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

arls investigated by the committee of last session, and I
'will shortly state to the house some of the opinions given
by very competent witnesses upon it. My hon. friend, the
member for Southampton, who was lately Governor of the
Bank, disapproved of the compulsory extinction of the
country issues, and thought that there was no great prac-
tical evil iri those evils except that they were not made on
securities, Mr. Newrnarch was of opinion that the country
issues ought not to be discontinued. Mr. Hubbard thought
that the right of issue of the English country banks should
be bought up, -that is to say, that they should be extin-
guished by law, but that the bankers should be compen-
sated for the loss of their right of issue. Mr. Norman, a
witness of great authority, also disapproved of interference
With the private issues, and I will take the liberty, as his
opinion is given very clearly, of reading it to the house.
He is asked—

"What is your own view at present ; having the advan-
tage of experience, and having seen what has actual y taken
Place since 1844, do you think it thsirableto makeany change
with regard to the issues of the country banks in England, or
of the Irish and Scotch banks ?—I think, speaking generally,
they have worked far more satisfactorily since 1844 than they
over had done in any previous period during my recollection,
or in any previous period that I have heardof; and, consider-
ing the habits and feelings of the country, and the interests
involved I doubt whether it would be expedient to attempt
by any direct legislative action to interfere further with pri-
vate issues, I must add, however, this—that, although the
action of private issues has been improved, still there have
been failures among private issues, even recent y ; therefore,
they arc not altogether in a perfectly satisfactory state.
" Do you attribute that improvement to the limit which
has been imposed by law on their issues ? —I do mainly."
Therefore, the effect of 11r. Norman's opinion is that it is
not desirable to interfere with the private issues. Lord
Overstone also gave his opinion on this question. He ap-
proved the gradual absorption of the country issues, but
not by means of any strong measures for their suppression
or for the suppression of the Scotch and Irish issues. With
regard to the question of requiring security for the corm-
tl3' issue' he entertained a doubt as to the expediency of
any such provision. Those are the opinions of some of the
Most competent witnesses on the question of the English
Country issues and of the Irish and Scotch issues, and they
do not point to the expediency at present of doing what
My right hon. friend called "developing the policy of the
act of 1844," by converting the Bank of England into the
Cole bank of issue for the United Kingdom. There is ano-
ther point which has boon raised in connection with this
Part of the subject, viz., that if that central bank be not
_.tho Bank of England it should be a Government bank, that
Government should assume to itself the right of issuing
Paper over the whole of the United Kingdom, and should
Prohibit the issues of paper either by the Bank of England
or the Bank of Ireland, or any other chartered or private
bank. It is, I think, undoubted that when the act of 1844
was under consideration some plan of that sort was in con-
templation, although Sir R. Peel did not think it desirable
at that time to attempt its introduction. A. letter from
Mr, Goulburn to the Governor and Deputy-Governor of
the Bank of England, dated April 26, 1814, contains this
passage :
" It appears highly desirable that any new arrangement
should be founded on the basis of an entire separation of the
business of the issue of notes from that of banking. This
Measure might bo effected by the establishment of a public
department for the issue of notes, independent altogether of
the Bank,"
That clearly contemplates some public establishment either
laving a parliamentary organisation, or being directly sub-
ject to the Crown—a public department unconnected with
the Bank. Ho goes on to say :
" But her Majesty's Government are willing in the 15rst in-
stance to consider whether this can be effected by a division
of the Bank into• two distinct and separate departments, to
conduct exclusively, ono the business of issue, the other that
of banking."
This shows that the notion of a Government Bank of Issue
for the entire kingdom was considered when the Act of
1844 was prepared, and therefore we may suppose that it
vas part of the development of that act to place the cur-
rency 9f the country on that footing. But the first ques-
tion which naturally arises on that proposition is, " By
what means are the Government to supply the country with
the paper currency—is it merely to have a central office in
-tiondon, and by the payments of dividends to contractors
arid other modes by which the Government makes payments
!,0 trust to the diffusion and dissemination of notes; or is
it to keep up an agency of branch banks all over England,
Ireland, and Scotland ?" If the latter plan were adopted
...
question whether such a system would be found to come
pat all to the views of some of its supporters. (Hear,
r.) On the other hand, if no such system were followed
" alight be doubted whether serious inconvenience would
set arise from the action of such a bank of issue wholly un-
connected with the establishment carrying on the ordinary
:3,Pprations of banking, the very plan of such an institution
ring founded upon the entire separation of the functions
O issuing from that of banking. On this question Lord
verstone has expressed an opinion in the committee last
rssion which will, I am sure, receive the attention of the

" The object of putting it (the issue of notes) more avow-
"-13' and distinctiy in the hands of the Government than it is
at present, I think is of this nature, that so long as there
„exists-in the public mind an impression that pressure upon
the trading world is aszociated with the management of the
Monetary system of the country, it might be veryincontve-
h. lent to place that monetary system more avowedly
hands of the Government ; and I must also observe thathe
I
think the interposition of some responsible body between the
Government and the management of paper issues might be
ceedingly convenient in strengthening and assisting
i the
Government to resist pressure which might come upon t at
certain periods to do that which it ought not to do."
We may therefore consider the result of Lord Overstone's
opinion, as delivered to the committee of last session, to be
unfavourable to the assumption by Government of the ex-
clusive right of making paper issues. Another meat expe-
rienced Bank direbtor entered a, little more fully into this
question, and showed rather more in detail some of the.
consequences which that system would give rise to. This
is Mr. Hubbard's description of the consequences which
would ensue on entire separation of the functions of issue
from those of banking. He says :--
The larger proportion of the public dividends are now paid
by a mere stroke of the pen; the amount of dividends due to
each banker, not only for himself, but for all his constituents,
'8 carried in one lino to his credit, and in a few h0u7.4
3,000,0001. or 4,000,0001. of public dividends are in that way
disposed of, and transferred from the audit roll to the different
corporations and banks who are entitled to receive them ; so
that the economy of labour and avoidance of risk are great
and marked advantages of these two functions being per-
formed by the same corporation. Still in their essence they
a'°, ctf course, distinct functions.
" In fact, at present the dividends are paid with a very
small use of ba.-nk-notes ? A very small use.
" But still it is conceivable that the Government might,
ter the purpose of making issues, pay dividends in notes ?
Certainly, it is 'one of the most obvious means of issuing notes.
" It might pa .y salaries, and contractors and others in notes,
Might it not ?--No doubt it might, and that would be a means
by which those notes would be periodically thrown into cir-
culation ' • and, on the other hand, the payment of the public
revenue through the Customs and Excise would be a means
of bringing those notes back again, so that there would be a
gradual passim;; out and in of notes through the medium of
those two operations. hut I may observe that if the Govern-
leant were to attempt to discharge those two operations in
its own persorn the amount of currency required would be
'Mr:inner sly I arger than it is now, It is owing to the eircum-
Snce of the Bank having as customers the various large
2idend hold era that it is enabled to perform all those opera-
tions with so small an expenditure of currency.
`` If the Government were to establish a bank of issue of
its Own, that would have the effect of counteracting some of
the most effect tual instruments for economising the currency
11" in use ? -It'would occasion a very much larger amount
of currency to be required.
"'[here wo odd be a greater amount of notes in circulation?
"-A Much larger amount of notes in circulation at particular
times, and it would be subject to very considerable varia-
tions,.wherea ,s the operations of the Bank of England have
the effect of r educing, by its expedients, the variations in the
amount of no tea. Although they have to pay 6,000,0007. at
each of the four quarters, the average variation is very little
more than 1,00 0,0001."
These answers must, I think, satisfy the house that a great
economy of tb o currency is effected by combining the Bank
of England of .orations and the issues of the Bank for the
Payment of dividends, whereas, if the Government were to
assume to i tsaalf the exclusive function of issuing, it would
be forced to keep a larger amount of paper in circulation,
inasmuch as the Government notes, no less than the notes
of the Bank Of England, would be required to be supported
133' a reserve of bullion ; and the cost to the public of in-
creasing the reserve of bullion would more than compen-
sate any economy which might be derived from any other
lionrce. Thor e fora, notwithstanding my right hon. friend's
harangue abc nit the antiquated relations of the Bank of
England witl i the Government, I confess that I see great
tCaniages in the present state of things with respect to
managem e nt of our currency, and I doubt whether any
„„s
°ll°Ley to tine public or any security to the holders of
`10,,88 would r r rise from an entire subversion of the existing
11:teZni and s, prohibition of the issue of notes by the
Bank of Engl zard, by private banks in England, by the
banks in Irel a nd and Scotland, and by the assumption of
,1,?! exclusive t ight of issue on the part of the Government.
.nere
: is a poi, nt as to which it seems to me there is some
Irnsunderstari• ding in the public mind. It is often used as
au argument in favour of this measure that the right of
.s one of the " Regalia Coronae," and that the
and ' mg pa per money bears a close analogy to it,
°light to; suing
-ex-er-cised by the State. What is tho fact in
regard to tho issue of coins? There is no doubt that the
right of lima ing coin is a part of the prerogative of the
Crown, but the Crown is in fact nothing but a manufac-
turer of coin. The Crown never purchases bullion, and
never takes tuay step for supplying the public with coin.
Bullion is b z ought to the Bank of England, the Bank of
England sen..is it to the Mint to be coined, the Mint coins
It and retur z as it to the Bank of England, the Bank issues
it to its cusi, Drillers in the form of sovereigns or any other
denominati on of coin. The entire business of the receipt
of bullion a r the issue of coin is managed by the Bank of
England as much as is the issue of paper, and in truth the
only funct ion with reapect to the coinage which the Crown
performs is that of impressing the die upon the bullion
which is sent to the Mint to be coined, that bullion being
in fact VI.) property of the Bank or of private individuals.
Therefore , those who imagine that the country would re-
ceive groat advantages from a Government bank and a Go-
vernmen t issue of coin will find when the case comes to be
examinf d that their idea is altogether fallacious. Looking,
therefore, to the present state of our paper currency, to
the her tea of the Bank of England, to the issues of the
Engliald private banks, and to the issues of banks in Ire-
land rs' ad Scotland. I cannot see at present that there is
anytb ing which either, according to our own observation
of the, facts, or the opinion of competent witnesses, calls
Upon us to resort to any compulsory measures for a sup-
Prers4ion of all issues except those of the Bank of England
—to vest that right exclusively to the Bank of England, or
still more to abolish the right of issue by the Bank of
England itself, and invest that right in the Crown. lam
11'4 prepared, whatever may be tho result of this motion,
either to submit to the house a m easure for the develop-
ment of the Act of 1841 in the wanner which I have de-
scribed, or to assent to the alteration which has been pro-
posed. But then the right honourable gentleman, if I
rightly catch` the spirit of his motion, says--" Inquiry
is exhausted ; you have done everything that com-
mittees can accomplish • you have now arrived at the
time for- legislation ; the Ceovern anent is bound to have a
policy"; we call upon you t }state what is your policy with
respect to the currene
and extensive measurye, of 2 to bring forward some new
policy, which you are bound legislation at ion founded upon that
to that appeal I would in the first'*el aprlea;
common consent, thislate cornempeenliatl_ Well, in answer
remark that, by
crisis out of which, as
I understand, this demand
any derangement
has
grown, has been caused, not by of the
currency, but by a derangement of capital
and credit. If
that be so—if the present crisis has not grown out of any
defects in our currency laws- wh y upon the occurrence of
tAia crisis is this demand made upon the Government ?
told
are we now called upon pea rfiliarly to legislate upon
uur c\irrency laws ? Why is it that at this moment wo are
told tA
tall declare a curency policy I confess that lan to-
y uuable to seerwhy thoxa i& y exigency for ouch a