The Sun.
London, England, 1857-02-07 00:00:00

the .attention of fhe house to what seem to me the most
important questelons involved in the act of 1844, and
which will require consideration fro
country that itsm the commit-
tee. It is of the utmost moment tothe
currency she mid rest upon a sound basis.
On the sound-
ness of its te arrency the trade, the
industry, and the credit
of thenatio n depend. ; and no effort should be spared to
maintain in their integrity such provisions of the law as .
secure so valuable a blessing, and so great a source of wealth
and prosperity. But there are other questions connected
with this subject which, although subordinate in their im-
portance. -yest deserve, and I hope will receive, theattentive
der.stion of the committee. I allude to the arrange-
mentci3nsi su'esisting between the Bank of England, in its rela-
tion of a banker, and the Government—that is to say, with
regard to the deposit of the public money in the custody of
the Bank of England, and also with regard to tho manage-
ment of the _national debt. The pecuniary relations sub-
sisting between the Bank and the Government do not, like
the subject of the currency, affect the interests and for-
tunes of trade and production. Nevertheless, within their
limited eph ere they aro of undoubted importance. Under
the late ace; the Bank of England now pays about 188,000/.
annually t o the Government for the privilege of issuing
notes. I think 120,0001. is the sum fixed by the act, in
addition 'so which the Bank pays 60,0001. a-year for stamp
duty, and another trifling item of 8,0001., making the total
amount which it pays i the Government in connection
with the paper currency 188,003/. The profit derived by
the Bank of England from the currency is calculated upon
different principles, and it is perhaps not very easy to de-
cide its precise amount ; but the highest estimate that I
have heard places it at about 170,0001., and the lowest at
about 80,0001. The Government, therefore, receives from
the Bank a larger sum than that made by the Bank in the
shape of profits. In addition to the contribution in re-
spect of the issue of notes, the Bank also makes a payment
for the management of the national debt. The scale of
that payment is prescribed by act of Parliament. They
pay at the rate of 4501. per 1,000,0001. for every part of
the national debt not exceeding 400,000,000/. ; 3401. per
1,000,000/. for every portion between 400,000,0001.
and 600,000,0001- ; and 3004 per 1,000,0001. for
all above 600,000,0001. This is the scale fixed by act
of Parliament, but it will be open to the committee,
in connection with the general question of renewing the
charter, to revise the terms upon which the privileges of
the Bank shall be continued. I may also state that lam
now in communication with the Governor of the Bank of
England on the subject of the pecuniary arrangements sub-
sisting between the Government and that corporation.
Upon the result of that communication it may depend whe-
ther or not the Government will deem it advisable to pro-
pose any modification in the terms of the present arrange-
ment. If such a modification should be thought expedient,
and it is likely to receive the assent of the Bank, the Go-
vernment will of course bring the matter under the con-
sideration either of the house or of the committee. I have
been compelled to trouble the house at, I fear, a wearisome
length on this question ; but the matter is one of so much
importance to the wholecommunity that I have preferred to
appear to be unnecessarily tedious rather than to withhold
anything which might be essential for the information of
hon. members. Before I sit down I have only to add that
the subject of joint-stock banks has, from circumstances well
known to every hon. gentleman, attracted a great degree
of public attention during the last twelvemonths or more.
Some of those establishments have failed in the most alarm-
ing manner, producing the most disastrous consequences to
their unfortunate shareholders. It therefore appeared to
me that the subject was one well worthy of investigation
before a committee of this house. The procedure by which
the affairs of insolvent joint-stock banks sire wound up is
anything but satisfactory. Suggestions have been made—
although I confess that I am no; one of those who approve
them—for the substitution of an inspection of the state of
their affairs by a Government officer for the vigilance and
control of their own iirectors. I, for one, greatly deprecate
any attempt to improve the management of joint-stock
banks or any other mercantile undertakings, by weakening
the motives for duo care and caution on the part of those
directly interested in such enterprises by holding oufthe
shadowy safeguard—for, after all, it never can be any real
protection—of Government control. However, this is one
of those matters which may fairly receive the attention of
the committee. I freely admit that there is a great dis-
similarity between the question of joint-stock banks and
the all important subject of the currency, which will con-
stitute the main topic fur investigation by the committee.
Still, it appeared to me that it would be difficult to form
two committees, to sit both at the same time, on subjects
as closely related to each other as the affairs of the Bank of
England and the currency generally, and the law of joint-
stock banks. On the other hand, I think it would not be
expedient altogether to emit to consider the question of
joint-stock banks, and I therefore propose that it be sub-
mitted to the same committee. The righ hon. baronet
(who had spoken throughout in a tone too low to he dis-
tinctly heard) then concluded by moving for the appoint-
ment of the committee.
Mr. DISRAELI (whose remarks were at times inaudible
from the same cause) said—lf it be desirable that both of
the subjects brought under our notice by the right hon.
gentleman should undergo the investigation of a select cons..
mittee, I think it would be very unwise that they should
both go before one and the same committee. Between the
currency and joint-stock banks I see no necessary connec-
tion; and, moreover, the question of joint-stock banks has
by itself attracted the greatest amount of public attention,
and is likewise one of sufficient difficulty and importance to
demand the undivided labours of a committee. (Hear.)
But, after listening to the statement -given by the right
hon. gentleman of the intentions of the. Government re_
specting the currency and their relations to the Bank, I am
really at a loss to understand what are to be the duties of
the proposed committee on that important subject. (Hear.)
The Government appear to have entirely male up their
minds on every point of moment connected with the ques-
tion before us ; and surely, therefore, it would have been
preferable for the right hon. gentleman at once to intro-
duce a bill embedying his views, and thus to afford the
hones an opportunity of expressing its approval or disap-
proval of them. With the exception of one solitary point,
of no very great moment—viz., whether the 11,.nk of Ire-
land should have permission to lend money on mortgage,
the Government, according to the speech of the right hon.
gent!. man, nave clearly made up their minds on the whole
question which they now wish to refer to a committee; and
therefore the course he proposes to us -is equally unsatis-
factory and futile. Where the auestions are of such a
nature as those on which the right hon. gentleman has
touched, and on which the Government also entertain a very
decided opinion, the proper arena' or investigation is the
whole house. (Hear.) The Ministers have a policy which
they are no doubt prepared to support. Then, why do they
not at once boldly submit it to the verdict of this house.
I question very much the propriety of referring the Bank
Act to a select committee, and I should much prefer that
the Government should lay before us their matured views
in the shape of a bill, which would be discussed and criti-
cised by all those hon. members who take an interest in the
subject, and the Government would then be able to defend
the point which they recommend. Of coarse, on such a
subject I shaq not attempt to divide the House should
there appear to bo a predominant feeling in favour of
adopting the proposed course, but I beg the house to con-
sider weather it. would not be more advisable, as I have
suggested, that the committee on joint-stock banks should
be confined to that topic, and that the renewal of the Bank
Act should be breughtbsf mre us iu the shape of a Govern-
ment bill, which could be discussed in this house.
Mr. TITE said that the speech of the Chancellor of the
Exchequer bad confirmed the impression produced on his
mind by the Royal speech, that the Government were
about to lay this question bsfore the House with a fore-
gone conclusion upon it. On no subject was there such
an extraordinary difference of opinion among men of the
greatest ability and most extensive information. The
reports of the select committee of the two Houses el.
Parliament were completely opposed to each other,
though the report of the select committee of that House
was carried by a small majority only, and many members
of it agreed entirely with the report of the House of
Lords' committee that the panic of 1847 was materially
aggravated by the operation of the act of 1314. Mr. Tooke
also was of tbat opinion,and he was completely opposed to
the character and the arrangements of that act. The
venters and speakers on this subject did not appear suffi-
ciently to have taken into c nsideretion the enormous inone
tary circtilatien of the country, amounting, in all, including
foreign bills of exchange, to wreathing not much nosier
200,000,0001. The mashinery which was to move this
great mass ought to be adjusted with the greatest
nicety, and so enabled to work without any jerks, such as
were occasioned by changes in the rate of interest. 01
these there heal been nine during the last year, and the
chances of them had been greatly increased by the act of
1844, which cut the capital of tho Bank into two parts—the
ordinary banking capital, anti the capital for the issue de-
partment. The circulation of the Bank was almost a fixed
quantity, about 20,000,000/., but the banking department,
owing to this division of capital, fluctuated very much.
Neither had the enormous amount of gold brought in' o
this country since 1843 been•talten into consideration.
Since that year gold to the amount of 175,000,000/. had
been discovered, of which no less than 135,000,0001. had
been imported into this country. The disturbing force of
that element had naturally been very great, for the impor-
tations had varied considerably in amount, having only
been 1,000,1.004 in some quarters of the intervening years,
and 3,000,b0J4 in others. A material effect hat been pro-
duced by these importations upon the discount of the Bank,
and the subject was one which ho thought deserved the
careful attention of thecommittee. In 1847 the Bank sud-
denly reduced the rate of interest to 2A per cent.,and in some
instances the rate of discount was only 1 per cent. The con-
sequence was that enormous building speculations were un-
dertaken, and when the Bulk found it necessary to raise
the rate of interest the speculators became bankrupts. The
large number of workmen now out of employment was at-
tributable to this state of things. He conceived that a
change was required in the constitution of the Court of
Directors. Under the present system eight of the
directors retired every year, and were replaced by eight
other gentlemen who were on the list, so that financial
Plans which had been sanctioned by a majority in one
W5Sk might be entirely changed the next week, in conse-.
queue of the ad mission of eight new directors. He hoped
trehiattteeful
orlertunity would be afforded, either in the can-
to which be tillaeq house,
of discussing the important poi.its
Mr. BAlLugalled attention.
Exchequer to sa tilTid understood the Chancellor of the
.at he wonld abstain, on the part of the
Government, frY one indicatingth the
the details of a measure on
this subject, until after
bees presented, and h report of the committee had
e Mr. Baillie) therefore conceived
that the constitution of tflic,
committee was a matter of
very e m
th
erione iportance,
°opinions entertained by advocates of unrestricted and of restricted banking
were as much opposed as were foruTiciirelY4aie views of the
Protectioeists and f
Exchequer hal referred to the opinions erf'cttleorl oef tsheir
the
discussions Peel on th;s question ; but those who recolleeZt eal de
discussions ell the present Bank Charter Act would retire
R. Peel never regarded it as a final mneiteurniT
her that Sir .
(Hear.) On the ceritrery,
the right hon. baronet distinctly
steted, when he introduced the,
t bill, that lie intended to
t
carry it nmuch further, and that his ultimate object was
0110 bulk of issue. Indeed Sir that there Should be only
t.ighout the country --b"
no)tender-
Peel gave private bankers till.°
etand that the privilege of issuing paper would o
and. ho
. inyvitecel'oali ceded to them for a pei iod of 10 years,the privilege of paper
bankers who were disposed to give up
issue to do so, and to receive In compensation an annual
payment of 1 per cent, upon time amount they were actually
issuing at the time. A number of private bankers accept
that prol"rition' upon the cl_ear understanding, that the
issues of all private banks should cease at the termination
of the charter ; and these bankers were now placed in a
very disadvantageous Petition, as compared with the bank-
ers who had not entered into the arrangement, for they
were without the power of issuing paper. He thought the
committee ought to consider whether, if the banking SYS"
tern of the country was to remain in its present state, all
private bankers should not be placed in the position in '
,which they were previously to the act of 1844.
Mr. GLYN thought thesuggestion of the right hon. mem-
ber for Buckingbawshire, that tae committees should be
appointed to inquire into this important subject, well de