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

t CAE t 7 0-1
L.?
_LP r. 4

,at in the pre-
I been reached
of things begun
io of the letter, in
the c ,elerated that pro-
cess ; but iy manifested itself,

and the wo. e itswas issued. Now,
in the presen, (ivy is the fact. We
had not reacheu ti. e letter was issued ;
and, whatever opinion med as to the benefi-
cial effects of the letter there is co doubt that if it had
not been written, if this authority had not been given,
ws should have seen a worse state of aings after the
12th of November than before it. Now, the fact
which seems to me material as constituting the differ-
ence between the two years is the proeress of the Lon-
don disceent at the Bank in 1847 and 1857. On the 23d
October, 1847, the London discounts of the Bank were
7,762,600/. The amount remained stationary till about
the 4th of November, when it fell to 7,500,0001 ; and a
few days later it sank even lower. In the present year,
on the other hand, those discounts amounted on the 9th
of November to 7,256,0001. They went on regularly in-
creasing, till on the 27th Nov. theyreached 12,022,0001.,
and on the let Dec. they still stood at 11,961,0001.
This shows that the sum under discount at the Bank of
England was greater at the end of that period than at
its commencement, whereas in the corresponding period
of 1847 that amount had considerably diminished. There.
fore I infer from these facts that, whereas the worst of
the crisis had been overcome before the letter of 1847
was issued, the worst had not been overcome when the
letter of this year was issued. I trust, Sir, that I have
established to the satisfaction of the committee that the
course taken by the Government in 1847 was maturely
considered and deliberately approved by Parliament—
that the authors and promoters of the measure approved
this proceeding, and that it constituted a precedent by
which subsequent Governments could with propriety re•
gulate their conduct. In the present case the causes of
the panic were no doubt different, but the result was
the sane; the circumstances with which the Government
had to deal were similar, the urgency was greater, and
whatever reason justified the resort to extraordinary
measures in the year 1847 will be found to apply with
greater cogency aril greater conclusiveness to the case of
the present year. But the existence of a precedent has
not grown out of mere accident from the occurrence of
circumstances which had not been foreseen when the
original measure was prepared. I have the evidence of
C itton, the Governor of the Bank at the time when
the bill of 1844 was under consideration, and that gen
tlemiin stated to the committees of both Houses of Pare
liement that the precise contingency which occurred iu
1847, as also in the present year, was foreseen by Sir
Robert Peel, who appeared to have contemplated a
mode of meeting it exactly identical with that which has
been adopted in both years. That seems to me an im-
portant part of the case ; and I will therefore read an
extract on this point from Mr. Cotton's evidence before
the committee of this house which sat in 1843. Similar
evidence was given 4y him before the committee of the
House of Lords. Mr. Cotton was thus examined :

"In the case of a panic do you think that a contraction
of the circulation is any cure for it ?--T. think it is, inas-
much as it increases the value of money and induces people
who have hoarded money to part with it.
" Do you think, even in the case of an internal panic,
the proper mode of cure is a contraction of the circula-
tion !—The proper mode of cure is a contraction of the cir•
lation ; whether it is worth while to submit to the remedy
is another question. I can easily conceive that there may
be monetary crises when it is necessary for the Govern.
ment to interfere, and to do as was dune in October.

" You contemplate, as I understand you, that under the
operation of the Act circumstances may arise which will
call for the interference of Government ?-1 did content-
, plate it, and I believe that I shall not be guilty of a breach
of confidence if I state that the subject was discussed very
fully with the First Lord of the Treasury and the Chance-
llor of the Exchequer during the consideration of the pro-
visions of the Bill, and when the subject was again pressed
on him Sir Robert Peel expressed his opinion to me in
these terms :---`llfy confidence is unshaken, that we are
taking all the precautions which legislation can prudently
take against the recurrence of a monetary crisis. It may
occur in spite of our precautions, and if it does, and if it
be necessary to assume a grave responsibility for the pur-
pose of meeting it, I dare say men will bo found willing
to assume such responsibility.'
" It was contemplated that circumstances might occur
' which would render it necessary to suspend the limit of the
Act of 1844. Can you state what were the sorts of events
that you had then in contemplation ?—I should say events
similar in effect to the events of 1825, when there was entire
discredit of all the country bank circulation, and a panic
which brought down, not merely an immense number of
bankers, but others who were man of undoubted property."
' I think that passage ought to convince this committee
that, in referring to the proceedings of 1847 as constitut-
ing a Parliamentary precedent of the utmost authority,
we have every security that the subject was fully con-
sidered both in its character and its consequences, and
that legislation was left in its present state upon mature
deliberation. The right bon, gentleman (11r, Disraeli)
pet a question last night which he had a perfect right
to ask, and t ) which he is entitled to have an answer.
It was :--" Whether the issue of this letter was called
for by the Bank directors, and whether pressure was
applied to the Government in order to obtain it I Now,
Sir, I state distinctly that the issue of that letter was
the spontaneous act of her Majesty's Government.
(Hear, hear.) That they proceeded upon their own deli-
berate and conscientious view of the circumstances of the
case—(bear, hear)—that they were not urged by depu-
tations, by the representations of mercantile bodies, nor
were they implored to interfere by the &rectors of the
Bank of England. No man invested with a public and
official responsibility could have acted in a more honour-
, rabic and conscientious manner than the directors of that
[ corporation. They showed themselves throughout ready
to carry into effect all the obligations which the law cast
upon them, and they merely said that they were willing
, to act upon any advice which the Governinentrnight tes-
tier to them, but that they were prepared to obey the
provisions of the law. Sir, the Government were guided
by their view of the facts which I have disclosed to the
committee—facts, the corresponding circumstances to
which were deliberately reviewed by the Parliament of
1347, and were considered by them as constituting a
legitimate ground of interference. These facts existed
in a far more intense degree in November, 1857, than in
Oc.ober, 1847. Our justification therefore is, that we
acted in consequence, not of the pressure of the me+rcan.
tile body, but in consequence of the pressure of facts,
and that we obould have been guilty of a grave dere-
liction of duty if in so grave and urgent a state of circatn-
stances we had hesitated to take upon ourselves the re-
sponsibility which was assumed by the Government. I
do not at all seek to screen myself under the existence
of mercantile pres,ure. If the act which we have done
is right, let the house indemnify the Beetle directors, let
them indemnify those who advised them. We do not
seek to shelter ourselves under any pretence of having
been coerced into the act. The committee is in posses-
sion of a numerical return from theßank fully exhibiting
the state of things each day from Nov. 11, and I shall
not trouble them with a minute analysis of these figures.
I will only say that, unlike 1847, tin Bank directors im-
mediately found themselves compelled to act upon the
authority given by Government, and to make issues in
excess of the limit fixed by the act. They first issued
1,000,0001. of notes from the issue to the backing depart-
ment, placing against that sum as equal amount of seen-
rities ; and ou a subsequent day they made a similar
transfer. Tue first issue was on the 12th of Nov., and
the is.cond on the subsequent day. The effect of that—
technically—is that the Bank has infringed the provi-
sions of the act to the extent of 2,000,000/. sterling ; but
the committee should bearin mind that, althoegh owing
to the pecu''ar manner in which the accounts of the Bank
are kept the law is technically infringed to that amount.
at no time has the Bank issued se snuck as 2,000,0001.
to the public. It has merely passed 2,003,000/. from one
department to another. I have before me a statement of
On the 15th Nev. the excess of n,:tes in
the amount in excess which was from day to day issued
to the pubre.
the hands ef the public was 186,000/., on the following
daye n:22 the,o/
0 amount and
of s° o
reached the maximum of 923,000/. If the committee will
d
of notes in the banking
department from the 2,000,0001, transferred from the
dO,
i,sue depar merit they will see the difference is the figures
the n
reserve until
the 20:11 Nov., wheel it
which I have given. That is the real amount
which has reached the public. On Nov. 21 that amount
was 617,0001. ; on the 23-1, 397,0001. ; on the 24th,
317,0001. ; on the 25th it had fallen to 81,0001.; on the
three following days there was an increase, but on Nev.
30 it had fallen to 15,0001. ; and ou Dec. 1 the note re-
serve was more than 2,000,0001. ; therefore, strictly
speaking, there was no issue in excess of the limit. I
need not, however, remind the committee that the ope
rations of the Bank being now divided into two depart-
nier.te it was impossible to work the banking department
without an issue of notes from the issue department, and
that that transfer was technically a violation of the law;
but the committee should hear in mind that the real and
essential violation of the act has been confined to the
amounts which I have just read. It may be asked what
would have been the result if the letter of Government I
had not been issued. That is a matter about which we
can only form conjectures. The actual result of issuing
that letter must be admitted to have been favourable. It
diminished alarm and restored confidence ; and it did
not in the smallest degree endanoer the convertibility 'ot
the note, because a favourable turn of the exchanges had
taken place, and there was at that time no fear of a fo-
reign drain of gold. Therefore I cannot third: that at
that moment the convertibility of the note was endan-
gered by the step which was authorised by Government.
If that authority had not been given, it is certain that
the only measure to which the Bank could have resorted
for its own protection would have been the immediate
and total ceesatien of discounts. (hear, hear.) Indeed,
could they have foreseen the impossibility of Government
taking such a stop, they might, perhaps, have diminished
their discounts a day earlier. At all events, they must at
the time the letter was issued have entirely stopped their
discounts. Whether so decided a step as that ou the part
of the Bank of England might not have led to the ex-
tension of discredit among establishments of a similar na-
ture engaged in similar operations of banking I leave it
to the Cumnottse to determine. (Oppositiou cheers.) It
ie net fur me to give arty positive opinion upou coca a
sulject, but if such discredit had arisen the Committee
eiu-t sea what would have been tho area upon the
banking department of the Bank of England by leading
to the withdrawal of deposits, Now, as by law the two
departments of the bank are separated the one from the
other, and the assets of the issue cannot be applied to
relief of the banking department, the Bank of England
might have found itself in the painful position of post-
poning payment to depositors—(hear)—or of applying a
portion ef the assets of the issue department—because
its assets would undoubtedly have been sufficient—(hear)
—to the discharge of the liabilities of the banking de-
partment. I think it probable that each a contingency
!night not have arisen ; nevertheless, it was within the
r.'.ngc of possibility. Event., Kg I have learned from
painful experience—events march very rapidly during a
commercial crisis. Persons who are loaded with the
responsibility of action in moments of that sort must be
prepared for them, and I leave it to the Committee to

judge whether, with such a contingency before them,
her Majesty's Government would have been justified in
withholding the letter which they sent to the Bank.
I am fully conscious of the gravity of the step which the
Government took. The deliberate infraction of a funda-
mental law governing the currency is, as this Committee
will readily believe, a step which no persons responsible
fer their acts would lightly take. (Hear.) Ido not in
the smallest degree seek to diminish the importance of
the proceeding molted to by her Majesty's Ministers ;
at the same time, let it be remembered that the actual
excess hitherto committed by the Bank has been limited
to the amount which I have st ated, and that the effect of
the authority which was given was simply to enlarge the
amount of the issues upon securities. Now, if the entire
circulation of this country had been metallic, I could
have understood any objection which might have been
entertained to an authority being given to a corr.-
ration like the Bank of England to issue 2,000,0001.
of bank-notes ; but, inammuck as they were authorised by
the Aot of 1844 to issue 14,000,000/. upon securities, and
as that act contained a provision fur further increasing
that amount, in accordance with which it has by an
order in Council been increased to 14.500,0001., the only
effect of the authority given by Government was in el
guarded manner, under the close observation of the
Government and of Parliament, and to meet arnomentary
emergency, to increase the issues of that description.
No new principle was introduced by that authority. It has
been said that the Government have authorised the Bank
to commit an act equivalent to the debasement of the
currency, that what we have done is almost equal to
permitting a repudiation of contracts, and that the sanc-
tity of property was invaded by this additional issue of
bank-notes. I entirely dispute the correctness of that
view. (Rear.) If any doubt had existed as to the in-
stantaneous convertibility of the additional notes issued
under our authority there would ha►e been some ground
for the charge which has been made against the Govern-
ment; but, inasmuch as the additional issue by the Bank
was not sufficient to affect the ♦alue of the notes, and
each note was convertible into gold upon demand, it
cannot be said with justice that the Government have
depreciated the currency, authorised the repudiation of
contracts, or struck at the security and sanctity of pro-
perty. (Rear, hear.) I wish I had it in my power to say
that this commercial crisis was definitively terminated,
and that we could look forward with maim confidence to
the Bank not having occasion to avail itself of the
authority which we have given to it. I think it
highly probable that the directors may not have occa-
sion again to exceed the statutory limit ; but, at the
same time, I cannot assure the house that no such con-
tingency can be expected to occur. Perhaps, in some
respects, it would have been more convenient to Par-
liament if it could have looked back upon a completed
commercial crisis before it was called upon to indemnify
the Bank directors. The Government thought, however,
that it was their duty, having authorised au infraction
of the law, at once to lay the matter before Parlia-
ment, and hence the celerity with which the Legisla-
ture has been assembled. The pressure still continuing,
and the wounds caused beithe crisis being yet unhealed,
it will be necessary for me to propose in the bill a pros-
pective power to the Bank to exceed the limits of the
charter for a period of 2Z' days after the meeting of Par-
liament subsequently to the recess. (Hear.) I have
taken that as a convenient period with a view to the
revision of Parliament, if revision should be necessary,
and I trust that if the house should be willing to pass
the Indemnity B II it wi I not refuse to allow me to
insert a clause to the effect I have stated. (Hear.) I
shall ask the house in the course of the evenine to agree
to the reappointment of the committee on the Bank Acts
which sat lest session. That committee examined many
important witnesses, but its inquiries were not completed,
and at the end of the session it presented the following
report to the house Your committee have agreed to
report to the house the evidence which they have re-
ceived ; and, as their investigation of the subject referred
to them is still incomplete, they beg leave to recommend
that a select committee be appointed to resume the en-
quiry in the ensuing session of Parliament." We should,
as a matter of course, have acted upon that recommen-
dation, and have moved the reappointment of the com-
mittee, but it has been said that what has occurred
during the last few months has weakened the reasons
for that course. It seems to me, on the contrary, that
the commercial crisis and the act of the Government
have strengthened rather than weakened the reasons fer
the reappointment of the committee. (Hear.) It mug
be obvious that if the house is desirous of reconsidering
any of the details of the Act of 1844, it cannot do so with
greater advantage than after a fu►l inquiry before a select
committee, and after the examination of competent wit-
nesses upon all the different branched of the subject.
The general portion of the subject was fully investi-
gated last session, but so much of it as relates to
the country banks of England and the banks of
Scotland and Ireland was not entered upon, and I
think it must be obvious, after the events of the last
few months, that there is a great deal in connexion both
with the country banks of England, and the banks of
Scotland and Ireland which well deserves careful inves-
tigation. (Hear.) Moreover, I confess I doubt whether
it would be prudent, when men are smarting under the
painful embarrassments of a commercial crisis, when that
crisis is still incomplete, when its consequences have not
yet been fully developed, to select that particular mo-
ment for revising your currency laws. Whether the
proposal was made by the Government or by indepen-
dent members, I cannot think that we should deliberate
upon a most difficult subject, a subject which has per-
plexed the minds of some of the ablest men whom this
country has produced, under circumstances likely to lead
to a safe and beneficial conclusion. Therefore, as I should
have moved the reappointment of the committee of last
sear under ordinary circumstances, it seems to me that
the extraordinary cirounistanoas under which we are
now assembled render such a step still more expedient.
(Hoar.) By what I have said the house I think must be
led to the inference that the commercial crisis has not
arisen from any abuses of the currency—from any ex-
cessive issues of bank paper in this country. (Hear.)
Whatever its causes may be, they stand, it seems,
wholly aloof from the proper and direct policy of the
act of 1844. (Hear, hear.) Let us first take the Bank
of England, the most important part of this subject. Can
it be said with truth that the directors of the Bask of
England have shown any want of foresight, any want of
prudence, any want of sagacity, cr any want of firmnes
during the past year ? I confess it appears to me, having
had necessary occasion to watch their proceedings with
vigilance, that they have not failed in any of the duties
incumbent upon them. (Hear, hear.) Let us compare,
as a test of excessive issues on their part, their notes its
the hands of tee public, with their private securities dur-
ing the years 1856-7. The following is a statement of
their notes with the public, including Bank poet-biil, at
various periods of 1856 :

October '21,815,000/. October 25 ~... 21,412,0001.
„ 11 21,501,0001. November 1 ... 21,483,000/.
„ 18 22,111,0001. 8... 21,149,0001.
For the present year, when as we are toll commercial
discredit has been canoed by excessive issues of Bank
paper, the returns are as follow :

October 3.,.... 20,825,000/. I October 31 , 21,184,000/.
„ 10 20,303,0001.. November 4... 21,080,000/.
17 21,052,000/. 11... 21,0L;3,000/.
„ 24
So that, in point of tact, the amount of notes in the
bands of the publie has been actuilly leas this your than
in 1356. Let na now compare with the ireue of notes and
Bank post-bills the private securities of the Bank at cor-
responding periods of 1850-7. The following is a return
of the private securities at the latter end of each of these
years

1856.* 1557.
October 4 21,582,0001. October 3 21,835,0001.
November 8... 18,626,000/. November 11 26,113,000/.
Therefore that shows that there was not any excessive
issue of paper on the part of the Bank of England, and
that the amount of Bank of England note. hal not been
excessively or unduly increased. With respect to the
country banks, can it be said that any portion of this
discredit is traceable to their over lime In the first
place, take the Borough rank of Llvarpeol. That is not
even a bank of issue. Then the lergejoint-stock bank
which has lately uu!ortuoretely fallen—the Northanaber.
land and Durham Dietriet Bank ; that, though a bank
of very extensive operations, and though it has felal
for a large sum of money, was likewise not a bank of
issue, and, therefore, whatever its imprudence or mis-
fortunes, they were in no way connected with an abuse
of the power of issuing paper. (hear, hear.) With
respect to the Scotch banks which have failed, both of
these undoubtedly were banks of issue, but their notes
bore a very small prop ,rtion to their entire liabilities,
and about half were covered by gold ; and no per-
son aware of the fact., or who will make himself lie-
quainted with them, can fail to come to thin conclusion,
that the failure of these Lanks is wholly indepen-
dent of all questions relating to paper currency. rhere-
fore, as far as the direct operation of the Act of 1844 is
concerned, as far as its object was to prevent the exces-
sive issue of paper either by the Bank of Eapland, or
by the country banks of England, or by the banks of
Scotland and Ireland, it must be admitted that the
policy of that Act, and of the Act of 1844, was SUCCAS-
fuI. Those who impugn the policy of those Acts must
say fleet at a'l events they were inoperative, or that, in
spite of them the currency was in a wise and sound state ;
and those who are friendly to the policy of those Acts
will attribute the sound state of the currency to their
direct operation. But, whatever these parties may think,
the main fact cannot be disputed, that our paper cur-
rency was and has remained up to the present momentin
a perfectly sound state. (hear.) It is quite conceivable,
as my right hon, friend remarked iu 1847, that a com-
mercial panic might arise if the circulation were purely
metallic. Tnere might be undue credit and unsound
speculation, and these Causes might produce the came
effects as are observable aethe present moment in the
town of Hamburg, where there is no paper c rJulation,
where the only circulation is metallic, and where there
xiet all the acute symptoms of a commercial crisis.
([Tear.) Now, with respect to the operation of the Act
of 1841, I ain des.r ,us of drawing the attention of the
committee to the distinction between the ordinary ope
rations et the Act in those circumstances w ,ich were
cunt 'IOWA(' by its authors, and its o;eretions at a
inernent of panic cr crisis. If we take its operations
under ordinary circumstances, the limit imposed on the
Beek of Eeelatid and on the country bank,i, and on
Irish and Scotch banks operates in the way of preven-
tion. It (lees not cheek the ordinary habitual operations
of commerce, but it is like a punishment in the penal
law which by its preventive consequences determines
inea'e conduct. But when we came to a state of panic
ail theies circumstances are reversed. Men's minds
aro then in an extraordinary state. Mutual dia
trust prevails through the community, and a law
which may be perfectly suited to the ordinary condi-
tions if trade, in which it nsay ()prate beneficialle
when luau ale left under the influence of ordinary
motive., may at a time of panic be found to produce
effects the reverse of beneficial. The question then
arises whether some extraordinary power should not be
required to suspend the operation of such a law. The

1 5:11'

present law does two things. It imposes a limit 6,1 the
issue of the Bank of England and exhibits the accounts '
of the Bank of England in a peculiar form, and likewise
requires that those accounts should be published once a
week. Now, wherever you impose a limit, there is ne
question that the existence of that limit, provided it
makes itself felt at a moment of crisis, must increase the
alarm. People feel at the moment that a peril presses
on them, they begin to calculate bow much remains of
that fund to which they look fur assistance in times of
commercial difficulty, and in whatever way you fix the
limit, whether by Act of Parliament, or, as Mr. Tooke
proposed, by a sort of usage, or, as in France, by the
discretion of the Government acting on the Bank of
France, there is no doubt that in moments of crisis the
limit must aggravate the alarm. (Hear, hear.) I can
bear witness, from my own observation, that such was
its operation in 1847. There is no doubt, in my opinion,
that when a crisis once sets in, when you have an extra-
ordinary state of distrust quite different from the state in
which men ordinarily live (because it is by mutual trust
and confidence that commerce is carried on), when you
get into a state of apprehension, and every man suspects
his neighbour, then undoubtedly any limit, which is im-
posed on the paper circulation, must aggravate the alarm.
In that way I distinguish between the ordinary and the
extraordinary operation of this Act. (Hear, hear.)
Well, then, the manner in which the assets of the Bank
are distributed, by which the whole bullion is set
against the paper issue of the Bank, and by which
only a small portion of reserve notes is placed in
the banking department in a very conspicuous
manner against the deposits, concentrates the atten-
tion of the commercial public upon the amount of
gold in reserve. They watch its diminution from day to
day, and when it has reached a certain point each person
desires to get a share of it as long as it lasts. The bank-
ing account tends, then, by that accident, to aggravate
in a commercial crisis the public alarm. These circum-
stances appear to me to show that in its extraordinary
operations this Act maytend to aggravate panic, though
in ordinary times it tends to promote a sound state of
circulation, and so far as the state of the currency is con-
cerned, to avert panics ; but when a panic arises from
other causes, at that particular crisis, though the panic
may only last a few days, it aggravates the alarm. It
appears to me that at moments of that sort we can only
resort to the discretion of the Government for the time
beingj but I shall be happy to hear if any gentleman has
any other remedy to offer for those rare, I am happy to
say. but nevertheless recurring occasions. It seems to
me you can only resort to the discretion of the Govern•
ment in some form or other. Now, there is a question on
which the Government has carefully deliberated, and on
which after deliberation they have not thought it their
duty to make any proposition to the house. The question
is one which will be considered by the committee to be
appointed, I hope, by this house. The question is whether
it is preferable to leave the power of dealing with these
emergencies vested in the executive Government for the
time being, to be exercised by them on their responsibility
to Parliament, and cut jeot to the duty of assembling
Parliament at an early period after the exercise of the
power, of submitting to it the whole facts of the case and
asking for an indemnity—the question, I repeat, is whe-
ther we should, in conformity with the opinion of the
Commons committee of 1847, leave the matter in that
state which undoubtedly involves an infraction of the law
though the wound which may bedone to the constitution
is healed by constitutional and Parliamentary means, or
whether we should adopt the conclusion of the committee
of the House of Lords in the same year, who thought it
irregular to grant such a power to the executive Go-
vernment, and that Parliament ought to engraft into
the Act itself a power of suspension. The bill,
the introduction of which I hope the house will
sanction, and intro luo, at a time when the events which
have called for its in,roduction are still recent, while the
crisis in its consecieencee is not fully developed, will not
centein any distinct provision upon that subject. It ap-
pears to me, indeed, that the question is one of im-
portance in a constitutional point of view rather than as
involving any great difference in its practical results. If,
after the proceedings which took place in 1847, and if
Parliament should coins to a similar conclusion now, the
Government acting under tha influence of two such pre-
cedents might find their course facilitated and guided,
while, upon the other baud, if a clause were inserted in
the present bill authorising the Government in cases of
emergency and in times of panic to relax the limit, but
containing a clause similar to that which is contained in
the act which enables Government to embody the
Militia, but which provides that they shall call Parlia-
ment together within 14 days. I think the practical
result of such a state of things would be the same as
those of the present system, because I think that a
Government would be apt to look upon the distinctioe
as a mere formal one, and would feel the same reluc-
tance to act upon the power afforded them, except in
cases of extreme emergency. While, therefore, I think
that the subject is more important as a constitutional
question than from any difference in the practical result
•E the two systems, there are other reasons why I think
that a clause conferring such a power upon the Govern-
ment ought not to be introduced iato the present b:11.
Two select committees have sat to inquire into the
subject-, one a committee of this house, and the other a
committee of the House of Lords, and, after fully hearing
and considering evidence on the subject, those com-
mittees arrived at diametrically opposite conclusions.
(Hear.) It is a subject therefore with regard to which we
may anticipate a great difference of opinion, and the Go-
vernment wool I be glad to hear the views entertained
by leading members of this and of the other house of Per-
liament before they can consider it their duty to submit
any measure with regard to it. Now, sir, there are que, •
tions relating to the operation of the law in Ireland and
Scotland which are worthy of notice, and I think that it
may become the house to consider whether some amend-
ments in the existing law may not be made with great
propriety--(loud cries of hear, hear)—to consider, for
example, whether there could be any objection to pro-
viding that the Bank of England note should be a legal
tender over the whole of the United Kingdom. (Cheers.)
Also, it might became us to consider whether, in order
to prevent the inconvenience arising from the drains of
gold from this country under the present system, it
might nut be advisable to allow the Irish and Scotch
banks to issue notes Against Bank of England notes.
(Hear, bear.) There is another subject to which I ad-
verted last ye :r in /loving the appointment of the com-
mittee to inquire into the operations of the Act of 1844
which has been the subject of much popular discussion
at the present peri el—l mean the policy of permanently
increasing for the future the limit of the issue of the
Dank of England. (Hear, hear.) It is said by some
persons that if the Peelle of England had been authorised
by law in the beginning of Nov. to issue 16,500,0001,
instead of 14,500,0001., and to give them such a power
does not involve any difference of principle from the Act
of 1844, for it was quite within the views of the pro-
moters of that Act, the crisis might have been got over
without any extraordinary step being taken by the Go-
vernment. I think, then, as far as I understand the
case, that is a fair representation of the views of many
gentlemen. (Hear, hear.) Now, sir, I wish in answer
to that view to call the attention of gentlemen who
entertain it to this fact. If the bullion reserve of
the Bauk of England had been what it was at Use com-
mencement of the crisis, and if the Bank of England
had been empowered by law ,to issue 16,500,000/,
instead of 14,500,0001. undoubtedly no extraordin-
ary interference might have been necessary. (Hear,
bear.) But at the mine time I can quite usiderstand
that, inasmuch as I believe that in a monetary panic
the existence of a limit tends to increase alarm, such
interference might have been necessary. (Hear,
hear.) Now, if the Bank of England had not kept the
same bullion in reserve which the law now requires,
if it bad merely issued 2,000,0001. more upon securities
and diminished the reserve by 2,000,0001., which, under
such a state of the law, it would be enabled to do, the
Rank of England would have had no greater facility
than it has now had, but the reserve of bullion would
be less by 2,000,0001. (Rear, hear.) I think that this
consideration must tend to convince gentlemen who hold
that view that a resort to the expedient of increasing
the credit of the issue of the Bank from 14,500,0001. to
16,500,000/. might not be quite so effectual a remedy
in times of panic as they imagined. (Hear, hear.) I
regret that I have been convene f to trouble the hours
at such great length upon this subject, but inasmuch as
these questions were the real occasion which induced
the Government to recowueeud her Majesty to call
Parliament together at this early period, and inasmuch
as they have groan out of an important crisis which
must lead to important results, inasmuch as the step
which has been taken by the Government woe an ax ra.
ordinary and extra-legal step—for we .stand before
Parliament, I will not say in the position of culprits, but
in the position of having advised the Corporation of the
Bauk of England to make a departure from the existing
law—inasmuch as we are now called upon to af4{
Parliament to indemnify the Bankn
if olf
havelt:o felt giditandmy
ourselves, I trust I may
be
c(lcuttly eery tos.
)snake a statement of f osrugcihrelengthte chair
that t
totheho u:.
The motion having been read fvo the
for
and
bill to e
CChairman
bringooff the
Bank of England respect certain
titeaCommittee d bme
ndi
fiiretchteed too emiavrer
issi‘triers.oGf tLhAeirDnsoTtoess,
Eandsatide—coAnsfirfainr,susicrh
, issues,nsl am
con.
corned I think that my right hon. friend, instead of
having to aide the indulgence of this house upon account
of the length at which he has thought it his duty to
explain au important subject, has, on the contrary,
conferred upon us an important obligation. (Rear,
hear.) On the other hand, lam by no means
sure that the same duty' is incumbent upon me, or
that it likewise attaches to other members of this
house. At all events, for my own part, I do not think
that this is an opportunity upon which I should feel it
necessary to trespass upon the attention of the house at
any length ; but, at the same time, I wish to make a few
remarks upon what has fallsu from my right hoe. friend
in respect to the subject now before the Committee, and
likewise with regard to the ulterior motion which he in-
tends to make with regard to the reappointment of the
Bank Charter Committee. As-respected the bill of in-
demni y for which his right hon. friend intended to ask,
he was not prepared to offer airy opposition to it. Ile
could easily conceive that questions might arise, and the
speech of his right hon. friend appeared to indicate a
consciouseess ua his part of the feet, whether the pre-
cise moment taken by the Government fur the issuing of
the letter of the 12th Nov. was the right one, or
might
tueeest-
tione might arise whether any other measures m
had certainly
aheadvedbaenegnerasdwopiltieedh ifaiislieruighoff it,i2e hoe. friend
meetfrieed tif, diff:fculties
he thought that his right hon. friend w J,g
mutatis
en,
she ;en threatened the country. However
was
at:utsn:igtihatdbiei:
utotandis a justification o
urgiiig the circumstances of 184r7.
as
of
th'ieencobueoame the -duty of the
teareineut of 1857 ; takenb by the Go-
kind, what a vas
house to consider,tblt
ceedings of ibsugttviitn,set their
traateifidciaitriaouneasteorapbroio-
preeedento of that nature, (Bear,)
force attached to

His right hop. friend in speaking of occasions of this
kind had justly and properly spoken of them as recur-
ring occasions. Unhappily, the occasion with which we
were now conversant could not he spoken of in the pact
tense, and even when the day arrived when it could be
spoken of in the past tense, we must yet look for the
recurrence of similar events ; and if this had been the
universal system of the trading of this country—be
would not stay to ask what trading, and whether it was
the trade in money—but if it had been the universal
system of trading in this country, and especially of the
money trade, we roust feel the force of the precedent of
1817, and the duplication and reduplication we were
giving to the force of that precedent by again :lama'
ting its justification. (Hear, hear.) The question must
els() be considered with a view to the elucidation 0
what further dutits were cast upon the house with
regard to the Mate of the law. His right hon. friend in
his speech bad embraced not only a vindication of the
issuing of the letter of the Government, which he (Mr.
Glasietone) did not impugn ; but he had also included in
it an argument in favour of the re-appointment of the
Bank committee of last year ; and he (Mr; Gladstone)
wished to represent to his right hon. friend and the house
how the matter stood. His right hon. friend thought it
would be better to re-appoint the committee than to
legislate, and he gave two reasons for holding that opi-
nion. In the first place, because a committee bad been
sitting which had made an incomplete inquiry, and
which had recommended its own re-appointment; and
secondly, because at a time when men's minds were
warm, and smarting under the influence of the comma,
cial crisis, we could not expect to obtain the fruits of
wholesome legislation. With regard to the first reason,
he must say he attached but little weight to it. There
were many precedents ; and it had often happened that
at a period of quiet, and when ample time was afforded
for the operations of committees of that house to con-
eider ;a particular state of circumstances, and when
urgent circumstances arose which were powerful to teach
more in a few weeks than a committee could learn in
years—(hear, hear)—that the house interfered, and the
action of committees was checked by the interposition
of the Government. He wished to represent to his right
hon. friend that if the committee on the Bank Acts was
re-appointed on the terms proposed by his right hon.
friend, it would be an over-burdened committee, and
that the first and most certain effect of its re-appoint-
ment would be to prevent the practical resumption of
the question at least in the year 1859, and more pro-
bably in the year 1860. (Hear, hear.) If that was true,
the proposition of his right hen, friend was anything
but satisfactory. What was it that his right hon.
friend called on the house to do f They had not
met now, as they did in 1847, to consider a viola-
tion of the law which was not actual but conditional
and contingent, or to grant an indemity for a past
violation of the law ; but they were called on to do
no less than, by a vote of that house, prospectively to
suspend the Bank Act. (Hear, hear.) Could that be
considered a satisfactory course ? Nor was it, according
to his view, the best mode in which parliament could
deal with such questions. Would it tend to settle the
public mind if, after the experience of the crisis of 180,
after the labours of so many committees, after the
recurrence of a graver crisis in 1857, they did no more
than suspend the Bank Act and re-appoint the com-
mittee of last year ? In the speech of his right hoe-
friend there was lacking a practical distinction between
the question of banking and the question of the lawn
which regulate issues. (Hear, hear.) The committee
which eat last session was appointed not merely to eon'
eider the state of banking, but also the laws which
regulate issues. It had two subjects referred to it,
both of them of an immensely comprehensive character ;
first, the laws in force in relation to the Bank of Eng-
land, and also in relation to country banks, to Scotch
banks, and to Irish hanks. Of that subject, in a
session of great labour so far as the committee was cow
corned, iaue
it
lhadl, b
y exhausted us sutl7it of
de c the first
issue department
inn
co
n exo n
ofithe in'
tee Bank of England ; they, therefore, bad still with
to
consider the question of issue in reference to country
banks, and to Scotch and Irish banks, and when that
was exhausted there was still an enertnoui poetscript
to the question which the committee was appointed to
inquire into—eatnely, thosuperannuated and antiquarian
state of the relations between the government and the
Bank of England. (Hear, hear.) That which was an
important, a novel subject of inquiry, with all the fresh'
ness of youth upon it in reference to inquiry which had
never yet been touched upon, had been scarcely art'
preached by the committee. Such was the progress
which the committee had made. The right
hon.
gentleman (Mr. Disraeli) had said last night that there
would come before the committee only a repetition of
currant and known doctrines, on which every min'smin'smind
was made up. The right hon. gentleman seemed to think
that the discussion of the question of the currency ws
an exhausted discussion. He (Mr. Gladstone) agreed
with him, but he must say that while it wagon exhausted
it was likewise an e'srnal discussion. It had within it
so strong and inherent a principle of vitality that if you
cut off one of its heads, another arose in its place ; it
had a charm, a fascination about it which seemed to drive
men mad. Currency had made as many lenatics as love
itself ; and he was not sure whether there ought not to
beestablished a special asylum in which that mania
could a
d b
te u treceivemoe tt h
c,,ebuetiedtenacnadtmbaotsitt a effectreatment.tualitteeentered on
e He
b
that question next year, although it had been exhausted
in 1857, it would go on with the process of exhaustion in
1858, and in 1859 it would repeat its inquiries, which
would not then be finished, and it would probably re•
commend its own reappointment in another year. His
right hon. friend had nothing to recede from : the qua--
tton was an open one ; they had all the same objscts in
view, and the question then before the house gave him
right hon. friend the best opportunity of taking further
time to consider the announcement which he had made
the night before. Could his right hon, friend be afraid
of precipitate legislation on the question of currency l
On some subjects there was often reason to apprehend
precipitate legislation, it was the question of currency.
There were a hundred gentlemen at least in that house,
who had given great attention to the subject, each of
whom believed that he was in possession of the particulalr
nostrum which was applicable to its solution. Would
they all be struck dumb? Did his right hon, friend sup'
pose that if he introduced a bill for the regulation of the
currency, he would be able to carry it at once 9 Let
him be sure that whatever might be the proposal thee
Government might make, it would receive the eager
attention of the house, that it would be canvassed
with ability and diligence, and that there would be no
chance Of its merits or its faults escaping observation.
What he (Mr. Gladstone) thought ought to be done warn
to recognise the distinction between the question beforen..
the house as it related to issue and as it related to ba3/.
ing. So far as the act of 1844 was concerned, as
touched on the question of issue only, and baying
a.
thingiil ie t
hto a
that
there
ewriet h
couldtbe question
better o f
for giving a distinct intimation to the counbtary.
been A
views of the house. For years past there d
least known, the least fixed and centralauthori. authority,
and
tendency in the public mind to run abroad tow
a tendency to an approximation to one conviction
ofa
an' t was
the plornifePs
the
conclusion as to what was the cost in the que;attrwidstaht-halt
currency, which would increase if the peoplet
give
no
Government and Parliament were prepared
cdoeucilsdivdeoo.,p,
ainsi°t on refer the et
heease
had had the amplest experience of the working of the
in-
clinedof 1844, and he (Mr. Gladstone) was not so muchaa.
subjectad tthoa
at
etehme
reu
ittratoeoes.t t
..,h:vt they
as his right hen. friend appeared to be tofuv t _
tain the act of 1844 in its utmost integrity,
.1,.•
member for North
around him be saw his hon. friend the
twhhoiucgahitt twhaast
et lorawr et
hmei gt
ihmt
ebet
eq ueoesetsioi
dneerc.onAn a:Ahead wl Ltkheids
dbahantildoynextradt them if they could
) His hon. friend
. tee to learn or to teach ? (L g
tut personality f the ap-
fWrieaardw,icalessaheirheo(eitelert. Spooner),reran,
wea (Laughter.)
enhdgt
ehe
iron.
gwould
the
ek
ehei
ms I:int:
would, he hoped,
prepared to
b eh re o could
the com-
mittee. in
at I 1-
otphtbeert
committeeom hei
member
m equali t peal,te ef:jo.
justice
s theTtichaeqybuaevsat
wouldif
putooorg
gihvtooone
air their own theoriefs,
waitneswee by questions which far
out of the into
of
answers
committeethey r cei voeadc;ii
rarnoda
ciit
t it was a machine constructed in
if one was to say that it
on which all other machines
opposition to the principle .
exceededwee would
he
ai nmj
Were constructed,length the
of
machine constructed
otherwise be
to get that said
in thate wordsof the
whichsavi saving
woof labour;eld
said in two—(hear, hear, and laughter)—and
commit.
that the appointment of such a a
of opinion
hear)---of the quesio
was the adjournment sine d6c—(
issue was COO
so far as it related to is-us. So far. as ihneorwdneer
4 it admitted of improvement, perhaps i t
that act, that
i ear ) Ile thought that
I corned they had the amplest expereence.
been
thea act of
8111414,e;
oafnedoihnep 1
owasLi
o boundn. (
I,
et
ao
r a,a_y, , having
.. b _
that
was
g rded the main purpose for which that ao
'el:LlZA:died it had perfectly succeeded. " We had hail
in 1847 a formidable foreign drain of gold, and wo had
had a formidable foreign drain in 1857, and in both cases'
we had acted against the drain by raising the rate of
interest, and by carrying out the policy of the act of
1814 we had succeeded in rectifying the state of the
exchanges. His right hon, friend had marked with
chronological fidelity the points to be observed, and it
would be seen, that as regarded issue the house was sit)e
and mature for the consideration of any proposal whit!'"
the Government might have to make. 'He did not then
abandon the hope that when the house met at the usual
time for despatch of public business, and when, perhaps'
the pressure of the commercial•crisis had passedsiby, her
Majesty's tiore to
Majesty's Government would make
a
proposition
13444,
Parliament on the subject of the
Lank
kother question
He would again say that there
for inquiry, and that was what were t
and La ird
recent commercial events. They had seen . _ .
on,
which had to be considered, and which abiacsaausfietssoulbjteboot
that night from the au,hentic figures of . his right 0
The de-
refine by a dem +nil for gold in this country.
tratiote
friend, this was no question of the American trade spa'
mend' should have been met by the legitimate op
cause
el the laws of commerce, and if that was the.
of the rate of discount, and a 1,„
oitf
sthheoudiedinbaendrnef,jbgyoltdheindtihreicetcoorusnotrfy;liet wßaase rki gob! t}:Athat
land by the raising
to we"
could be shown that such a course bad failed .
__.
should stand in a position of difficulty with
met ~..,
the foreign drain of gel 1, he would admit thraetgawra
to the act of 1844. But that drain had been `•
the Bank directors acting wisely and prudently on pore
principle of the act of 1847. Since then, 110 we
.i,
there had been a crisis, which had become more ferio
(labia after the exchanges had been rectified, than abed
they were in au unsatisfactory condition. What
_oi!
were the causes of that crisis I There was a prevaln
~l.
opinion that it was connected with the state and con
tion of banking. On that point he would not pronounce
an opinion, but ho would grant that it was a St subjectu,
for inquiry by a committee. He desired that it. shouirlyd
eta
q ii,to, and it was because tie wanted inquiry
tiro:
the subject that he begged the house would. t i.,
same 0,-
o the burthen on a committee of going
currency, the laws
ojrole of inquiring at once into the on in the