 ;
and the only romedy will be the same as that now proposed
—the appointment of a committee to ascertain what por-
tion of the distresshas been produced by the circulation of
bank notes. I shall endeavour to explain what are, in my
mind, the causes of the late commercial convulsion, and I
shall be glad if those gentlemen who are to follow me
it to a select committee. I take, then, as the
(I)lfike the present than by
may fall, as I think the
obtaining information
egncia2ugse of the disturbance of public credit the recent
houseon willthc cheroot
hasrsrte bc
ajt any yf
muchreor
mrbo
batter
at intotde
ri
sthan;eus whichso
en
metals. I take 1851 as
timea
instance
hadr
railroads
the culminating point of our prosperity. We had then the
enormous amount of 22,000,0001, of bullion, Irate of
Ow
interest, not more than 2 per cent. ; and this circumstance
was not peculiar to England, because the same prevailed in
;gr°rniemaßit discoveries of the precious
every great country. It prevailed also in America,
although acted. upon much earlier than other countries
had been by the discovery of gold in California: Since 1843
we have had imported into this country the enormous sum
of 190,0001. of gold. What was the consequence of all this ?
lormoaedsw
change was to take place in the value of money, and an op-
portunity idea that the
fitthsetst
portunitv afforded by increased capital of executing public
works. e a
Europe. France, lied ouly one or two extremely
There. was anh
necessary lines, executed those great lines of railway in
hthenroaugghroesutt
the centre end south of France. She did more ; she exe-
cuted public works and raised public buildings which
neither Louis XIV. nor the First Napoleon, whatever
their will might have been, were able to execute. She
raised new palaces. Public works on a still more extensive
scale were carried on in the centre and South of Europe.
In short, there was scarcely any country, either in Europe
or America, in which there was not a Government invest-
ment of capital in this way, Upon these immense invest-
ments there was a superstructure of. speculation in the
shares of those compames— the necessary consequence of
the first investment. A new claess of houses and of mono-
tery institutions was established, in order to collect the
savings and superfluous cash, and invest them in these nri-
,iertakinv. That was the time when the Credit Mobiliur
was established, which pushed on affiliated institutions
iu every city in Europe. We criticised those institutions,
we impugned the principles on which they were founded,
we expressed suspicion concerning the dividends they
paid, we have denounced their investments of capital
and their advances as unscrupulous, reckless, improvi-
dent, and uupeincipletl. (Hear, hear.) But what
has more recently occurred in this country shows that,
whilst we pointed out the mote in our neighbem's eye, we
were not sufficiently conscious that our own condition was
even more emberraesing. These (ler-
perhaps
takings stimulated consumption, and this great stimulus
to consumption increased the price of all produce. Gamb-
-I;ng arose just the same in shares in public works
as in produce; in which there was so extraordinary a rise

las seemed to astonish the world. This oral attributed in
part to the increase in our metallic treaseeres. The conse-
quence of all this was speculation, reckless investments,
and overtrading, which year after year increased. Year
after year those engagements wore carried on throughout
the world by the application of capital and the continua-
tion of credit to au extent never before equalled. Only
three days ago I saw an instance which appeared to me
remarkable of the manner in which credit was applied,
but was told that it was by no means an uncommon in-
stance. A merchant in New York drew upon a merchant
in Hamburg. The latter declined to receive the bills un-
less the invoice was sent. What was the invoice ? The
invoice was for a cargo of wheat from San Fernando, in
California, to be despatehed to Melbourne. Well, the
merchant at Hamburg accepted the bills, and the moment
he accepted the bills he drew upon the merchant in Lon-
don who accepted his bills, and converting those bills into
capital, took up the bills which the merchant drew from
America. The result was that the merchant in London
supplied the capital for this commercial speculation of
California to Melbourne, although totally ignorant of all
the circumstances of thertransaction, the solvency of the
parties, or the value of the cargo. Now, why had such
trading as this gone on to such an extent, and for such a
duration ? I will show you the cause. For the last three
years we have been on the eve of a great crash ; but when
the exchanges were turning, and the accommodation becom-
ing confined—when a crash was at hand, and mon were
looking about in alarm, there arrived those golden galleons
from Australia—those rich argosies from California—
which, throwing an immense heap of treasureupontho mar-
ket, averted the suffering which was imminent. But things
went on, and it was no longer in the power of 20 or 3J mil-
lions of treasure to prevent the crash which has occurred.
The most surprising thing was that suffering - existed
when, not only in this country, but throughout Europe,
there was the most exuberant harvest upon record. (Hear.)
It is most remarkable that throughout the last five years
there have existed causes in Europe any one of which had,
under other circumstances, brought about a convulsion.
During the greater portion of the time there was a Euro-
pean war; the two greatest States in Europe were nego-
tiating large loans; there were three successive bad har-
vests in France; you had the silk panic, yet the convul-
sion had been retarded by the arrival of gold. The right
hon, gentleman the Chancellor of the Exchequer said the
commercial distress was occasioned by the derangement of
capital and credit. It is not for me to dispute that posi-
tion, but the right hon. gentleman is the first Minister who
maintained that commercial distress was occasioned by
derangement of capital and credit. I express the opinions
of those who are most largely engaged in the foreign trade
when I say that it was not during those five years that we
measure :l even by hundreds of millions, but by a denomi-
nation unusual even in commercial returns. In those ti an-
sections the share of England is to be computed by hun-
dreds of millions, and yet we aro to bo told that the sole
cause of the derangement of our commerce is some
20,000,0001. in Bank of England notes. We shut our eyes
to those immense operations, and we concentrate our at-
tention upon one of the smallest forms of credit that can
influence trade. (Hear.) Why, sir, the derangement of
credit can only be brought about by the abuse of credit,
and not by the mismanagement of the currency. The right
hon. gentleman the First Lord of the Admiralty cheers
that, but what have the right hon. gentleman and his
school been doing these thirty years whenever a disturb-
ance in the commercial world occurred, but ascribing these
commercial disturbances to bank notes? What happened
in 1825? There was then a commercial convulsion. Then
it was pretended that the cause was the issue of notes by
the country bank% Well, in 1337 there was again a crisis.
That was attributed to the joint-stock banks issuing
so many bank notes, and no one was more positive
in that allegation than the right honourable gentle.
man the member for Halifax (Sir Charles Wood.) In
1847 there was another crisis. What produced the con-
vulsion then, according to great authority, was the
mismanagement by the Bank directors of the circula-
tion of their notes. In every instance capital was
confounded with currency--in every instance they have
attributed to the least influential form of credit conse.
gneiices which could only be effected by the employment
of credit and capital conjointly on a colossal scale,- and
which no circulation of bank notes could, under any cii-
cumstances, ever roach. Now, sir, I will show this house,
if it will permit, in this misapprehension also lies the cause
of the diSleulty under which wo are now labouring, an •.1
in its solution alone shall we ever discover any efficient
means of extricating ourselves from this perpetually re-
curring embarras- ment. It has always struck me as a very
curious subject of inquiry, why men should persist in such
a confusihn of ideas as always to mistake capital for cur-
rency, and to attribute to the leas powerful instrument-
the more influential results. It is also a very curious
thing that in this country the two schools of currency.
who agree in no single principle, are in accord upon one
point. Th tt high authority to which the right her. gen-
tleman the Chancellor of the Exchequer referred (Lord
Overstone), who does justice to the merits of bullion, and
my hon. friend behind me (Hr. Spooner), who sufficiently
esteems the merits of paper, both agree on the point that
commercial convulsions are occasion° r or may be mate-
rially prevented, by the wise regulatioli of the circulation
of bank notes. Now, I a aat to know the reason why people,
differiug in every respect as regards the subject generally,
should be in accord cn that point ? I think the fact may
be accounted for, and I am of opinion that iu asccrtainin2;
the causes of that agreement we may advance a step to-
wards ascertaining the means by which we may extricate
ourselves from the embarrassments surrounding this un-
settled subject. ' When the resumption of cash payments
took place in 1819 it was followed by a great-fell of prices,
and that continued for two years or even more. Now, it
was not at all surprising that those who suffered, and
sharply, at that time, should have ascribed_ to the resump-
tion of cash payments, the great injury whicn they expe-
rienced, I believe that the resumption had nothing to do
with the fall of prices, and I do not think there is a pro-
Veal in Euclid more capable of complete deMonstration
than that conclusion, although, as I have already re-
marked, I think It was most natural for a large body of
commercial men to attribute their embarrassments to that
cause ; and it was at that very time that the Birmingham
school arose which has exercised a good deal of influence on
these questions. Now, sir, this class of opinions has been
predominant in this house ; all public men have accepted
them; and I trace the origin of this opposite opinion to
the bullion committee of lelo. I am sure that no one in
this house would speak of the labours of the bullion com-
mittee but with that respect which all groat intellectual
eflbrts and public services deserve; that committee vindi-
cated that great principle upon which the happiness of
communities mainly depends, the stun lard of value.
(Hoar, hear,) The bullion committee proved that au over
issue of inconvertible paper might be depreciated, and in
our case depreciated. I think a very fair argument might be
urged to show that the price of geld in those days was
raised by some other cause besides the existence of depre-
ciated paper ; but let that pass ; that our paper currency
was depreciated, and that it was demonstrated to be so by
the bullion committee, I think no fair inquirer can deny.
But, sir, the bullion committe took place after all nearly 50
years ago, and I suppose that committee is not an excep-
tion to the rule that time and thought mature the expe-
rience of mankin 1. It is not impossible that the bullion
committee 50 years ago may have been incorrect in some
of its conclusions. This is an age of progress, and any-
thing which happened 50 years ago has been :objected
during the interval to great modifications; our commerce,
our jurisprudence, as they were established 50 years ago,
have undergone very great changes; and it is absurd to
suppose that the bullion should have foreseen all the poe-
sible consequences even of the principles which they ad-
vanced and established, and that all the sharp experience
which this country has gone through during the years that
have since elapsed, all those great experiments in our cir-
culation, all those convulsions which have been the subject
of endless Parliamentary inquiries, and all the new light
which has been thrown upon the subject, It is, I say,
absurd to suppose that the science of currency is exactly
in the same state as it was when the report of the bullion
committee was presented to the Speaker from that bar.
Now, sir, the bullion committee was perfectly right in
this principle that the inconvertible paper money of
this country had become depreciated by over-issue ;
but, sir, I think they rapidly and rashly extended that
conclusion to bank notes convertible at par. Now, I
hold that there is a distinction complete, and which
can be established by argument and an appeal to
facts, between paper money and paper credit, and that in-
convertible notes are paper money, and subject to depre-
ciation, but that bank notes convertible at par cannot be
subject to depreciation, and to that position I beg to call
the attention of the right bon. bart (Sir C. Wood) whom I
now see making a note. I hold, sir, that by ample, com-
plete, and irrefutable evidence throe things may be proved
—first, that notes convertible at par cannot be depreciated;
secondly, that it is impossible to force their circulation—
(boar)—and, thirdly, that for any issuer of bank notes,
convertible at par, to price cannot be affected by a bank
note circulation under such conditions farther than they
would be affected by an equal amount of metallic cur-
rency. (EL ae.) I hold, air, that it has been shown by the
labours of our committees, in the evidenee which they have
taken—l hold that it has boon shown, in a manner which
cannot be confuted, that there is a clear distinction be-
tween paper money and bank notes convertible at par, and
that there is a law which regulates the circulation of bank
notes convertible par, which prevents redundancy, which
renders what people call the inflation of the circulation
impossible—(hear)—and which renders a balance between
the issue and reflux of the notes a matter of mathematical
demonstration. Now, sir, there is I feel a certain difficulty
in speaking upon this subject in what is, and I trust always
will be, a popular assembly ; but, sir, the subject has suf-
fered because it has not been discussed in this house, and
referred instead to Parliamentary committees. Perhaps
therefore the house will bear with me while I shcrtly ex-
plain the principles which I think produce these effects.
Now, sir, in the case of gold or paper money, and by paper
money I mean bank notes which are not convertible, they
are introduced into the market as a medium of payment ;
they discharge their office, and when fresh payments are to
be made, fresh gold,if it can be got, and fresh paper money,
easier to be obtained, again serves as a medium of payment,
but a bank note convertible at par enters the market, not
as a medium of payment, but as a loan upon which interest
is paid, and when the timefor that loan being repaid comes
round, other bank notes must return to the issuer to effect
that payment ; the consequence is that the issue and the
reflux are always equal, and ie the long run the balance is
always struck between them. (Severed hon. members were
here observed to express dissent.) Now, sir, let us apply those
principles which I have I know imperfectly expressed. Let
us apply those principles to the effects which this country has
had to eucouuter with regard to the issues of bank notes dur-
ing all these commercial convulsions that during 30 years
have periodically prevailed. I'll take the issues of the coun-
try banks, which have already been referred to to-night. The
commercial convulsion of 1825, allow me to remind the
house, was alleged by the Minister of the day—and the alle-
gation has been r,pcated by his successor upon the Treasury
bench at this moment— to have been occasioned by the over-
circulation of cotes by country bankers. Sir, upon that sub-
ject we have evidence which was not in the possession of the
bullion committee, which carried on its investigation evi.h-
out half the advantage we now possess from statistical returns
and inquiries—we have evidence before us presenting results
which no man can resist, and which utterly destroys the
theory which the right lion. gentleman opposite (Sir 0. Wood)
has always supported. We have a return of the issues of notes
by country bankers for a period of 25 years; that return is
on our table, and let any hon. gentleman look over it, it in-
cludes the issues of hundreds of country bankers—between
700 and 800, I believe—and when he examines them he will
at once see that there is some law which regulates the issues
of bank notes convertible at par which is too strong to be re-
sisted by country bankers or governed by the British Partite-
meet. Yon will find, in the whole circulation to England
supplied by hundreds of country bankers, that at a particular
I cried of the year the circulation expands, that at another
period of the year it is depressed, and at another, the middle
term is effected; and as constantly that, these terms corm-
spend with the occupations of the people amongst whoM
those notes are circulated : that in April, when the farmer—
for it is amongst that class that the notes of country banks
chiefly circulate —when the farmer, I say, buys stock, there
is an increase of circu'ation : that at the end of the year,
when agricultural pursuits are dead, the circulation fails, and
after the harvest you will find the circulation equal. Now
how is it possible to view these phenomena—for a quarter