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

IHE SUN, LONDON, SATURDA EVENING, DECE viI3ER 12, 18N1

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 the late com-
mercial 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 1344. 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 he 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 scsrcoly say that men of such emi-
nence as Mr. Tooke and others who agree with him would
not adhere so stedfastly to it. They ara 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 persons 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 1844. It is an objection, not to the failure of that Act
under circumstances of extraordinary pressure, but to its
unsoundness 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 boon 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 thatthe suspension of the Habeas Corpna
Act was a less evil than its enforcement. But I will refer
to a case of the present day, about which, no doubt, gentle-
men in this house will be divided. I mean the suspension
of the freedom of the press in India. I sin 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 mutinythathas
nearly become a general revolt, which might not in the
smallest degree justify such a step in the ordinary state of
ludia. Therefore I cannot for a moment admit that, be-
cause we have passed through a commercial crisis—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 new
legislation on the subject of the currency. Thera
appears to me to be an excessive disposition to expect
benefit from legislation at a period of commercial crisis.
There is no time, in my opinion, when it is more incumbent
on a prudent Legislature to be upon their guard 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 ara comparatively powerless (hoar, 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 than
that of supposing that it is iu 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 code of laws to regulate our currency and place it
upon a now foundation. Least of all can I admit thatthat
demand is iu 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 lopt. 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 altethtions 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
commercial crisis. Tho plan which seems to have boon
ultimately acquiesced in after the debates of 1847 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-
ment, 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 certain 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.) There-
fore, if there is to be a relaxing power, we are 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 tho 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 the object of all law to secure.

" The committee are of opinion that the principle on which
the Act of 1844 should be amended is the introduction of a
discretionary relaxing power ; such power, in whomsoever
vested, to be exercised only during the existence of a favour-
able foreign exchange."
Such was the conclusion of tho committee of the Upper
House. The committee of the House of Commons came to
a directly opposite conclusion. They say—
" Your committee have had under their consideration whe-
ther it is advisable that powers should be conferred by law
upon the Government to enable them to meet the occurrence
of aoy 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, an also what may be the mea-
sure best calculated to meet them, it is more expedient to
leave to those with whom the responsibility of the Govern-
ment may rest at the time 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 the
Bank Acts in June last, gave the following evidence :
" At present it is the established practice of the Govern-
ment, not in way to interfere to control the discretion of the
directors with regard to the management of the Bank ?—Not
at all,
" Assuming that this is the rule, 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 tho 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 eases should be conferred upon them by Act of Parlia-
ment 1--I think that to introduce any provision to meet a
contingency would be highly undesirable, because it would
have the effecr. 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 in its present
state I—lf any events were to occur, from whatever cause,
which suspended the whole action of credit throughout the
country, the Ministers of the day would, no doubt, hold it
to be 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 tb occur, and the entertaining of which can only, I
think, be detrimental to the proper c.msideration 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-
ing the house with extracts. [" No, no."] In the evidence
given by that high authority before the committee of the
House of Lords in 181 S he is asked :
" Assuming 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 ate you of opinion that that discretion can be mo 4t safely
lodged, with the view to insure as little as possible a depar-
ture from this statute ?"
Lord Overstono 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 violation of an existing Act of Parlia-
ment, we obtain a better protection against the too easy and
ready au exercise of the power than by lodging the discretion
with any other parties.
* ,

"At what period of pressure do things not become amen
able to principle ?—When the actual conductheof
partiestest
of any
be-
comes such that you cannot bring it under
ordinary principle. When people act, not rom any rea-on-
able motive, but under the blind influence of panic, I con-
sider their conduct as not amenable to principle."
There appears, no doubt, to ba some tautology in this last
answer—(hear, hear)—but it marks with tolerable distinct-
ness the circumstances under which the noble lord thinks
the Act of 1844 ought to be departed from. Lord Over-
stone is next asked :
" Do net you think that if the discretion is only to be ex-
ercised under circumstances so extraordinary, it is alraost
impossible to anticipate their, by legislation:o—Th° circum-
stances under which it would be necessary to exercise the
discretion canoot be defined beforehand. There is also this
difficulty—the —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 difficulty, 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 bo augmented."
These opinions are in favour of not interfering with the
existing law. Now, perhaps, I may ba permitted shortly
to express my own opinions, intimated as they have been
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 agreed to the Indemnity
Bill lateiy passed, I do not believe that if any commercial
crisis should hereafter occur any great practical difference
will exist in the position of a Government botween their
view of the effect of these two precedents and the conduct
which they would pursue if they had legislative authority
to suspend the act, but were called upon to assemble Par-
liament within a fortnight or three weeks after exercising
hesus ending power were, as it ought
that authority. If
to be exercised
to be, treated as one proper only on extra-
ordinarybelief is that the practical differ-
ence occasions, my
between the two states of things would not be very
important. My inclination would, therefore, be to let
matters rest as they do present. (Hear.) At the same
time, if it were the general wish of Parliament—if it were
thought an uncoustitutional exorcaiwse, oafnpdotwheernoanfttehnevapradrst
of the Executive to suspend. the l
to come for an indemnity—although I confess it seems to
rue that the passing of an Indemnity Bill condones what-
everi constitutional offence may haTo Ina committed—f

, that view should prevail, I should feel no insuperable ob-
jection to the adoption of each a course. At the same
time, as far as my o am 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-
nazy 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
coarse, if Parliament were sitting, and such a remedy were
th iught 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 bo 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 most 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, woul I 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 me to be open to this objection :—I should
be sorry to authorise the Government by Act of Parlia-
ment to issue inconvertible notes. (Hoar.) If these notes
were payable 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
everychineb 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 in 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 ngland with
their bullion reserve, I do not see what we should gain by
calling them Treasury notes. It would be better 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 14,500,000/., or, as is some-
times proposed, the substitution of either 16,000,000/. or a
larger number of millions of notes to be issued by the Go-
vernment in place of the credit notes of the Bank of Eng-
laud; 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.
opiniontifbi
oreei
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tfsortge
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that
itershell
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nvitdeMr
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admitwe
that my error was not an unnatural one, 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 tho possibility
ef misrepresenting my hon. friend's opinions, I desire, if
the house will allow me, to quote Mr. Twellie answers in
his own words. He 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 these 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 say, that incon-
vertible Si. notes would net exchange for five sovereigns
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 intornal commerce, and we want it to pay Govern-
ment their taxes.
(Laughter.)
" I thought you said you couldconceivo that it might hap-
pen that under the system which you recommend the Si, note
would not exchange for five sovereigns ?—That I think is not
material. A bank-note, I conceive, is convertible intoevery-
thing. If you wanted to convert it into gold, you would go
to a bullion merchant, and he would give you the market
value in gold, as he would in any other commodity ; it might
be more or it might be less than 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 be 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 wo 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 sum of five sovereigns, do you not?—For five
pounds." (A laugh.) "If they tax me 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 repro-
sent it ; it is only recently that wo have had the sovereign,
which represents the pound.
" Do you think that a pound then meant a piece of paper
with certain words printed upon it? —lt had a superscription,
which r 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
uow as it was in the early part of my experience.
" And you think it desirable that a currency should be
estabdshed 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, if 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
not adopt the recommendation of Mr. Twells--if the prin-
ciple which ho lays down is not to be made the foundation
of the new currency legislation which the government is
called on to produce in this current month of December,
perhaps it may be said that a more limited proposition
should be adopted, such, for example, as the issue per-
mitted under the Act of 1814 should be increased by a
million or two, or something of that Bart. Now, I admit
that there is nothing in the principle of the Act of 1844
which requires that the amount should be exactly
14,500,000/. (Hear.) There is no magic I know of in that
particular amount, which was fixed on grounds repeatedly
stated at the time ; and I admit that a person who is
friendly to the principle of the Act may fairly suggest any
amount more than 11,000,0001. (Hear.) That is a matter
for the consideration of the house; but I confess that I
doubt extremely whether the advantage which many gen-
tlemen anticipate from such an alteration would be dee
rived from it. So tar as I understand the matter, there
are two objects in view. Ono is from that school, in which
I must not number my hon. friend (Hr. Spooner), repre-
sented by Mr. Twills. They consider that the simple aug-
mentation of the paper currency is an advantage to the
country and increases the wealth of the nation ; that by
increasing the limit of Bank issues 2,000,0)0/. you would
add 2,000,000/. to the amount of notes in the hands of the
public. That I take to be an entire delusion. (Hear.) I do
not believe that the Bank of England would induce the
public to use more notes than they do at present, and if the
power were given, unless some stronger occasion than wo
have yet witnessed were to occur the present number of notes
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 on 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 2,000,000/. less of bullion in reserve, and the only
difference would be that there would be 2,000,000/. of
riote3 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
arrangement 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 2.000,0001. 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 2,000,001/. snore 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 a 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 has 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
male 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 coarse of yesterday. He stated that the
original enactment by which the 1.3 Lnk of England
note was ma le a legal tender included both Ire-
land and Scotland ; but, inasmuch as doubts arose
as to the construction of the Act, it was held
to be confined to England, awl in 1845 au 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
alleged why that clause should not be modified, and why
we should not revert to what seems to have been the de-
sign awl intention of the original enactment. (Hear,
hear.) There is another question, too, which has been
raised by the hon. member for Dublin (Hr. Vance), and
that is whether it would not be proper that in Ireland the
notes of the Bank of Ireland should be made a legal tender.
That seems to me a fit subject also for the consideration of
the committee. I have beau 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, accompanied with an in-
struction to inquire into the causes 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 Ole Act of 1814, which will investigate the subject of
provincial issuesin England, and also in Ireland an Scot-
land, and which will, so far as they think it expedient,
illustrate the general operation of the Act of 1811, 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 1R44 (7th 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. DISRA.ELI—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 am! 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 ? One would have supposed that
the right hon. gentleman had forgotten for the moment
the circumstances under which Parliament was 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, Team 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 commercial 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 as to
what has taken place, or suggest any remedial measures.
I consider that to pursue such a course would not be to the
honour of Parliament. I anticipated from the first day of
our ►nee ing that there would be a discussion upon the
subject; and if I avoided mixing up this question with
the debate on the indemnity bill, it was because the house
thought that it would be snore convenient to keep the two
subjects separate, and upon theunderstanding that ass op-
portunity would be afforded to consider this question. I
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 retnemthred, I was myself a membcr. The
right lion, gentleman says that the evidence taken before
that 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 member 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 sense witnesses, the same informa-
tion, the same facts, and the same arguments that we had
in the evidence of the committee upon commercial distress.
(Hear.) Lot him understand that so far as lam concerned
1 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. gentleman will not however
pretend that what has since occurred in the commercial
world—if I may use so confined a term-- does not justify
any gentleman, who at the end of the last session was wil-

ling fo 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 it is a subject which requires no further
investigation, but au immediate and distinct determina-
tion. 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.
(Rear.) On ono point, however, he has not satisfied me.
He will, he says, leave the law as it now stands ; but how
will he restore it to its moral influence? Ho cannot forgot
that it has been twice violated, and that consequently
people now look upon it as an obsolete law, and no
human being believes that it can be carriel into general
practice. The right hon. gentleman must know as well
as any other gentleman in this house that the moment
a law loses that moral influence which all laws ought
to possess, that moment it becomes, to all intents and
purposes, a 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 be made and which puts the house in a
clear and intelligible position. What I want the house to
agree to is, that we will not stop future legislation, which
we do if wo ask for future inquiry. I would induce the
house to say that wo 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 one 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 again on the 4th of February from baying our months
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
overtra,ding, 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 ns In
1837 we had extended commercial relations with the United
States of America. In 1817 we had 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
bad a share in bringing them about. What do we find
place Your finger on one or two causes which
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,
in 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 same is the case in Spain, in the south
of Germany, in the centre of Europe, and in some portions
of the north of Germany. In 1817 there was a document
published from which he gathered that the failures which
took place 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 place during the present crisis,
and I am ECry to say that several other houses may now be
ad led to the black catalogue. These failures amount to
the sum of 45,000,000/. This is a sum much snore than
double the failureswhich d in 1847. Under these
occurred
circumstances, it seems to me that it is the duty of Parlia-
ment to inquire Into the causes of this strange convulsion
—(hear, hear, from the Ministerial benches)--anl if the
right hon. gentleman had come forward and appointed a
committee to inquire into the causes of commercial dis-
tress 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 37 days did that committee sit, and its pro-
ceedings wore 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 1811, and the consequence has been that you have had
that act, iu 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 another 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 remedy will be the same as that now proposed
—the appointment of a committee to ascertain what por-
tion of the distress has 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
will correct any error into which I may fall, as I think the
house has a much better chance of obtaining information
on the subject from a discussion like the present than by
consigning it to a select committee. I take, then as the
goldasthe
i consequence
prime cause of the disturbance of public credit the recent
,iooooesim.
of bullion,
I take 1852 as
f
prosperity. We had then the
f
low rate o
theienormousdiscoveries notna t
mn amountcgonruPoe tt point
tytah.n2:2f2,ll° °olrpueterer
per iva. ;i
prevailed
d alsothis
Am e ra
was not peculiar to England, because the same prevailed in
eavltehroyugghmaaetted upon much earlier than other countries
we have had imported into this country the enormous sum
had been by the ttiecoNvvenryatowf
oTfhle9reo'w"asLaonfigdoeladt.hat the time had come when a great
California.
ofSince a l this 8
?
change was to take place in the value of money,
and an op-
portunity afforded by increased capital of executing public
works. We had in the first instance railroads throughout
Europe. France, which had only one or two extremely
necessary lines, executed those great lines of railway in
the centre and 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
which Was scarcely
ye
was not a Government invest-
mentr A
ofepi
scale wore carried on in the centre and South of Europe.
In short,rc
a theta
any country, either in Europe
o
.7- Upon these immense invest-
ments there was a superstructure of soeculation in the
shares of those companies—the necessary consequence of
the first investment. A new classs of houses and of mone-
tarymetaeitae nl
in
this
wa
institutions was established, in order to collect the
That was the time when the Credit Mobilier
savings and superfluous cash, and invest them in these un-
which pushed on affiliated institutions
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 unprincipled.
dw
inears: :as:
every
naba shed,
(Hear hear.) Bat what,
has more recently occurred in this country shows that,
whilst, we pointed out the mote in our neighbour's eye, we
were not Bufficimetya coomnbacairoruasutihna: our own
greatcondi tionwae
perhaps even
under-
takings stimulated consumption, and this great stimulus
to consumption increased the price of all produce. Gamb-
ling arose just the same in shares in public works
n
as
i produce, in which there was So extraordinary a ripe

as seemed to astonish the world. This was attributed in
part to the increase in our metallic treasures. The conse-
quence of all this was speculation, reckless investments,
and ovortrading, which year after year increased. Year
after year those engagements were 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 despatched to Melbourne. Well, the
merchant at Hamburg accepted the bills, and the moment
he accepted the bills he drew upon the merchant in Len-
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 the transaction, the solvency of the
parties, or the value of the cargo. Now, why had such
trading as this gone on to inch 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 men were
looking about in alarm, there arrived those golden galleons
from Australia—those rich argosies from California—
which, throwing an immense heap of treasure uponthe mar-
ket, averted the suffering which was imminent. But things
went on, and it was no longer in the power of 20 or 3) 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 Car-
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
measured oven by hundreds of millions, but by a denomi-
nation unusual oven in commercial returns. In these ti an-
sections the share of England is to be computed by hun-
dreds of millions, and yet we are to be 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 brou;ht 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 sight 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 b sink notes ? What happened
in 1823? There was then a commercial convulsion. Then
it was pretended that the cause was the issue of notes by
the country banks. Well, in 1837 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 (ail. Charles Wood.) In
1847 there was another crisis. What produced the con-
vulsion then, according to groat 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 instancy they have
attributed to the least influential form of credit conse-
quences 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 cir-
cumstances, ever reach. Now, sir, I will show the house,
if it will permit, in this misapprehension also lies the cause
of the difficulty under which we are now labouring. and
in its solution alone shall we ever discover any efficient
means of extricating ourselves from this perpetually re-
curring embarras•mont. It has always struck me as a very
curious subject of inquiry, why men should persist in such
a confusion of ideas as always to mistake capital for cur-
rency, and to attribute to the loss powerful instrument
the snore 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. That high authority to which the right hare gen-
tleman the Chancellor of the Exchequer referred (Lord
Overstone), who does justice to the merits of bullion, and
my hon. friend behind me (Mr. Spooner), who sufficiently
esteems the merits of paper, both agree on the point that
commercial convulsions are occasioned, or may be mate-
rially prevented, by the wise regulation of the circulation
of bank notes. Now, I wautto know the reason why people,
differing in every respect as regards the subject generally,
should be in accord on that point ? I think the fact may
be accounted for, and I am of opinion that in ascertaining
the canoes 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 fall of prices,
and that continued for two years or even snore. 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-
blem in Euclid mere 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 1810. I am sore that no one in
this house would speak of the labours of the bullion com-
mittee but with that respect which all great intellectual
efforts and public services deserve ; that committee vindi-
cated that great principle upon which the happiness of
communities mainly depends, the standard of value.
(Hear, bear,) The bullion committee proved that an over
issue of inconvertible paper might bo depreciated, and in
our case depreciated. I think a vory fair argument might be
urged to show that the price of gold in those days was
raised by some other cause besides the existence of depre-
ciated paper • but lot 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 mankind. 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 subjected
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 pos-
sviabnlececdonasnedquesetnavisehva
so
nf
ti theth
aptr i
allnc i ethes
sharpavhi e he
xtih)
eeryi e
na
cde-
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 ana 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 aro 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 hon. bart (Sir C. Wood) whom I
now see making a note. I hold, sir, that by ample, com-
plete, and irrefutable evidence three things may be proved
—first, that notes convertible at par cannot be depreciated;
secondly, that it is impossible to force their circulation—
(hoar)—and, thirJly, that for any issuer of bank notes,
convertible at par, to price cannot be affected by a bank
note circulation under such conditions further than they
would be affected by an equal amount of metallic cur-
rency. (llt ar.) I hold, sir, that it has been shown by the
labours of our committees, in the evidenee which they have
taken—l hold that it has been shown, in a manner which
cannot be confuted, that thero 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 in the long run tho balance is
always struck between them. (Several 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 is encounter with regard to the issues of bank notes dur-
ing all these commereial 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-eight. 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 repeated by his successor upon the Treasury
bench at this moment— to have been occasioned by the over-
circulation of notes 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 with-
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 hon. gentleman opposite (Sir C. 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 ho examines them lie 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 Parlia-
ment. Yon will end, in the whole circulation to England
supplied by hundreds of country bankers, that at a particular
I eriod 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 corre-
spond with the occupations of the people amongst whom
those notes aro 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 circulation : that at the end of the year,
when agricultural pursuits aro dead, the circulation falls, and
after the harvest you will find the circulation equal. Now
how is it possible to view these pheuerana—for a quarto;

of a century the returns show them to have occurred with
astronomical precision-alio* is it possible to view that rise
in the sprihg, that sinking in winter, and that even condi-
tion in the autumn, without seeing that there is some 1::w
which regulate the circulation of notes much too strong to be
influenced by Acts of Parliament ! We do not possess much
informatian about their own transactions from the country
bankers; they are of all men the least likely to give it they
are naturally jealous and reserved. But their returns are
upon the table of the house, and they completely prove that
the issue of bank notes depends upon the wants of the com-
munity. If they were to attempt to.fbrce the issue of their
notes, what would they be doing ? Why, while they think
they are putting their notes into circulation, they are but
lending their capital by means of such advances, and if these
injudicious advances lead to a commercial convulsion, that
convulsion cannot with any propriety be ascribed to the issue
of bank notes. The circulation of bank notes is currency,
and I defy any banker to convert that currency into capital:
Any one may take and lock up the notes in his strong box ;
that he may do ; and if he do, no one will say that w He so
locked up such notes can have any effect on the circulation.
So much, then, for these poor country bankers whose over-
issue of notes, according to the right hon. gentleman and the
school of which he is so eminent a member, produced the con-
vulsion of 1825. Let us now look at the crisis which oc-
curred in 1837. The commercial convulsion of 1857 was
produce% according to the school of the ultra-bullionists, by
the over-issue of bank notes convertible at par by the joint
stock banks. Look now at the evidence and documents which
gentlemen who then made speeches did not possess. I know
that I have an advantage over the gentlemen of that day, in
availing myself of documents and evidence which did not
then exist ; but the speeches that were then made operated
on public opinion, and in effect became the foundation on
which was based the legislation which followed. I come now
to the issue of bank notes convertible at par by the j oint stock
banks. Then we find that on account of the horrible sins of
the poor country bankers, it was become necessary that we
should have banks of a more authentic credit. 1113 country
bankers had convulsed the country, and they had nearly
severed the connection of America with th's country.
What did the honourable member for Halifax (Sir C. Wood)
who is taking notes to-night —(a laugh) —do then? He
says that this is a great affair, this commercial convulsion.
but I have found out the reason. Let me remind you what
occurred when joint-stock banks wore founded in this coun-
try. We have since hears so much of these banks having
done great things, that they have accomplished such great
disasters by means of their colossal credit, that hon. gentle-
men must not expect that joint-stock banks established in
1835 were of equal dimensions. But let mo say that joint-
stock banks when established were of no mean character.
There were at that time 107 of these institutions in the coun-
try ; they had a paid-up capital of 15,000,000/. ; and their
subscribed capital was nearly ten times that amount. There
were 478 branches and agencies of these banks pushed into -
every active town and seat of trade and seat of agriculture in
England. They were established on the prineiple and with
the idea, that they would make a great profit by the circula-
tion of their •bank-notes. What occurred T When the com-
mercial convulsion happened in 1837, it was found that the
circulation of the joint-stock banks had increased. Between
the year 1835 and 1837—that is, during the two years pre-
ceding the convulsion—their circulation had increased by the
amount of 1,500,0001. It was instantly said that the com-
mercial convulsion of England had been occasioned by that
over-issuo of 1,500,000/. There was a redundant currency.
The fall of great houses and the disturbance of capital and
credit throughout the United States and England were attri-
buted to that cause. It was urged by the defenders of joint-
stock banks that their business had really very much increased
iu consequence of the demands of the public upon them ; but
these gentlemen were not listened to. Can there be anything
more absurd than to think that so great and important an
effect as the commercial convulsion of 1837 could be occa-
sioned by so mean and petty a cause ? But let me remind
you that these instances and these arguments were not only
at ono time prevalent but predominant in this house ; and it
is because these arguments, founded upon these instances,
have been taken so easily that we have had the law passed
in 1844 which, to the confusion and shame of the country,
must, on every recurring emergency, bo suspended t What
is the point, then, with respect to these joint-stock banks !
It is but very recently that, in the course of the examina-
tion af witnesses by the same committee—a repetition of
which the right hon. gentleman proposes to-night
I find the right hon, member for Halifax sharply cross-exa-
mining one of the witnesses who had advanced an opinion
which I believe to be a legitimate opinion, viz., that an over-
issue of bank notes convertible at par was impossible—the
right hon. member sharply cross-examining him as to the
over-issue of notes to the paltry amount of 1,500,0001. But
it now turns out that this excess of issue was produced by
depriving the poor country bankers of nearly the whole of
their circulation, and not only that, but by affecting the
branch banks of the Bank of England to no inconsiderable
amount. So that over the whole of this country, after the
addition to it of 1,500,000/., the aggregate circulation in that
year was absolutely diminished. Who can think, after evi.
deuce of that kind, of supporting a theory which I think the
Chancellor of the Exchequer to-night has cast to the winds ;
but yet it is a theory which is supported by the law that he
recommends the Sovereign to suspend, and by the reappoint-
ment of that committee which ho suggests. What can evi-
dence do moro that has not been done by the events which
occurred in regard to join'-stock banks, whose over-issue, as
it was alleged, of a million and a half, had occasioned a con-
vulsion in England and Europe. At that time there were
failures of joint-stork banks for 1,500,0001.; but what was
their issue ? There was ono bank, for instance, the Northern
and Central J•dut-Stock Bank, which failed in 1837 for a
large amount, but their issues were only 30,000/. in notes.
It was that paltry issue, however, of 30,0001. which cause I
the convulsion, and not the injudicious, improvident, and
unprincipled advances to the extent of 1,500,000/. (Hear.)
What has occurred at the present day ? Look at the joint-
stock barks in Scotland and England which have suspended;
many of them we'o not banks of issue at all, and some of
them, with a liability of a million, had been issuing to an
amount which was perfectly contemptible. In fact, the notes
sent into circulation by these banks have produced no effect
upon those five portentous years to which I have been calling
your attention. The right hon. gentleman proposes an in-
quiry into the case of the Scotch and Irish banks, and the
operation of the law of 1845 ; and to that I have no objec-
tion. But if you look at the circulation of the Scotch banks
you will find an important illustration of the principle for
which I havo been contending. Since the year 1826, in that
country where banking facilities and the employment of
banking canital and credit is so great, we find that the notes
in the hands of the public have every year bean diminishing.
And at this moment I doubt whether the amount is so great
as it was when that great development of banking took place.
I havo now shown you that with regard to the circulation of
the notes of the country bankers in 1825, and the notes sent
into circulation by the joint-stock banks in 1837, there can
bo nothing more futile than to suppose that the convulsions
of those years were attributable to such causes. Lot us come
to 1847, when the only victim on whom the calamities of the '
country could be placed was the Bank of England, and when
the only cause which could be alleged for its misfortune was
the mismanagement of their notes in circulation. Our expe-
rience of that year entirely proves that the directors of the
Bank of England have not the least controlling power over
the circulation of their notes ; for, in 1847, when this crash
o Turred, and when there was a withdrawal at the beginning
of the year of bullion to the amount of 7,000,0001., the notes
in the hands of the public remained at exactly the
same amount. Later in the year, when the crash occurred,
and when the law was suspended, there still remained
in the hands of the public —how locked up or disposed
of is not recorded—the same amount of bank notes,
When you talk of over-issuo, and of the power of the
Bank directors to force the circulation of their totes, let me
remind the house of what occurred in 1847 with respect to
the commercial circumstances of this country. In 10 years
you have doubled year exports and imports, and in these 10
years you have not added one bank note to the amount in
circulation. The whole of the bank notes in circulation in
1846 and 1847-1 am speaking from memory, but sufficiently
accurate for our purpose—was about 40,000,000; and in the
last return which I have seen for 1855 (and circumstances
have occurred since 'then which favour my argument) the
whole of the bank note circulation of England was 39,000,000/.
All this proves that bank notes are in a certain sense falling
into disuse ; and the truth is, that no doubt we have arrived
at such facilities of communication—the daily post, the elec-
tric telegraph, and ether circumstances —as render that kind
of accommodation no longer so important as it was 10 years
ago. Now, sir, I hope this house will believe that, with the
views which I have attempted to place before it, I approach
the cousideration of the illegal suspension of the Bank Charter
Act by the Government with no prejudice whatever. I
am not one of those who suppose that a disturbance of the
capital credit of a country like England will bo at all pecu-
niarily affected by the circumstance of their having a limited
circulation of the notes of the Bank of England. But, sir, it
is impossible, in my mind, to resist this conviction, that the
act of 1844, which, after all, was an act only to regulate the
circulation and the issue of Bauk of England notes, was an
act drawn up in deference to those fallacious principles re-
specting issue which have so long and so fatally prevailed in
the country; that the provisions of that act were framed
in deference to those mistaken views ; and that, in con-
sequence of the deference to those mistaken views, that act
has exercised aggravating influence upon the commercial
distress which has recently prevailed. Sir, I believe that to
be the case. A great objection to that act in my mind is that
it paralyses circulation. Circulation, which should at all
times be active, and especially active at a tans of commercial
alarm, becomes stagnant at the very instant when those cir-
cumstances of apprehension, arise. That act, I believe, ope-
rates upon circumstances, however different, in exactly the
same manner. Whether you are dealing with a foreign drain,
or with a domestic drain, occasioned by panic, the Ration of
the Bank Act is exactly the same. While at ono instant it is
perfectly competent to control foreign interference, the very
moment when there is any alarm, the Bank acknowledges
that it is itself subject to terror, and it feels and increases the
very confusion which it shares. Now, sir, at the bottom of
all this, in my mind, the misapprehension that there exist a
in the minds of the framers of that act, as to their residing
in the Bank any power which regulates the issue of bank
notes. They assumed as a truth—what I think can be proved
to be erroneous—that it was possible for any issuer of notes
to force his circulation. But, sir, if the principles which I
have attempted to recommend to the consideration of the
house are founded in truth, we need no longer argue as to
whom a distributory, power is to be entrusted of bank notes
convertible at par, because it is impossible in my mind to
believe that that power of distribution would be abused.
However, that is a point to which this house must direct its
attention. (Hear, hear.) Now, sir, I find hon. gentlemen
coming forward who propose nothing, or who are about to
advocate opinions which are not maintainable either by ar-
gument or by facts. I think I, on the other hand, have
taken a course which is the Parliamentary ono, which is the
legitimate 'one, which is, I maintain, the moderate and
proper one. (Hear.) As for legislating before Christmasupon a question of this kind, it is absurd to suppose that
the First Minister himself would embark upon such an under-
taking. But I ask the house to-night to come to a resolution
which will show that, though we are not prepared to come to
ca
precipitate conclusion, we can arrive at this ‘zinclusion, that
the materials for legislation are in our possession, and that in
due season, after due deliberation, we win adaress om ss
to the solution of this great public difficulty. (Cheers.)e ourselves
to the solution of this great public difficulty. (Cheers.) I
would say one word with respect to the conduct of the Bank
of England. I understand, sir, and I have been told in the
course of the last speech but one of the Chancellor
of the Ex-
chequer,that all the directors of the Bank of England are in
favour f this measure—that they are in favour of the Act of
1844. New, sir, I shOuld not wish to speak of the directors of
the Bank of England iu any other terms than in those of the
sincere respect to which they are entitled. I think it is a very
great thing for the people of England, and for the City of Lon-
don, that a body of men of such intelligence and public
w
spirit can be induced to undertake the management of such
with institution as the Bank of England, and whoay
add,ca n conduct
themselves with so great firmness, and, I may
great liberality. But if an attempt be made to influence pub-
lic opinion in this house by appealing to the great authority of
the Bank directors, I am sure they will permit me to advert
to some circumstances, not in a hostile but in a truly friendly
spirit, which I think ought to be brought before the conside-
rationr of the house, not in order to deprive the Bank directors
of their due influence upon our debates, but which I think
should be placed before the house, not in an exaggerated light,
but in that calm tone tq which they aro entitled. Now, Ido
not know whether hon. gentlemen have read the evidence that
was taken before the committee on the Bank Charter Act
which Sat pine last year. Perhaps since this catastrophe has