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

3 FIE

amount of debt owing by the Government to the B
instead of having the mecurities locked up and paying
out a quantity of notes professing to be convertible into
gold, but which they were unable to pay. Re would
leave the administration of the national paper in the
hands of the Bank, and would let them issue those
notes. instead of their own, on Ruch terms as would be
fair and just for substituting that currency for their
own. By doing this, a double currency woald be
formed. It might be objected that there would be a di`-
ference in the value of the two. But would it not be bet-
ter to allow parties to purchase the gold notes at a pre-
mium than to compel them to pay 13 per cent. 'I Ile con-
tended that such a plan would be more consonant with
the best intere,ts of the country. By this means there
would be a reglar circulation of 20,000,0001., and those
fluctuations whicn were so destructive to business would
be avoided. Although he was prepared to support the
Bi 1 of Indemnity, there was one provision to which he
entertained an o` jection, sn'l that was the power given
to the Bank and the Government of breaking the law.
He was quite sure the country would not consent to
leave such a power in the hands of the Bank, and still
less to place such an unconstitutional power in the hands
of the Government. (leer.)
Mr. GLYN said he did not understand the Chancellor
of the Exchequer to have proposed the insertion of any
clause conferring the power to which the hon. member had
just alluded, but that he had suggested it for the conside-
ration of the house.

Mr. SPOONER observed that it had been proposed by
the right hon. gentleman.
The CHANCELLOR of the EXCHEQUER remarked
that what ho had said was that he would insert a clause in
the bill authorising the Bank to exceed the legal limit for
twenty-eight days after the meeting of parliament after the
recess.
Mr. GLYN—The hon. member for Warwickshire had
referred to the effect of the act of 1q44 on the existing state
of things. In doing so the hon. gentleman was mixing up
two questions which were entirely distinct. Ho was mixing
up the question of capital with the question of currency.
This crisis which occurred in 1847 and that which now ex-

feted primarily arose from the same causes. In 1847, the
commercial crisis was brought about by the overtrading of
this country with India, and large speculations for the
promotion of the corn trade on the continent of Europe.
These things, added to the internal pressure and panic,
were the primary causes of the crisis of 1847. The
causes which had produced the present crisis were iden-
tically the same, and had produced the same effects. The
country was now suffering partly from the terrible over-
thow of its commercial relations with the United States.
It was also affected by a new feature which hitherto had
not been felt in its commercial relations—the total destruc-
tion of commercial houses connected with the North of
Europe. That trade had for a few years been carried on
very much like that of the United States—on an entire
system of credit. Another immediate cause of the crisis,
and a new one, was the extraordinary over-banking in
Scotland. (Hear, hear.) That, added to the over-banking
in some parts ofEngland, hal caused the internal pres-
sure which had led to the disastrous effects under which
the commerce of the country was now suffering. But he
could not trace these effects up to the Act of 1811 in any
way consistent with justice. The provisions of the act may
be summed up under three heads—first, the separation
Of the two departments, banking and issue—secondly,
the restriction of the amount of paper circulation upon
securities; and, thirdly, that which regulated the coun-
try banks. With regard to the first point it turned
out that the Bank directors themselves, some time before
the introduction of the bill of 1844, had instituted that
division as a departmental arrangement wholesome pro-
vision when kept in their own circle, but attended with
disastrous effects when made a necessary part of the act.
With regard to the restriction of the country bank circula-
tion, he did not think any difference of opinion existed.
The great difficulty of the question was in the limit of the
circulation to 14,000,000/. He did not think any indivi-
dual who had watched the operations of the crises of 1847
and that of 1857, could fail in arriving at this conviction,
that although the pressure was not caused by the act, yet
the limiting of the power of issue upon securities became in
itself the primary cause of the evil. It simply acted in this
way. The operation of the pressure reduced the reserves
at the Bank. The man who was ready to sacrifice anything
to meet his engagements, who was ready to pay oven 20
per cent, for that purpose, was anxious to buy the currency
—would purchase it at any cost—aad that depressed the
reierve still further. (Hear, hear.) He would venture to
assert that a person hal no right to demand the purchase
of a, portion of the currency to meet his engagements. That
tan; so, the issue of the Government letter became inevi-
tauie both in 1847 and 1857. In the year 1847 especially
there was a moral courage in the issue of a letter which the
country ought to appreciate and value ; and nothing could
exceed the promptitude with which the present letter had
been issued, for it was issued without any pressure from
the commercial body on the Government. (Hear.) A de-
putation was ready to start from Liverpool on the day the,
letter was written, but they waited for a telegraphic mes-
sage to know whether they should come up or not, and
found their wishes had been anticipated by the noble lord
at the head of the Government. (Hear.) It was an inevi-
table consequence that whenever a pressure arose a letter
must be sent down to relieve the act of 1844. He believed
that no individual or Government would ever have the
hardihood to carry out the primary principle of that act.
If any Government did so they would be hurled from
power, not by a vote of the house but by the physical force
of the con,try. (Hear.) The country would not allow its
commercial operations to be interfered with in any such
manner. Did any one suppose that the large machinery
connected with the mill power of the country and the
mining interests of the country would be content to go
without their wages merely because a principle was to be
upheld? (Hear.) That being so, the question arose whether
the power which had been exercised should remain in the
hands of the government, without any positive knowledge
of the manner in which it might be exercised ? He thought
the proper place for lodging such a power was in the hands
of a responsible body like the Bank directors, under suffi-
cient parliamentary control. Unless something of that
kind ghoul(' be clone, a pure metallic circulation must be
resorted to ; and he did not think the country was proper('
for such a proceeding. Matters could not be allowed to
remain in their present position much longer, for it was
constitutionally wrong to allow such a power to exist
without any certain rule for its proper exercise. (Hear,
hear.) He could not sit down without bearing his testi-
mony to the conduct of the_Bank directors, which was
beyond all praise, and he must be permitted to say that
they had shown a degree of firmness, vigour, and discre-
tion which entitled them to the warmest thanks of the
country. (Cheers.)
Mr. HENLEY agreed in the general opinion that the
government were entitled to a bill of indemnity. Bat if
they had acted otherwise, and had not been torn to pieces
by the people, they would have to defend themselves against
a bill of impeachment. (" Hear," and laughter.) There
would not only have been the risk, but the certainty of a
popular commotion. So far, therefore, as regarded the bill
of indemnity, he should give it a very cheerful support.
The next question was, why should there be a need of these
indemnities? (Hear, hear.) What was the state of the
law ? Twice within the last fifteen years a corporation,
possessed of an enormous capital, showing a rest of
3,000,000/. or 4,000,0001. above their engagements, would
not have been able to pay anybody a shilling without an
indemnity. (Hear, hear.) In 1817 the directors stated
that the measure had been forced down their throats, and
that they could have done without it, but that was early
a matter of opinion. The hon. member for Kendal had
given credit to the government for their spontaneous
action in the matter, but he had made one statement which
throw a shade of doubt upon their.conduct, for it appeared
that a Liverpool deputation were only stopped from coming
up by the telegraphic announcement that something had
happened. (A. laugh.) He differed entirely from his
honourable friend behind him. He was one of those
who wished to see the bank note convertible at every
man's will who held it. (Hear, hear.) He could not
conceive that a monetary system could be safe without
that. Then the next question was what was being converti-
ble ? His notion of convertibility was that a man could go
to the counter when he pleased and be sure to have gold for
his note at the time. Then the next question came : how
far did the act of 1814 secure that ? The Chancellor of the
Exchequer said that the distinguished individual who
brought that bill forward said he had three objects. One
was to prevent panics ; another to maintain convertibility,
and the third object was to prevent speculation by the
issue of paper. Now let them see how far these objects had
been attained. Sir Re Peel himself said it had failed in the
first object. It had failed to prevent panics. Well, failing
to proauce panics—{A. MEMBER : "It has succeeded in
that "1- (laughter) failing to prevent panics had it pro-
duced convertibility. What had the bank got to pay its
notes with ? In ordinary times it had twenty millions of
bank notes, fourteen millions of. which were issued upon
_ _

security, and the residue upon gold. It should be obseried
that that gold was not in coin. Now if they had not had a
letter to suspend the operations of the bank, if the bank
had been unable to pay its deposits over the counter, how
long would it have been before parties would have gone to
havetheir notes paid in gold ? They said people would not
be so foolish as to go, but why did they not go ? Because
confidence prevented their going. They must rely on that
confidence because all banking operations were founded on
it. Nobanker could keep every shilling that was confided
to him in his counter ready to be repaid ; but he must
trust to keeping a certain proportion of it. So it was in
what was called this mixed circulation. If they chose to
issue on security that was nothing but depending on the
confidence of the country. If it carried with it a limit
they laid the foundation of a want of confidence, and that
want of confidence, if they tried to maintain the law would
necessarily prevent bank notes being paid in gold. A good
deal had been said on the subject of panics. Sir R. Peel
was reported to have said that provision could not be made
against panics. But he should like the Chancellor of the
Exchequer to state what ground there was for the difficulty
they were in now and that they wero in in 1817, whether
in point of fact it was a real alarm, or whether it was
an idle panic ? The hon. member who moved the address
quoted an opinion of one of the directors, Mr. Hub-
bard, upon this subject. They had also in the blue-
book the opinion of the Governor of the Bank of Eng-
land. One of these gentlemen said the country
was grossly ignorant, and the other said they were not
well acquainted with the true principles of the act of 1814,
and they went on to explain that the panic arose from not
understanding what they called " the normal state of the
decrease of the reserve at a particular time." This decrease
in the reserve in 1847 took place in the month of October,
when there was a nice chance of building up a little his-
tory to show that the public were unreasonable, and it
would have done perfectly well if they had kept clear of
figures. Mr. Hubbard said, "The chief difficulty in Octo-
ber, 1817, was occasioned by the excessive ignorance of the
public generally." Now that was a good jolly accusation.
(Laughter.) " Excessive ignorance of the public) generally
with regard to the action of the Bank, and especially its
action periodically, and when the publication of the reserve
of the Bank showed a declined state at the commencement
of October, the public mind was alarmed, and the alarm
became what was called a panic." Now, the difference be-
tween alarm and panic was when there was any reason for
alarm. This alarm, Mr. Hubbard said, caused people to
look up what money they had got. Mr. Hubbard did not
stop there ; but went into the region of prophecy. He said,
" I believe therefore that the experience of 1847, so far from
showing that the Bank Charter-Act is untenable in terms of
difficulty, shows that it operated with perfect success—a
YUCCOI3B that will be greater under future trials by reason of
the Bank feeling more confidence in its own operations, but
what is more important still, the bankers and mercantile
community will know that they must exorcise a little indi-
vidual prudence, an I nut consider the Bank of England a
dryenurse in the hour of need." That evidence was given
see
eetwaitat MThri.sWeguelin
said, because. he went o question
in July, 1857, and now
nlotiethieimao
in the month
was pi",
accounts and the various domestic
of October, the Banks ma,
to him—" Suppose that in 1817,
causes regulating the supply o f bullion had been as
correctly understood as they are in the summer of this
have yes'f''
do you think that the same panic would accrued_he t
And ho said—and this was very curious—" T lowes
Amount of mom in 017, And cosequently the highest