The Sun.
London, England, 1857-12-05 00:00:00

SUN, LONDON, SATURDA EVENING DE

amount of actual circulation corresponded exactly with
the period at which you might expect the lowest
amount of issue and the highest active circulation. Con-
sequently, if the public had been aware that it was nothing
more than a mere normal action of the reserve and
the active circulation, they would hive concluded that
feom that period the active circulation would begin to de-
cline." He went on to put in figures, and what were those
figures ? It seemed that at the coramencement of October,
1817, the amount of reserved notes was 3,852,0001., and on
the 231 of October it had sunk to 1,194,0001., a diminution
of 68 per cent. Then Mr. Weguelin contrasted that with
the period of 1856. In September, 1856, the amount was
6,218,000/., while on the 18th of October there had been a
diminution of 3,700,0001., and therefore he wanted it to be
assumed that because in 1847 the reserve at the Bank had
only dropped 2,600,0001., and in 1856 had dropped
3,700,000/., the public were alarmed in 1847, and were
not at all alarmed in 1856. But it seemed very odd to him
(Mr. Henley) that a man should suppose it was the same
thing, with only 3,850,000/. to take 2,658,0001. away from
it, that it would be to take the same amount from a much
larger parcel, because prudent people did not look at what
was taken away—they looked at what was left. And,
therefore, so far from that statement of the two Bank
directors showing that what took place in 1847 was a
panic, they gave ii resistible evidence, upon figures, to show
that reasoning men, who had their engagements to meet,
had good ground for the alarm that they felt, and, there-
fore, that ground was cut from under the feet of those who
said that the provisions of the bill of 18A were always
good except in case of panics. He denied that in that case
it was panic; it was reasonable alarm. There was another
question connected with the act of 1841 on which he knew
he held an opinion which was not shared by many, but he
was glad to find thatgopinion supported by no less an au-
thority than the late governor of the Bank. He had never
been able to understand why, when the Bank of England
was issuing such an amount of bank notes as it saw fit,
they were to pass a law to say to that corporation, you may
if you please, in addition to these notes that you have out,
issue 14 millions of notes more. He never could understand
the reason of that. He believed the immediate effect was
to inflate the currency of the country, and that it induced
to a certain degree excess of trading, and the governor of the
Bank of England expressed the same opinion, not in evi-
dence, but in answer to a communication from the Chancel-
lor of the Exchequer. After stating certain advantages, he
said, "On the other hand, the act encourages the dangerous
theory that the Bank of England maylin its bankingdepart-
meat act in a,ll respects as a private bank in the arrange-
ments with its customers, and that the force of competi-
tion with large money lenders, and the produce of large
deposits, is apt to induce an unwarrantable inflation of
credit." That was a strong assertion to come from such
an authority. He would now inquire what was the ope-
ration of the law when it first passed. In 1848 the notes
issued were 19 millions, and the private securities were
5,500,0001. On the Ist of August, 1841, the notes issued
were
,21 millions, and the private securities 6 millions.
That was the state of things antecedent to the bill of 1844.
The Bank of rate of discount had then for two years been
4 per cent., but Mr. Chapman said Messrs. Gurney were
charging only 2/. 3s. 4d. in 1813, and 2/. 2s. 6d. hi 1844.
In 1845 the notes issued, instead of being 21,116,000/.,
were 28,250,090/. ; the bullion was 15,600,000/. instead of
16,000,000/., and the private securities instead of being
6,851,0J0/., jumped up to 11,760,000/ In 1846 things were
about the same. The notes were 28.400,0001., but the pri-
veto securities had jumped up to 17,900,000/. That was
some little evidence of inflation of credit he thought. But
what was the discount? (In 1845 the Bank rate of dis-
count was 2/. 13s. 4d., and Gurneys were charging 2/.
19s. 2d. Tlaese facts seemed to give some weight to the
opinion of Mr. Wegnolin, that this act had a tendency to
an unwarrantable inflation of credit. Now let them take
the other end of the stick. By the operation of this act
they had had to come twice to the house in ten years to
ask for an indemnity. The question was what they were
to do under these circumstances. No one had yet got up
in that house and said the operation of this bill ought to
be maintained in its entirety. (Hear.) The next point
wa., was it safe or desirable to leave it in the discretion of
Government, or ought they to relax the law by repealing
it, or by seine other mode. In speaking of the repeal of
the law he was only speaking of that part which related to
the issue of notes by the Bank of England. That which
related to the issue of notes by the country banks he
thought a sound provision. In July Mr. Weguelin said
in no case had the reserve gone below three millions, and
there had boon no anxiety in the pubic mind with regard
to the state, of that reserve, bet Mr. Chapman said the
state of the reserve had caused a very great anxiety, and
that in 1856 they were under groat alarm, and that they
carried on their business only on an understanding that
they should be relieved by Government. What sort of a
state of things was that?
The CHANCELLOR of the- EXCHEQUER—The
statement was contradicted.

Mr. HENLEY—Tho right hon. gentleman said it was
contradicted ; but where ? It was endeavoured no doubt to
be explained away. It was said that the promise was not
given by a member of the Government, or a member of Par-
liament, or a member of the Bank ; but Mr. Chapman said
they had it from an individual in such a position that he
believed it. With regard to the question where the dis-
pensing power ought to be lodged, he (Mr. Henley) could
not see any quarter in which it could be placed with safety.
He believed there ought not to be a limit ; and that had

been proved to demonstration by what had fallen from the
Chancellor of the Exchequer himself. (Cheers) The right
hon. gentleman had argued the question as if he was going
to be hanged unless he could make out a stropg case for
his indemnity. He said, " Don't think that the law has
been infringed to the extent:of 2,000,000/. or anything like
it," and then he went through a long list of figures to show
that the infraction really never amounted to more than
about 900,000/. Well, but would any ono pretend to say
that the convertibility of the Bank note had, been in any
way endangered by that excess of 900,0001.? He (Mr. Hen-
ley) agreed with the right hon. gentleman (Mr. Gladstone)

to fix the limit at 16 or 17 millions wolild do no good

whatever ; and that, while it would not lessen the mischief,
it might perhaps give a worse chance of meeting a crisis
when it occurred. The directors of the Bank had said

throughout that they should havo acted hi precisely the

same manner, and would have taken precisely the same
steps, if the act had not been in existence. They would
have raised the rate of discount just the same ; and here he
(Ur. Henley) must confess that he was not one of those
who believed they could keep the rate of discount at a uni-
form point. But if the conduct of the Bank would have

been the same, act or no act, why create all this alarm for
the sake of keeping up a limit ? It was like greasing a car-
riage wheel ; if they put the grease on before it got hut, it
never would get hot; but if it once became heated no
amount of grease would save it from coming to a dead
lock. As to leaving the dispensing power in the bands of
Government, he (Mr. Henley) was of the same opinion as
the member for Oxford and the member for Southampton.
When the point was raisedin the committee the member for
Oxford said, " If the Government was a weak one it would
yield, but if it was a strong ono it would resist, and then it
would incur a great deal of unpopularity." By-the-bye,
did the hon. gentlemen opposite consider that their Govern-
ment was a weak one for having on this occasion yielded ?
However that might be, it was clear that if this power
was once conceded to Government, the whole matter would
bo virtually placed in their hands ; and now that a double
precedent had been established, they might rest certain
that they would never-be without pressure. Mr. Hubbard
said that to relax the act was simply to stultify it, and he
(Mr. Henley) believed that that was quite true. Mr. Hub-
bard further said that the effect of extending the provisions
of the act in times of difficulty would be to force the bank-
ing community into a complete dependency upon the Bank
of England ; and that appeared to have actually taken
place. Of course post hoc was not always propter hoc ; but
when they sew that such a state of things had become
largely developed since the passing of the act, they natu-
rally asked what good it had done them ? A very import-
ant question was put in the committee by the member for
Carlisle, viz. :—" Are your primary considerations, when
paper is presented to you for discount, the solvency of the
parties and the state of your bullion in reserve ?" The
governor and deputy-governor spoke out like men. They
said, " Those are not our primary considerations—they are
our only ones." Their principle was, rent, quocunque mode,
rem. Not so Messrs. Gurneys. The same question was asked
them, and they seemed not to be so slack-waisted ; for the
Old Lady of Threadneedle-street seemed to have latterly
gotof in tsos
rsso. mGeoqr un ee ey rs I
sr aa
ibdi s (cLhaeurge tis er .) T
a certain he
description representative
of
paper that we won't touch—we won't touch any re-dis-
coun'ed paper." Hon gentlemen threw up their hands.
wasHo lin
or t ee
nr
el tyr adoisdwne or t f
os ar yt
hweh
tort
ah
tehr iotf wt
the
es ssot
aotre
mn oe tn.
tslie
he
quoted ; nor did he care whether they were true or false.
They only show what sort of paper was in the market—
whether Messrs. Gurneys dealt in it or not. a hey heard a
great deal now-a-days about "increased banking facilities"
" increased commercial facilities," and the like. He did
not care what they called these things ; but it was obvious
that since the passing of the act there had been a
great development in the trading world of all kinds
of queer systems. (Hear, hear, hear.) Formerly,
u hen the Bank felt itself obliged to exercise its own
discretion there was not the sort of thing that now went
on. Twenty years ago he doubted whether the governor
and deputy-governor would have given an answer to the
effect that in carrying on their business they hail no regard
to the character of the paper offered to them. (Hear.) For-
merly the Bank held a salutary check over speculative
transactions, and that had no doubt a good effect upon
trading morality ; but now there wore what they called
" slaughter-houses ; " there were unlicensed pawnbrokers,
dealers in warrants, and buyers and sellers of cargoes " on
the run "—things which were never heard of a few
years
ago, and by which small traders were completely
"chewed up." (Laughter and cheers.) Small traders died
away, and people shrugged their shoulders, and said, "Oh,
they cannot keep pace with the times." (Hear. ) And
yet, by means of this wonderful act of 1844, they had, for-
sooth, prevented an undue inflation of credit and specula-
tion in paper. (Cheers ) Certainly, the act had restricted
the issue of one particular kind of paper, that called Bank
notes ; but it had only encouraged the creation of other
kinds of paper which were ten thousand times more mis-
chievous. (Hear.) There was one other point on which
he would make a remark—namely, the proposal of the
Chancellor of the Exchequer that the Scotch notes might
be paid iu Bank of England notes. That proposition he
regarded as merely tending to aggravate a prejudicialstate
of things which now prevailed in England. By the act
they had given to a number of existing private bankers a
monopoly is the creation of notes, without their having a
single farthing to set against them that the legislature
know of. At present these notes, amounting to 8,000,0001.,
formed, with the 20,000,0001. of Bank of England notes,
the currency of the country. Now, by the wonderful ma-
chinery
of the act, the instant they came to have a pres-
sure upon gold, they had on the one hand the reserve of
notes lessening in exactly tho same proportion as the bul-
lion diminished, and on the otherhand, they hail the coun-
try bankers compelled to run to the Bank of England for
notes amounting to at least 2,000,0001., to enable theta to
meet the demands of their own customers. To make the
Scotch notes likewise payable in Bank of England notes
would obviously increase the evil. At the same time he
should be glad to see the circulation of the whole kingdom
put on the same footing ; for at the present moment Scot-
land and Ireland stood on the footing of foreign states, so
far as their currency was concerned.
Lord J. RUSSELL—Whatever variety of opinions may
exist in this house upon this difficult question, I think all
will agree that the committee are very much indebted to
my right hon. friend the Chancellor of the Exchequer for
the able manner in which he has laid beforri us the propo-
sitions of the Government. I am in the singular—l will
not say the unfortunate—position of being very well satis-
fied with what has been done—tolerably satisfied with the
act of 1844, and entirely satisfied with the proposal of the
committee which is to follow after the present proposition.
I will say but one word with regard to the immediate
question before us, because I think that all sides of the
house are agreed that the measures taken by her Majesty's
ministers was a right use of their discretion, and that it
contributed to save the commercial credit of s country.
( Hear.) Every party in this house will therefore admit
that an indemnity ought to bo given to the Government
for the policy they have pursued. (Rear.) That question

being disposed of, the further question naturally arises, if
the act of 1844 was rightly suspended in 1847, and if it
has been again rightly suspended in 1857, is it an act which
ought to be maintained ? Or, supposing that it is to bs
maintained, will it not require some extensive alterations
in its provisions ? Or, lastly, is it not necessary to give
some dispensing power either to the crown or to the Bank,
in order from time to time to suspend its operation? But
I think that, gentlemen, in discussing this question in this
house—still more in discussing it out of tdoors—fall into
the error, against which they were warned by the Chan-
cellor of the Exchequer and by Mr. Glyn, of confounding
the two questions of national currency and commercial
credit. (Hear.) I say that the act of 1814 was intended
to secure our rational currency from depreciation and from
debasement. I believe that it has contributed to that
end—indeed, that it has secured that end. (Hear.) But
commercial credit, which some of the more extravagant
supporters of the act of 1844 seem to think was to be saved
from all danger and all panic by that act—commercial
credit runs its own course ; and all that any act of
Parliament can do is to endeavour as far as possible,
that the national currency may not be endangered by
it; that it may help from time to time—but that it
should not be swept away in the hurricanes that occa-
sionally desolate the fields of commerce. (Hear, hear.) To
go b ack t • this distinction —with regard to nationsl currency
I think that everyone that will consider a momentwill be galls-
fled with the act of 1844 as a supplement to the act of
1819. I remember perfectly well coming from the Low
Countries in 1815 with a number of 20-franc pieces; and
for every one of these 20-franc pieces I got a one-pound
Bank of England note. The Bank of England note was
then worth 16fr. (Hear, hear.) But any one now would
get 25fr. or more, either in London or Paris, for that same
note. Well, then, there is an end of the depreciation ;
that depreciation had been cured by the act of 1819 and
the act of 1841, And I do not think that in either of these
times of panic or commercial distress, either in 1847 or
1857, there has been the least doubt or question of the
convertibility of the bank-note. I believe that every
merchant and every individual in the country felt satisfied
that his five-pound note would obtain its equivalent in
gold ; and therefore there has been no depreciation of the
currency; upon that question there has not been any fail-
ure. But when we come to that other question of com-
mercial credit, I think that any one who looks at the his-
tory of the country only from the commencement of the
present century will see that there have been always these
changes—first, of rising and improving trade—next of
prosperity—next of inflation—and next of disasters and
distrust; and, finally, the bubble burst, and we had to
begin again. (Hear, hear.) That was the case before the
act of 1841 was passed. (Hear.) I lament to have heard
from so high an authority as Mr. Glyn so much blame
thrown ou the act of 1844. Does he recollect what occurred
in 1825? (Hear, hear.) In 1825, if I remember right,
20 years before this act was passed, 700 private banks in
the country broke; there was the greatest distress through-
out the country, the greatest distrust of country bank
paper, and a period of distress ensued. In 1847, again,
there wore peculiar causes at work ; there was a great de-
mand for corn, a very natural and necessary demand,
but which occasioned a great export of specie. There,
wore other speculations which occasioned distrust, an-
other period of distress occurred. The same has occurred
in 1857 ; and when the right hon. gentleman opposite reads
a namber of passages from the evidence of merchants and
bank directors stating that trade is in a wholesome condi-
tion,'it should be remembered that that only applies to the
time when the answers were given. Because every one,
whether engaged in trade or otherwise, must know that
there are changes—that there are revolutions, and very
often very sudden revolutions—which take place in com-
merce; that, owing to some particular cause—it may be a
very sudden cause—or owing to a great inflation of some
particular speculation, the country all at once finds itself
in a state of doubt and distrust with regard to even the
most healthy portions of trading operations. Now, let us
look what has been done with regard to the currency at
these separate periods ; because, while I would wish to
support the act 1841, I think that as it has been very much
over-blamed on the other. I believe that it is an additional
security, that it is an improvement on our former laws ;
but I do not think, with regard to the action of trade upon
currency and currency upon trade, that the course of things
has very much varied since the passing of that act. In
1825 we had the testimony of Lord Ashburton in this
house. Ho stated that the governor and deputy-governor
of the Bank, Mr. Huskisson, and himself met to consider
what should be done. There was then a very small amount
of gold in the Bank—perhaps some hundred thousand so-
vereigns, I don't remember the amount—and there was a
very great alarm. Whether there was a panio or not, and
whether alarm is a very just feeling, and panic a very un-
just one, I will not dispute—that seems rather a question
of philology than of finance. (Hear.) But there was very
great alarm, and these very able men met to consider what
should be done. After some hours of consultation Lard
Ashburton stated they were all agreed that, whatever
might be tho cause, relaxation and the expansion of credit,
not further restriction, was the remedy required. They
advised the governor of the Bank to issue more paper. This
was on the Saturday or Sunday. Oa Monday morning the
Bank declared that they were ready to discount. Confi-
dence was restored, and, so far from the Bank being drained
of its last sovereign, its coffers were speedily replenished.
That happened before the act of 1844. In 1817, also, from
causes which I will not enumerate, there was a return of
difficulty and alarm. The case was represented to my right
hon. friend the present First Lord of the Admiralty and
myself ; and several days we sat in anxious consultation
On the state of affairs,' advising with Mr. Cotton, the
governor of the Bank, the directors, and other persons
very competent to enlighten ns on what occurred from
day to day ; and then, on our own responsibility—not at
the request of the Bank any more than now—not for the
purpose of saving the national currency, which was not in
any danger, but for the sake of the commercial credit of
the nation—for the sake of many large firms which, though
perfectly solvent themselves, were threatened by others-
-and for the great interests of the country, we resolved
to recommend the Bank to issue bank notes, if necessary,

beyond the limit imposed by law. I believe we were
justified in that course; and, if I remember rightly, Mr.
Herries, then a member of this house, moved a resolution
approving the conduct of the Government in that instance.
Well, in 1857 the state of things described to us by the
Chancellor of the Exchequer occurs. The Government
meets, and the First Lord of the Treasury and the Chan-
cellor of the Exchequer issue a similar letter. I am sorry
to say the effect is not so immediate as was that of our
letter in 1847. It may have been that the disease had
spread its roots deeper; it may have been owing to some
other cause, existinz, perhaps, in foreign countries; but,
according to the highest authority, we have not yet re-
covered our former state of healthy trade and sound com-
mercial credit. As far, however, as it has gone that letter
has been effective ; it has saved many parties from ruin,
it has saved the general interests of the country from great
disaster. And, for my part, I hope, with my hon. friend
the member for Kendal, that we shall never see a Minister
of this country so infatuated in favour of an abstract prin-
ciple, sound enough in itself, as to refuse in these oases of
emergency to incur the responsibility of relaxing the Act
of 1814, and thereby preventing what may be a fearful
convulsion. (Hear, hear.) But is it true that this Act,
having been twice suspended, is altogether wo_Ft.hklens!i,tahnal
ought to be replaced by some other system? .1 think
as far as the national currency is concerned it is an Ateot
which does not require alteration. And with regard
commercial credit I venture to say that no one authority
that I have ever heard or read of has proposed a &thee by
which you shall have a national currency
times of commercial distress and fitted f
panic—a scheme wht mor.
.aell
shall preserve convertibility and yet be of sufficient force
to prevent the 'effects—the most natural and inevitable
effects—be it of over speculation, of excessive trade, or of
h
the misfortune of the particular time. In order to show
that I do not wish to cast blame upon those who, iu some
instances at least, have been unfortunate in these
transactions. I cannot but call to mind a remark of
Mr. Tierney, who,
in allusion to one of these periods of com-
mercial distress said, " You may talk of wild speculation and
rash trading, but the men accused of this rashness and wild
speculation would, if they had succeeded, have been enter-
prising British merchants." (Hear.) It is very often the case
that a few have pushed their credit too far, that circumstances
have turned against them, that their failure leads to others,
and thus great discredit is thrown upon the country, when
perhaps but a few—a very few, persons are to blame. But,
sir, if there are any persons to blame for giving too great
facilities to individual traders, whether connected with the
Bank of England, the Western Bank of Scotland, or any other
banking or commercial company, it seems to me that the
appointment of a committee is , exactly the manner in which
the Government ought to deal with this case If such has
been the ease it cannot but be useful to the country to learn
what errors have been committed, and to obtain some warn-
ing not to repeat them in the future. My right hon. friend
the member for the University of Oxford protests against the
re-appointment of the committee to inquire into banking and
issues, but he says that he should quite approve the appoint.
ment of a c )mmittee to
inquire into the causes of the com-
mercial distress. I, sir, amnot very particular about the
title of this committee, or the exact form iu which it is ap-
pointed. 1 am quite sure that if appointed as a committee te
inquire into banking it would inquire into all the causes of
commercial distress, and into the conduct of those who are
carrying on the trade of the country. I am equally sure that
if appointed to consider the causes .of commercial distress it
would inquire into banking and the operation of the Act of
1844. It is impossible to bind down a committee not to con-
sider these two subjects together , and therefore, I think it is
quite right that it should
be 7 appointed in such terms as the
Ghancellor of the Exchequer shall think fit. Well, then, sir,
with what view is the committee to be appointed ? The right
hon. gentleman the member for Buckinghamshire asked a
question last night, which I think was quite right inspirit, but
which he made rather more stringent than was necessary. He
asked--" Is the Act of 1844 to be maintained ? If it is to be
maintained why should you have the Act of Indemnity t If it
is not to be maintained let the Act of Indemnity be passed,
and let the measures of her Majesty's Government be pro-
duced." Now, I understand—l do not know that I correctly
understand, the intentions of the Government, but, as far as I
understand them, it seems to me that they are prepared to
stand by the general principles of the Act of 1844 If they
were not prepared to stand by those general principles, if
they intended to throw the whole question of the currency
loose before the committee—if we were to have the plan of
the hon. member for North Warwickshire (Mr. Spooner)
which seems to me, if not so dangerous as I have apprehended
vet—l will not use an unusual phase—more unreaoonable
that I had expected—if wo were to have our currency di-
vided into two parts, one of which is to rest on the security
upon gold, and if we
kind coming out of the
appointment by the
co,sof.eitur Isometiottbe Threeuev,et
then
eet
other
re
shouts.,
hipt
ors
uo.j, andoldo
tssa
yot the
tei
It
that
a ht ei
ktr s
Government would bo a very unadvisable step. But if wo
aro to have a committee, keeping in view the Act of 1844 and
seeing whether that act should be either amended or in any
way expanded, I think that is a very fair question to be laid
before a committee, and that it would be more prudent on
the part of the Government to say that when the evidence is
before us, and not till then, will they toll the house at what
conclusions they have arrived with regard to amendments in
harmony with the spirit of the act, but making its provisions
still more effective. Various ways are suggested in which
that act might bo altered. There is one to which the Chan-
cellor of the Exchequer alluded, and with regard to which I
time,
you
a constitutional do not quite agree with him, although there is some reason
in what he says concerning it. He says that if you give to
the Government or to the Bank a discretionar, power of re-
nwill net make much
practicalaxi
buttim time to
willtim
ques-
tionraise
whether or not it is right to give sick a power by Act of
Parliament. Now, I beg pardon of my right hon. friend, but
lalteration,ac"from
I think you raise not only a great constitutional but a groat
practical question besides : because, while I should be very
unwilling to give to Ministers this power ; of dispensing
with an Act of Parliame It on constitutional grounds, I think
theatthcre are moral reasons, and reasons of practical utility
which aro still more forcible against the adoption of such a
course. I feel convinced that if the Minister and the Bank, or
the Bank alone, had this power it would give great en-
couragement to wild and unsound speculation. (Hear,
hear ) Every one would then say, " We can go to the
Gov, rnment and tell them that they have got tho power, and
that this is the very case in which it was intended that they
should exercise it ;" whereas it is now a groat inconvenience
and a great responsibility for a Minister to say, " I think
this Act is at present so obnoxious to the community that I

will undertake to suspend it awl will immediately call Par-
liament together to lay my conduct before it." I think that
that is a considerable check upon the conduct of the Minister,
and therefore upon those speculatora who would wish for the
frequent suspension of this Act. (Hear.) Let us see what
has happened with regard to the Act. In 1844 it was
enacted ; in 1847 it was suspended for a time. That occurred
only three years after it was passed, and I think men might
then reasonably-say that an Act which within three years was
found to be unavailing and had broken down ought not to re-
main upon the statute-book. But since 1847 we have for 10
years had a sound state of the currency—(hear, hear)—we
have had no complaints of the working of the Act ; and it
may be five years, or it may be 20 before there is another
occurrence similar to that which we are now considering. I
would leave the future to the future. I would allow it to be
decided by experience whither or not another 10 years may
not elapse without the adoption of such a course, and, if the
inconvenience is then no greater than has been sustain d in
1847 and 1857, I should think that there would be reason
not for repealing, but for maintaining the Act. (Hear, hear.)
For, considering that your primary object is to maintain a
currency convertible into gold, and that your next object is
as far as possible, without endangering that currency, to give
help in times of commercial distress and disaster, I think
that an Act which performs those functions as they have been
performed by the Act of 1844 in 1847 and in the present
year, is one which deserves to be supported. My hon. friend
the member for Kendal (Mr. Glyn) says that when distress
begins the sight of the Bank returns aggravates the alarm.
That may be so, but is that the working of the Act of 1844 ?
I remember before the passing of that Act asking a friend of
mine who was very well conversant with those subjects, the
late Lord Sydenham, what ought to be done if we had a com-
mercial crisis and a state of discredit. He said, "Let the Bank
go on and pay to its last guinea." But would not that be a.
time of distrust and distress ? Suppose that you had the Act
of 1819 alone, without that of 1844, and there came a time at
which the reserve of bullion in the Bank was reduced to
1,000,0001.—t0 500,0001.—t0 100,00 M—would not that pro-
duce great alarm. Would there not be a people as anxious
to obtain gold as, they now are to obtain bank notes ? Would
there not be the same discredit and distrust as now exist ?
Therefore, as I believe, it is not the Act of 1844, it is the very
nature of a currency convertible into gold, operating with a
diminution of commercial credit and the spread of alarm,
which produces that state of things to which, my hon. friend
referred. (Hear.) If that be so, let us see what is the actual
working of this Act. It is, I confess, not that which you
would expect upon the face of the measure. The Act says
that there aro 14 millions and a half which the Bank may
always issue, but that any notes issued beyond that amount
must be the representatives of gold and silver bullion in its
cellars. If that were literally carried into effect when the
Bank had 16 millions of bullion it would issue 30 millions of
bank-notes ; when it had 7 millions it would issue 21 mil-
lions. _ But that is not the operation of the Act, because we
all know that there is no such demand for notes as to induce
the Bank to go beyond some 22,000,0001. or 23,000,0001.,
and we know also that it is quite impossible for them to go on
issuing notes with safety to the extent of 7,000,0001., when
thereris only that amount of bullion in reserve. Immediately
that the reserve of bank-notes is reduced to 1,000,0001., or
1,500,0001., still more when it is reduced to less, then comes
that desire to obtain notes which the Chancellor of the Ex-
chequer has described. Every one sees that the reserve 'of
notes will soon be exhausted and makes a rush to obtain
what proportion he wants, and thus the Bank becomes en-
dangered long before the notes representing 7,000,0001. of
gold are really issued. The Act of 1844, therefore, is more
restrictive than appears on the faoo of it. It hardly allows
the issue of 14 millions and the whole stock of bullion to
be represented ; there must be areserve of notes in order that
the Bank may -be at all secure. The question may fairly be
discussed, whether any change should be made in that re-
spect. I doubt the utility of any change ; but of this lam
quite sure, that if it should appear to a select committee that
a change might safely and beneficially be made it ought to be
made by Act of Parliament, and not by giving any discretion
either to the Minister of the day or to the Bank of England.
(Hear, hear.) It should be plainly laid down in your Act
what further relaxation might bo allowed. (Hear, hear,
hear.) I believe myself that the Act of 1841 has tended
to secure the currency and has not tended to aggravate
commercial distress. (Hear, hear, bear.) We have heard
with some apprehension the views entertained by the
right lion. gentleman the member for Oxfordshire. He com-
plains that the Act of 1844 has encouraged the great evil of
over-speculation, and has led to the circulation of a great deal
of worthless commercial paper in the country. (A laugh.)
That is a somewhat inconsistent complaint, and theright hon.
gentleman proposes accordingly a somewhat inconsistent re-
medy, because he says there should be nb limit to the issue
of paper by the Bank. (Hear, hear.) He complains of the
limit ; but I wish to know from him and from the other
gentlemen who denounce the Act of 1844 what is the real
extent of their demands. Aro they satisfied or are they not
with the Act of 1819 ? Are they satisfied or are they not that
notes should always be convertible into gold? Are they
satisfied with the standard of the currency as laid down in
ancient times, and as affirmed soon after the Revolution, and
again by Lord Althorp when ho was Chancellor of the Ex-
chequer? (Hear.) When they complain of the special pro-
visions of the Act of 1844 de they not, in fact, mean a great
deal more ? Do they not really mean that there shall be an
issue which shall not be founded upon bullion, but which
shall bo so extensive, so expansive that it must necessarily
become greatly depreciated in value, requiring for the safety
of its credit the application of a Bank Restriction Act.
(Hear, hear.) If that be their intention, let them plainly
declare it. Do not let them complain of the special provi-
sions of the Act of 1844, but let them tell us whether they
mean to maintain the currency in its integrity. We shall
then know how to meet such a proposition. Such views are
not openly avowed in this house, but they have been avowed
in some recent meetings; and in one meeting especially
which took place in Glasgow, it was stated without disguise
_ . _

that your paper currency should be commensurate with the
demands of trade. (A laugh.) Is it intended, I ask, that

there should be any base for this currency, or is it mere
worthless paper, producing periodical convulsions worse than
any we have heretofore witnessed 7 (Hear.) In defending the
Act of 1844, in admitting that there may be smne alteration
. . . . . .

in its principles, but maintaining that tliere ought to be none
in its provisions, I think I am in fact standing upon the Act of
1819 and the laws which regulate our currency. I believe that
th3se evils from which we have lately suffered, from which
we are still suffering, are incidental to a very great and ex-
tended commerce, *We all know that the laws passed of late
y are, beginning in 1842 and ending with the repeal of the
Navigation Act in 1848, have tended greatly to increase the
trade of the country ; and we know also that while increasing
legitimate trade, while making many men wealthy and giving
general prosperity to the country; they have produced at thee
same time the concomitant evils Of unsound speculation, cash
adventures by• -nithout capital, and bubble companies
eager to share in the riches or the world. We are
commercial country, prosperous beyond any that ever existed
on the face of the globe. But wo must not expect too much.
We must occasionally be visited by misfortune. I believe,
however, that the general principles upon which we are acting
are sound ones. I believe that the Government have on this
occasion pursued a course which will entitle them to the
gratitude of the country. I see nothing to be altered in our
general laws, and I hope that this house, at all events, will not
tamper with the great principles of a sound currency.

(Cheers.)
Mr. DISRAELL—I trust that in discussing this question
we shall abstain from that vague declamation which has occa-
sionally been indulged in upon both sides of the house, and
among others by the noble lord who has just spoken, though
I admit that many of his observations, liko much that falls
from his lips, were worthy of our most' serious attention.

What aro we asked to do to-night ? It is no ordinary demand
that is made upon the House of Commons. We are asked to
consent to a Bill of Indemnity for an infraction of the law,
authorised by:the Government in consequence of the commer-
cial distress and distrust that have prevailed, and that unfor-
tunately still prevail. We have heard a great deal of com-
mittees upon commercial distress being advisable. Permit
me, though very briefly, to lay before you some suggestions
as to what may be the causes of the present commercial dis-
tress and distrust. The distress is general. It is not confined
to this country, where it is extensive. All know that it pre-
vails in the United States. It is not peculiar to the United
States, as some gentlemen who have have addressed you
would seem to infer. It is European. It prevails in Ger-
many, in Austri t, in Denmark, in Sweden, and what is occur-
ring in Hamburg at this moment must be fresh in the recol.
lection and the fears of many members of this house.
Again, it is to be recollected that the commercial trans-
actions of Europe are carried on by an amount of
capital that is not to be counted by millions, but by hundreds
of millions. It is, therefore, a very great error—and here I
entirely agree with the noble lord the member for the city—
to suppose that the management of a limited portion of the
currency of England could have occasioned this immense dis-
aster and these wide consequences, which really have origi-
nated, not from the mismanagement of the currency of this
country, but from the mismanagement of th^ capital of Eu-
rope. (Hear.) Now, there is one important point which we
must bear in mind in considering the Act of 1844. That Act
is an Act to regulate the currency of this country. The pur-
port of it is in my mind irreproachable. Its object is one
which every man ought to wish to secure, and the means by
which that object is sought to be obttinod aro in many re-
spects worthy of public admiration. But is it or is it not the
fact that this Act, which really is intended only to regulate
the currency of this country, to establish and maintain the
convertibility of the notes of the Bank of England, has never-
theless the effect—as I believe, the unintended effect—of
greatly aggravating, commercial distr, se and distrust when
they aro occasioned by the misapplication and mismanage-
ment, not of the currency of England, but of the capital of
Europe ? (Hear, hear.) Now, I apprehend that that point
has never been met throughout all these observations, which
I have listened to, and I apprehend that it is a position which
can be established. I say it can be shown that it is in conse-
quence
of the machinery of the Act of 1844, though intended '
merely as a currency Act, and to h .vo a limited application
to objects, no doubt, of paramount importance, that the
managers of the currency of this country have been forced to
treat in an identical manner and by the same means two cir-
cumstances totally opposite in their character, and both exor-
cising amost powerfuland injurious influence on the commerce
and capital of this country—th is, a foreign drain and a
domestic drain. I say that the Act of 1844, from the man-
ner in which it is framed, forces those who regulate the cur-
rency of this country to apply to a domestic drain exactly the
same treatment which is applied to a foreign drain ; while, if
there is anything which can be established by argument and an
app-al to facts it is that the two sets of circumstances should
be treated in an exactly contrary manner, and be encoun-
tered by means exactly opposite. If that point be esta-
blished, and if that be the sound position, then surely we
may fairly consider a question of that kind without being
accused by the noble lord of wishing to tamper with the
standard of value, to inundate the country with paper money,
or of desiring to recur to obsolete modes of practice, and to
what took place in this country with respect to the circula-
tion, when, in fact, the same circumstances did not exist,
and when there were not the same means of regulating th
currency. The noble lord has made a very great appeal toe
night to the disastrous year of 1525, when ho informed us
that 700 banks were broken in the same morning, I believe.
(A laugh.) The noble lord was not then the Prime Minister
of this country, and though no man is better acquainted with
its history than the noble lord, yet I think that on this occa-
sion he has trusted too carelessly to his memory ; for at that
disastrous period, not 700 country banks, but 73 banks alto-
gether, in London and in the country, broke, and by no
means were the majority of these banks of issue. Therefore I
do not think that that illustrative warning bears very much
on the question we ought to consider this evening. (A laugh.)
But this year of 1825—this phantom of ancient distress con-
stantly raised in our debates—has really very little to do
with the modern principles of banking, and the means by
which the currency of this country is new carried on. It is
very easy to abuse the Bank directors of that day for what
occurred, but wo must remember that in 1825 it was quite
impossible for the directors of the Bank of England to
avail themselves of those resources witch yon now aro always
ready to remind them are at their disposal to guard their
accounts by raising the rate of discounts. In 1825 you
allowed the usury laws to prevail, and it was impossible for
the Bank to have a higher rate of discount than 5 per cent.
Tborefere the year 1825 Worn to eircumetancos Which 119