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

justifies the interference of the Government in the pre-
sent year. In 1847 the turning point had been reached
before the issue of the letter—the state of things begun
to improve. It is true that the issue of the left-r, in
the opinion of competent judges, accelerated that pro-
cess ; but the improvement had already manifested itself,
and the worst had been seen before it was issued. Now,
in the present year the direct contrary is the fact. We
had not reached the worst when the letter was issued ;
and, whatever opinion may be formed as to the benefi-
cial effects of the letter, there is no doubt that if it had
not been written, if this authority bad not been given,
we should have seen a worse state of things 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 progress of the Lon-
don discount at the Bank in 1847 and 1857. Ou the 23
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 27,h Nov. they reached 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 periel
of 1847 that amount had considerablydirninished. 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 wag 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
coaeidered 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 same; the circuen•tances with which the Government
bad to deal were similar, the urgency was greater, and
whatever reason ju-tified the resort to extraordinary
measures in the year 1847 will be found to apply with
greater cogency and greater conclusiveness to the case of
the present year. But the exi,tence of a precedent has
not grown out of mere accident from the occurrence of
circumstances which bad not been foreseen when the
original measure was prepared. I have the evidence of
C Aeon, the Governer of the Bank at the time when
the bill of 1844 was under consideration, and that gen
tlemsn stated to the committees of both Houses of Par-
liameet that the precise contingency which occurred in
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 tbat which has
been at.opted in both years. That seems to me an im-
portaet 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 1848. Similar
evidence was given 1 y him before the committee of the
Rouse of Lords. Mr. C 4ton was thus examined :

" In the case of a panic do you think that a contraction
of the circulation is any cure for it ?—I 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 con traction 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 done in October.
" You contemplate, as I understand yon, that under the
operation of the Act circumstances may arise which will
call for the interference of Government ?—I did contem-
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 proved
on him Sir Robert Peel expressed his opinion to me in
these terms My 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 he 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 1814. 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 numb-sr of
bankers, but others who were men of un loubted property."
I think that passage ought to convince this ceniinittee
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-
sidtred both in its character and its consequences, and
that legislation was left in its present state upon mature
deliberation. The right bon. genileman (dr. Disraeli)
pat a question last night which be had a perfect right
to ask, and t s which he is entitled to have an answer.
It was :—•" Whether the issue of this letter was ceded
for by the Bank directors, and whether pressure was
applied to .be Government in order to obtahe it ! Now,
Sir, I state distinctly that the issue of that letter was
the spontaneous act of her Majesty's Government.
(Elear, hear.) That they proceeded upon their own deli-
berate and conscientious view of the circumstances of the
case—(t•car, hear)—that they were not urged by depu-
tations, by the represen.ationa of mercantile bodies, nor
were they implore,l to interfere by the d rectors of the
Bank of England. No man invested with a public and
official responsibility could have acted iu a more honour-
rabic and conscientious manner than the directors of that
corpration. Tney showed themselves throughout ready
to carry into client all the ob!igations which the saw cast
upon them, and they merely Paid that they were wiling
to act upon any advice which the Government might tee-
der 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
oonnuittee—f acts, the corresponding cireu instances to
which were deliberately reviewed by the Parliament of
1847, and were considered by them as constituting a
legitimate ground of interference. These facts existed
in a far more inten.e degree in November, 1857, than in
October, 1847. Oar justification therefore is, that we
acted in consequence, not of the pressure of the merman.
tile body, but in consequence of the pressure of facts,
and that we should have been guilty of a grave dere.
'letter' of duty if in so grave and urgent a state of circum-
stances we had hesitated to take upon oureelvea the re-
sponsibility which was assumed by the Government. I
do not at all sock to screen myself under the existence
of mercantile pressure. If the act which we have done
is right, let the house indemnify the Beek directors, Ist
them indemnify those who advised them. We do net
seek to shelter eurcelees under any pretence of having
been coerced into the ac". The committee is its posses•
sloe of a numerical return irons the B ank 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, tl $ Bank directors im-
mediately found themselves compelled to act upon the
authority given by Government, and to make issues in
eXC3R4 of the limit fixed by the. act. They first issued
1,000,0001. of notes from the issue to the backing doper'.
meet, placing against that sum as equal amount of secu-
rities ; and on a subsequent day they made a similar
transfer. The first issue was on the 12th of Nov., and
the second 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 bear in mine that, although °semi;
to the pecu' a • manner in
which the accountsof the Bank
are kept the Law is technically infringed to that amount,
at no time has the Bank issued se much as 2,000,000/.
to the public. It has merely passed 2 00),0001. from ono
department to another. I have before me a Et;.t;:tnent of
the amount in excess which was from day to day jellied
to the publ e. 03 the 15th N the ex-mss of re tea in
the hands of the public was 186,0001., on she foil? wing
day 622,0001., and so on until the 20 11 Nov., 'hen it
reached the maximum of 928,0001. If the committee will
deduct the amount of the reserve of notes in the bankieg
department from the 2,000,000/ transferred from the
i-sue department they will see the difference is the figures
which I have given. That in the real amount
which has reached the public. On Nov. 21 that amount
was 617,000/. ; on the 231, 397,000./. ; 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 15,000/. ; and on 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 B ink being now divided into two depart-
meats it was impossible to work the banking departnifest
without an issue of notes from the issue department, and
that that transfer was technically a violation of the law;
but the committee should bear in mind that the real and
essential violation of the act has been confined to the
amounts which I have just nee!. It may be asked what
would have been the result if the letter of Government
had not been issued. That is a matter about which we
is
suing
that only form coej,ctures. The actual result of
that letter must be admitted to have been favore, It
diminished alarm an I restored confidence ; and it did
not in the smallest degree endanger the convertibility of
the note, b.icauee a favourable turn of the exchanges had
taken place, and there was at that time no fear of a fo-
reign drain of gold. Therefere I cannot think that at
that moment the conver ibility 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 cessation of discounts. (Hear, hear.) Indeed,
could they have foreseen the impossibility
of Government
taking such a step, they might, perhaps, have diminished
their discounts a day earlier. At all events, they must r
the time the letter was issuedat have entirely sopped their
discounts. Whether so decided a step
ag that on the part
of the Bank of England raieht not have led to the ex•
tension of discredit among
eictablistiments of a similar na-
ture engaged in similar operations of banking I leave it
to the Committee to determine. (Oppcaition cheers.) It
is not for me to give any positive opinion upon sue) a
subject, but if such discredit had arisen the Committee
must see what would have been the effect upon the
banking department of the Bank of England by leading
o the withdrawal of deposits. Now, as by the two law
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-
portion cf the aseete of the issue
post-
poning payment to depositors—(hear)—or of applying a
department—because
its assets would undoubtedly have been snfficient---(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
range of possibility. Events as 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 Corareittee to c

judge whether, with such a centiegency 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
for their acts would lightly take. (Hear.) Ido not in
the smallest degree seek_ to diminish the importance of
the proceeding resorted 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 stated, 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 corpo-
ration like the Bank of England to issue 2,000,0001.
of bank-notes ; but, inasmuch as they were authorised by
the Act of 1844 to issue 14,000,000/. upon securitii s, and
as that act contained a provision for 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 a
guarded manner, under the close observation of the
Government and of Parliament, and to meet a momontary
emergency, to increase the issues of that description.
No new principle was introduced by that authority. It bee
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. (Hear.) If any doubt bad existed as to the in-
stantaneous convertibility of the additional notes issued
ander our authority there would have been some ground
for the charge which ha. been made against the Govern-
ment; but, inasmuch as the additional issue by the Bank
was not sufficient to affect the value 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
contract., or struck at the security and sanctity of pro•
perty. (Hear, bean) I wish I had it in my power to say
that this commercial crisis was definitively terminated,
and that we could look forward with entire 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 Rome
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 an infraction
of the law, at once t• 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 by the 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 28 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 Recess:try,
and I trust that if the house should be willing to pass
the Indemnity 1311 it will 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 evening to agree
to the reappointment of the committee on the Bank Acts
which sat last seesien. That committee examined many
important witnesses, but its inquiries were uot campleted,
and at the end cf the sessicn 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 fir
the reappointment of the committee. (Hear.) Is must
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 full inquiry before a select
committee, and after the examination of competent wit-
nesses upon all the different branches of the suliict.
Tne general portion of the subject was fully investi-
gated last sessiou, 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 connexi m 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 lawny. Whether the
proposal was made by the Government or by indepet,
dent menth.rs, I cannot think that we should deliberate
upon a most difficult subject, a subject which ha r per-
plexed the minds of some of the ablest men whom this
country has produced, under circumstances likely to load
to a safe and beneficial conclusion. Therefore, as I should
have moved the reappointment of the committee of last
year under ordinary circumstances, it seems to ins that
the extraordinary circumstances under which we are
now assembled render such us step still more expedient.
([Tear.) By what I have said the house I think must bo
led to the inference that the commercial crisis has in t
arisen from any abuses of the currency—from any ex-
cessive issues of bank paper in this country. (gear.)
Whatever its causes may he, they stand, it seems,
wholly aloof from the proper and direct ploy of the
act of 1844. (Hear, hear.) Let us first take the Bank
of England, the most impoi taut part of this subject. Can
it be said with truth that the directors of the Bank of
England hive shown any want of foresight, any waist of
prudence, any want of sagacity, er any want ogi firienses
during the past year ? I confess it appears to me, having
had necessary occasion to watch their proceedings with
vigilance, tbat they have not failed in any of the duties
incumbent upon them. (Hear, hear.) Let us compare,
as a test cf excessive issues on their part, their notes in
the hands of toe public with their private securities dur-
ing the years 1853-7. The following is a statement of
their notes a ith the public, including Bank poet-bid, at
various periods of 1850 :

October 4 '21,885,003/. October 25 ....: 21,412,0031.
„ 11 21,501,040/. November 1 ... 21,483,000 d.
„ 18 22,141,02W. ~ 8... 21,149,000/.
Fur the present year, when as we ere told commercial
discredit has been caused by excessive issues of Bank
paper, the returns are as follow :

October 3...... 20,825,0001. I Octobor 31 21,184,0001.
~ 10 20,863,0001. November 4... 21,080,0001.
~ 17 21,052,0001. I „ 11... 21,0,53,0001.
„ 24. 20,586,003.
So that, in point of fact, the amount of notes in the
hands of the public has been actuAlly less this year than
in 1856. Lat us now compare with the irsuo of notes and
Bank poet-bills the private seciritiez of the Bank at cw,
responding periods of 1850 7. The following is a return
of the private securities at the latter end of try...h of these
years :—•

1856. 1357.
October 4 21,332,0001. I October 3 21,835,0054
November 8... 18,e26,000/. l November 11 26,113,000e
Therefore that shove that there was not any rxeessive
issue of paper on the part of the Bank of England, and
that the amount of Bank of England notes has not been
excessively or unduly increased. With respect to the
c untry
hanks, can it be said that
issue
portien of this
,
discredit is traceable to their over ? In the first
place, take the Borough Bank of Liverpeol. That is not
even a bank of issue. Then the lergejoint-stock bunk
which has lately uafortuoately fallen—thy Northumber.
land and Durham District Bank ; that, though a bank
of very extensive operations, and though it has fa led
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 alms.
of the power of issuing paper. (Rear, 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 hall were covered by gold ; and no per:
son aware of the facto, or who will melee himself ac-
quainted with them, can fail to come to this conclusion,
that the failure of these banks is wholly indepen-
dent of all questions relating to paper currency. There-
fore, as far as the direct operation of the Act of 1844 is
concerned, as far as its object was to prevent the exc s-
sive issue of paper either by the Bonk of England, 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 success-
ful. Those who impugn the policy of those Acts must
say that 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. (Bear.) It is quite conceivable,
as my right hon. friend remarked in 1847, that a com-
mercial panic might arise if the circulation were purely
metallic. There might be undue credit and unsound
speculation, and these caution might produce the same
effects ae are observable at'the present moment in the
town of Hamburg, where there is no paper c tnilation,
where the only circulation is metallic, and where there.
exiet all the acute symptoms of a commercial creek
(Rear.) Now, with respecieto the operation of the Act
of 1841, I am des'r ms of drawing the attention of the
committee to the distinction between the ordinary ore
rations of the Act in those circumstances w:ich were
cout.mplated by its authors, and its (seer tions at a
moment of panic cr crisis. If we take its operations
under ordinary circumstances, the limit !reposed on the
Beek of Elgfand and on the country banks, end on
Irish and Scotch banks operates in the way of preven-
tion. It does not cheek the ordinary habitual operations
of ceminerce, but it is like a punishment in the penal
law which by its preventive couseqnences delermines
men's conduct. But when we come to a state of panic
all these circumstances are ravereed. Men's minds
are then in an extraordinary state. INlutcal die•
trust prevails through the community, and a law
which may be pi rfrctly suited to the ordinary condi-
tions of trace, in which it may operate beneficially
when men are left under the influence of ordinary
motives, may at a time of panic be found to produce
effects the reverse of beneficial. The question then
arises whether some extraordinary power shcule not be
required to suspend the operation of such a law. The

present law does two things. It imposes a limit on 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 how much remains of
that fund to which they look for 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 tie 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
g. t 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
againat the paper issue cf the Bank, and by which
only a met 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 re serve. 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 tenets to promote a sound state of
circulation, and so far as the state of the currency is con-
corned, to avert panics; but when a panic arises from
otber causes, at that particular crisis, though the panic
may only last a few days, it aggravates the alarm. It
appears to me that at momenta of that sort we can only
resort to the discretion of the Government for the time
being ; but I shall be happy to bear 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
meat in some f irm 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 a ny proposition to the house. The question
is one which will be considered by the committee to be
*pp:Anted, 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
timebeing, to be exercised by them on their responsibility
to Parliament, and sutject 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 ren indemnity—the question, I repeat, is whe-
ther we should, in conforneity 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 intrcieluem at a time when the events which
have called for its to reduction are still recent, while the
crisis in its consequences is not fully developed, will not
. contain 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 remits. If,
after the proceedings which took place in 1847, and if
Parliament cheuld come to a similar conclusion now, the
Government acting under the influence of two such pre-
, cadent!! might find their course facilitated and guided,
while, upon the other hand, 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 distinction
as a mere formal one, and would feel the same relec-
' 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
eV the two sy--teeng, there are other reasons why I think
that a clause conferring such a power upon the Govern-
ment ought lot to ba introduced into the present bal.
Tao select committees have sat to inquire ;nto the
subjec', one a committee of this house, and the other a
• committee of the House of Lords, and, atter fully hearing
• and considering evidence on the subject, those emel-
t rnittees 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 would be glad to hear the views entt-rtaieed
by leading members of this and of the other bawl) of Par-
I lien:tent before they can consider it their duty to submit
any measure with regard to it. Now, sir, there are quo,-
; tions relating to the ore-ration of the law in Ireland and
Scotland which are worthy of notice, and I think that it
may become the house to clothier whether some amend-
ments in the existing law may not be made with great
propriety—(loml cries of hear, hear)—to consider, for
example, whether there could be any objection to pro-
viding that the Batik ot England note should be a legal
tender over the whole of the United Kingdom. (Cheers.)
Also, it might become 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 not be advisable to allow the Irish and Scotch
banks to issue notes against Bank of England notes.
(blear, hear.) There is another subject to whicn I ad-
verted last year in noving the appointment of the cora.
mittec to inquire into the operations of the Act of 1844
which has been the subject of much popular discueeion
at the present period—l mean the policy of permanently
incr:.asieg for the future the limit of the issue of the
Bank of Ea-gland. (Hear, hear.) It is said by some
persons that if the Pank of England had been authoriet d
by Law in the beginning of Nov. to issue 16,500,0001,
in-toad of 14,500,000/., and to give them such a power
does not involve any difference of principle from the Act
0f.1844, for it was quite within the views of the pro-
motets of that Act, the crisis might have been got over
without any extraordinary step being taken by the Ge.
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
tee Bank of England had been what it Was at the com-
mencement of the crisis, and if the Bank of Beet-mid
had been empowered by law no issue 16,500,0001.,
inetead of 14,500,0001. undoubtedly no extraordin-
ary interference might have been necessary. (Elear,
hear) Bet at the same time I can quite understand
that, inasmuch as I believe that in a monetary panic
the existence of a lanit tends to increase alarm, such
interferoace might have h ea necessary. ((lean
Leer.) No ?7, if the Bank of ugland had not kept the
same bu lion in reserve which the law now requires,
if it had 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
Bank of England would have bad no greater facility
than it has now had, but the reserve of bullion would
be lees by 2,000,0001. (Hear, hear.) I think that this
coesicleratiou must tend to convince gentlemen who hold
that view that a resort to the expedient of increasing
the credit of the issue of the Beek from 14,500,0001. to
16,500,0001. might not be quite so effectual a remedy
he times of panic as they imagined. (Hear, hear.) I
regret that I have been compellel to trouble the flown
at such great length upon this subject, but inasmuch as
these questions were the real occasion which induced
the Government to recommend her Majesty to call
Pailiament together at this early period, and inasmuch
as they have groan out of an important crisis which
must lead to important results, itiaeinueh as the step
which has been taken by the Government was an ( x ra.
ordinary and extra-legal step—for we stand before
Parliament, I will not say in the position of culprit., but
the
Bank the position of having advised the Corporation of le
Bank of England to make a departure from the existir g
law—inasmuch as we are now called uo
and
on to ask
L
Parliament to indemnify the Bn k ofif I Englandhave felt it my
ourselves, I trust I may be forgiven
duty to make a statement of such length to the house.
(Cheers.)
The motion having been read from the chair that the
Chairman of the Committee be directed to move for
leave to bring in a bill to indemnify the Governor and
Company of the Bank of England in respect of certain
issues of their notes, and to confirm such issues,
Mr. GLADSTONE said—As far, sir, as I am con.
cerned I think that my right lion. friend, instead of
having to ask the indulgence of this house upon account
of the length at which he has thought it his duty to
explain an important subject, has, on the contrary,
conferred upon us an important obligation. (Hear,
hear.) On the other hand, I am by no means
sure that the same duty is incumbent upon me, cr
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 fallen frhm my right hon, friend
in respect to the subject now before the Committee, and
likewise with regard to the ulterior motion which ho in-
tends to make with regard to the reappointment of the
Batik Charter Committee. As respected the bill of in-
deinuny fur which his right hon, friend intended to ask,
he was not prepared to offer any opposition to it. He
could easily conceive that questions might arise, and the
speech of his right hen. Creme': appeared to indicate a
consciousness on his part of the feet, whether the pre-
cise moment taken by the Gevernment for the issuing of
the letter of the 12th Nov. was the right one, or ques-
lions might arise whether any ether measuresinigules
not
have been adopted in lieu of it, to meet the d ff :cl
and dangers which his right hon. friend had certainly
shown terente.ned the country. However that might he,
he thought that his right hon. friend was justified in
urging the circuinstancee of 1847 as being mutelis
mutanlis a justification of the course taken by the Go-
vernment of 1857 ; but it then became the duly of the
house to consider, in giving th, it ratification to pro- ,
madmen of that kind, what a vast and immeasurable I
force attached to precedents of that nature, (Rear.) ,

' His right hon. 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 be spoken of in the past
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—he
would not stay to ask what trading, and whether it was
the trade in money—but if it bad been the universal
system of trading in this country, and especially of the
money trade, we must feel the force of the precedent of
1847, and the duplication and reduplication we were
giving to the force of that precedent by again admit
ting its justification. (Hear, bear.) The question must
also be considered with a view to the elucidation o
what further duties were cast upon the house with
regard to the state of the law. His right hon, friend in
is speech bad embraced not only a vindication of the
issuing of the letter of the Government, which he (Mrs
Gladstone) 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 had been
sitting which had made an incomplete inquiry, end
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 rearms,
he must say he attached but little weight to it. There
were many precedents ; and it had often happened that
at a periud 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 cimmittee, 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 185, and more pro-
bably in the year 1860. (Hear, hear.) If that was true,
the proposition of his right hon friend was anything
but satisfactory. What wax it that his right hon.
friend called on the house to do ! They bad not
met now, as they did is 1847, to consider a
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 question,. Would it tend tJ settle the
pubic mind if, after the experience of the crisis of 18417.
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 conk'
mittee of last year 1 in the speech of his right boo.
friend there was lacking a practical distinction between
the question of banking and the question of the laws
which regulate issues. (Hear, hear.) The committee
which sat last session was appointed not merely to Cow
• eider the state of banking-, but also the laws which
regulate issues. It had two subjects referred to its
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 *
session of great labour so far as the committee was COO'
cerned, it had exhausted the first department of the in'
quiry, namely, the suject of issue in connexion with
the Bank of England ; they, therefore, bad still to
consider the question of issue is reference to country
banks, and to Scotch and Irish banks, and when that
was exhausted there was still an enormous postscript
to the question which the committee was appointed to
inquire into—r amely, thesuperannuated awl antiqu.arjan
state of the relations between the government and the
Bunk of England. (Hear, hear.) That wbick was An
important, a novel subject of inquiry, with all the fresh.
ness of youth upon it in reference to inquiry which bad
never yet been touched upon, had been scarcely er
proached by the committee. Such was the progreU
which the committee bad made. The right hon.
gentleman (11r. Disraeli) had said last night that there
would come before the committee only a repetition of
current and known doctrines, on which every Wiled mind
was made up. The right hon. gentleman seemed to think
that the discussion of the question of the currency was
an exhausted discussion. He (Mr. Gladstone) agreed
with him, buthe must say that while it 'risen exiissusted
it was likewise an a erne! 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 fascinations about it which seemed todrive
men mad. Currency had made as many lunatics as love
itself ; and he was not sure whether there ought not to
• be established a special asylum in which that mania
cou'd receive the best and most effectual treatment. He
had the utmost confidence that if a committee entered on
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 Weald probably re-
commend its own reappointment in another year. His
right hon. friend had nothing to recede from : the ques'
0011 was an open one ; they had all the same objects in
view, and the question then before the house gave hie
right bon. 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 f
Ore 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 particular
nostrum which was applicable to its solution. Would
they all be struck dumb? Did his right hon. friend sup-
pose that if ho introduced a bill for the regulation of the
currency, he would be able to carry it at once 1 Let
him be sure that %battler might be the proposal the
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 obeervation.
What he (Mr. Gladstone) thought ought to be done was
to recognise the distinction between the question before
the house as it related to issue and as it related to bank-
ing. So far as the act of 1844 was concerned, as it
touched on the question of issue only, and having no-
thing to do with the question of banking, it was irnpoe:
Bible that there could be a better time than the prisons
for giving a distinct intimation to the country of the
views of the house. For years past there bad been a
tendency in the public mind to run abroad towards the
least known, the least fixed and central authority, and
a tendency to an approximation to one conviction ond
conclu-ion as to what was the cost in the question of
currency, which would increase if the people saw that
Government and Parliament were prepared to give no
decisive opinion in the case, and that the utmost they
could do was to refer the subject to a committee. We
had had the amplest experience of the working of the act
of 1844, and he CSlr. Gladstone) was not so much in'
clined as his right hon. friend appeared to be to main-
tain the act of 1844 in its utmost integrity, for he
thought that there might be questions connected with it
which it was now the time to consider. As he looked
around him he saw his hon. friend the member for North
Warwickshire (Nlr. Spooner), and he would ask his hon.
friend, as an honest man, was he going into the commit-
tee to learn or to teach ? (Paughter.) Ms hon. friend
would, he hoped, forgive him the personality of the ap-
peal, for the question he had ,put to him he could with
equal justice have put to any other member of the cow-
mittee. They would go into the committee prepared to
air their own theories, and to extract them if they could
out of the mouths of witnesses by questions which far
exeeded in length the answers they received; and it
would be a juster description of a committee on currency
if one was to stj that it was a machine ,constructed is
oppo, ition to the principle on which all other machines
we re constructed, that of the saving of ; in order
to get that said in ten words which would otherwise be
sail in two—(hear, hear, and laughter)—and he was
of opinion that the appointment of such a committee
was the adjournment sins die---(hear)--of the question
PO far as it related to issue. So far as issue was- cen-
earned they had the amplest experience 'of the act of
1844; and be was bound to say, having been a,party to
that act, that it admitted of improvement, perhaps.inthe
shape of completion. (Hear, hear.) He thought that
as regarded the main purpose fur which that act was
established it had perfectly succeeded. We had had
in 1847 a formidable foreign drain of gold, and we bad
had a formidable foreign drain in 1857, and in both wee
we had acted
.against the drain by raising the rate of
interest, and by carrying out the policy of the act of
1844 we had succeeded in rectifying the state of the
exchanges. His sight hon. friend bad marked with
chronological fidelity the points to be observed, and it
would be seen, that as regarded issue the house was ripe
and mature for the consideratiOn of any proposal eilti„"
the Government might have to make. He did Da then
abandon the hope that when the house met kt the usual
lig
time for despatch of public business, and when, perhaps;
the pressure e
of the commercial crisis had passed by, _ _
Majesty's Government would make a proposition
Parliament on the subject of the Bank Act of 184 e
He would again Fay that there was another question
which had to be considered, and which was a fit sah.P.°`
for inquiry, and that was what were the canoes of too
recent commercial events. They had seen and 10114
that night from the authentic figures of his right hone:
friend, this was no question of the American trade op..
e
rating by a demand for gold in this country. The ti
mand should have been met by the legitimate operation
of the laws of commerce, and if that was the cause
of the demand for gold in this country, it was right that
it should be met by the director, of the Bank of Be f:
land by the raising of the rate of discount, and if
could be shown that such a course bad failed to Me"
the foreign drain of gold, he would admit that trce
should stand in a position of difficulty with regard
to the act of 1844. But that drain bad been met 14
the Bank directors acting wisely and prudently on the
principle of the act of 1847. Since then, however'
!here had been a crisis, which had become more formi-
dable after the exchanges had been rectified, than when
they were in an unsatisfactory condition. What then
were the causes of that crisis ? There was a prevaleni
opinion that it was connected with the state and condi-
tion of banking. On that point he would not pronounce
an opinion, but he would grant that it was a fit subject
for inquiry by a committee. He desired that it should be
inquired into, and it was because he wants
notinq row
in inquiry on
the subject that he begged the house would
the burthen on a committee of going on the came old
circle of inquiring at once iato the currency, the laws 0