The Sun.
London, England, 1857-12-08 00:00:00

E El iit E- P
• - , S. 1S
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Now he thought that a final end ought to be put to the bill
of 1841, which had already caused so much distress to the
country. On the 3th Oct. the amount of reserve notes
in the Bank was 4,600,0001., and on the sth November,
it had gone down to 2,200,0001., and if the Government
had not interposed on the 12th, it must have absolutely
stopped payment. It was said that the directors might
have saved themselves by stopping the discounts, but that
would have brought ruin and disaster on the whole of the
commercial community. He could not help expressing hie
regret that a clause was introduced into limiting the issue
to 28 days after the meeting of Parliament, and with a
rate of discount fixed at 10 per cent. If the discount were
to go down lower than that, then the limits of the act of
1814 were to come into operation. Surely, such a discount
must be the ruin of moderate traders who had no capital,
and to whom such a rate of discount would be ruin. When
a discount of 10 per cent. existed in the Bank of England
for first-class paper it was not unreasonable to suppose that
it would be three or four per cent. higher in other banks,
and surely no commercial transactions could be entered
into while that state of thingpontinued. He trusted the
Government would not think it necessary to persist with
that part of the proposal, for if they required such an issue
of paper as the country demanded, nothing could be worse
than to continue the rate of interest as it then stood.
Mr. CROSSLEY said he was engaged in commercial
pursuits all his life, and yet he approached the present sub-
ject with great diffidence, because it is ono of the most
difficult which could be considered. According to the
speech of the right hon gentleman the memer for
Buckinghamshire, on Thursday night, they had got them-
selves " into a regular fix," in relation to the Bank of Eng-
land. Now, what was the Bank of England ? It was a
joint-stock banking company, with certain privileges. He
must confess that in his opinion the Government deserved
great credit for the course they had recently taken, and
that was the feeling of all the manufacturers and merchants
with syhom he was acquainted. (Hear, hear.) The right
hon. gentleman the member for Oxfordshire, however,
who was a colleague of the right honourable gentleman
the member for Buckinghamshire, said that the
Government deserved impeachment for having broken
the law, while he would say that they would deserve
impeachment had they not broke the law. Looking at
the leaders of the Opposition in the one house and the
other, he (Mr. Crossley) thought that the country might infer
from them the course contemplated to be taken, and see
that they certainly ran in pairs. Although he did not
entirely approve of the Bank Act of 1844, he was yet
somewhat in its favour. Its opponents spoke of it as " like
a candle burning at both ends," with a foreign and do-
mestic drain upon it—the gold going out of the country,
and the internal drain of gold operating at the same time ;
and they predicted that that drain might go on until a
sovereign would not be left in the Bank of England. Much
had been said as to the issue of the 14,500,0001. or
16,500,0001., and the question was raised whether the
power ought to be left to the Government or to the Bank
of England. The noble lord the member for the City of
London said that the Government ought to have the power
to control the matter, and other hon. members said that
the power ought to be vested in the Bank of England. He
put it to the house whether they might not so deal with
the question as to give to it an elasticity ? And he thought
that instead of leaving it either to the Government or to
the Bank of England, they might settle it by tho question
of discount, when either above or below 5 per cent. on the
14,500,0001., and when the time might come, it would still
be in the optiooof Government to stop in and advise the
suspension of the law. There was one great anomaly, and
that was the state of the law in Scotland and in Ireland in
respegt to issue, and the house he thought ought certainly
not to allow the present dnoment to pass away without
assimilating the law relating to notes as a legal tender, and
thus guard against the drain of gold which recently proved
so embarrassing. He was of opinion that they ought to
have only one bank of issue, and that they ought to pay
the party interested for their trouble, and that the pro-
fits of the transfers ought to go to the reduction of the
taxation of the country. (Hear, hear.) He thought
certainly that those profits ought not to be given to any
private class, but rather for the benefit of the whole
community. He remembered that some years ago in
New York he was told that they had then completed only
about 300 miles of railrcad to Chicago, and that in a short
space of time they had increased the line to 3,000 miles,
and shortly after that to 6,000 miles. There was now a
complaint that much of the capital of this country
was invested in speculations in America, but, however
that might be, it was desirable that men should pursue
such a course as would mitigate the evils from which the
country an,l trade were suffering.
Mr. PHILLIPS believed the Government did that
which they felt they ought to do. Let them look to what
was really the state of the case. g There were three causes
which, in his opinion, led to the existing embarrassment.
Firstly, the wars in Russia and in India—secondly, the
conduct of certain banks, first, of the Liverpool Borough
Bank, and afterwards of the Glasgow ; and lastly, the em-
barrassment brought upon the city of London by the con-
duct of bill-brokering houses. He felt that the Bank of
England, from the course which they pursued, appre-
hended that there were indications of storms ahead. The
Bank foresaw it in raising the rate of discount a year and
a half ago; and if they contrasted the conduct of the ex-
isting directors with that of the directors of 1817, it would
be found that they had not raised the rate of discount until
the last moment. What was the result of that ? He be-
lieved he was right in stating that no less than six directors
succumbed to the pressure at that time. If, then, they
took certain conduct of the Liverpool and Glasgow Banks
he thought the commercial world ought to protest against
a system which involved infinite damage to those who were
trying to obtain an honest livelihood, and he felt that it
was a bold proceeding to see the city of Glasgow proclaim-
ing to the world that their misdeeds were the mere result
of accident. He trusted means would be devised to put an
end, and that suddenly, to the system of bill-brokering in
the city of London. Who were the bill-brokers, and wat
wore they composed of ? They were composed of men who
received from various parties in England their surplus
capital—those persons being tempted to send their surplus
capital into the hands of those brokers. He was not going
to say anything against those brokers, but he must say it
behoved them to take care into whose hands they placed
the money entrusted to them. What he asked, would have
been the effect of the stoppage of some of the brokers on
some of the commercial houses ? There would be great dis-
asters. But from the moment the Government relieved the
commercial interests, from that very moment every trans-
action would receive a fresh interest; and he must
say that everything that took place from that time, must
and would be beneficial to the country. (Hear.) They had
at the present mills with the option of working short time
or no time; but he trusted they would soon be ab:o to get
produce cheap, an i again to set work going, which would
be a benefit to all people engaged and interested in manufac-
tures. They could not at the present tell whether they
were to have highprices, or low prices, and they were in a
state of uncertainty. With respect to the parties who at-
tributed the existing distress to certain causes, he, for one,
must say that he was of the same opinion as Lord Over-
stone. He wished to see the working man in the posses.
sion of that comfort which he ought to have ; and he
wished to see no power in any bank to issue, bat in the
Bank of England, with a reserve of sovereigns in their
coffers to meet every note they issue. (Hear, hear.) The
country banks wished to have the power to issue their own
notes ; but he thought great care and caution should be
taken in that matter. A meeting had recently been called
at Manchester, at which a resolution was passed by the
merchants of that important place, that they would refuse
any notes issued by those banks, and the consequence was
that the banks in the district did not issue notes; and it
subsequently appeared that some of the parties came for-
ward and stated that it would be almost impossible, if not
next to impossible, for them to have withstood the pres-
sure had they relied on the issue of local notes. He men-
tioned those matters to show that he thought they ought
to have but one great commercial bank of issue.
Mr. NE WDBGATE said the hon. gentleman who had
just sat down had expressed opinions that were very cur-
rent, and very much entertained by a large body of the
people of this country. With respect to the produce of
cotton, he himself could not condemn the course taken by
Government in relation to that staple article. His prin-
cipal object in now rising was to ask the right honourable
gentleman the Chancellor of the Exchequer a question
which had already been put to her Majesty's Ministers—
whether there had been any interference with any capital
of large amount, the operation of which in relation to the
issue and demand for notes, might have had an effect in
producing the crisis ? That was a most important sub-
ject, and one to which he thought the tight honourable
gentleman ought to give an answer. While the Bank of
England had now to contend with difficulties the most
enormous, there was capital to a vast amount in few hands.
They had, for instance, the house of Rothschild, who, with
five houses, commanded 30,000,0001. He therefore must
say that it was essential that they should have such an
establishment, and he thought the house ought to be in-
formed whether any difficulties of the sort he had referred
to had arisen, and been the cause of the Government having
issued the letter to which so much reference had been made,
and for which he, for ono, sincerely thanked them in the
name of all his constituents. Those who relied on bullion
should remember that the question was not merely a com-
mercial question. He thought that the circumstances in
which the country was now placed— considering that they
were involved in a great struggle for the maintenance of
her Majesty's power in In .ia— ought to lead the Govern-
ment to be explicit, and that they ought to give every
possible information upon that subject also. He thought
the subject was ripe for legislation, and that means might
be taken to come to an understanding with the Bank of
England to prevent the recurrence of that establishment to
a rate of interest below 3 per cent., since the low rate of
interest bad been found to stimulate those speculations
which every one so much condemned. If Lord Overstone
had his will, and it were possible that the question of issue
could be separated altogether from banking, and the power
of the Bank of England thus limited, the result would be
to put it in the power of one or two of the large merchant
houses to contract the currency of the country. It was
unbecoming that there should be a law which might allow
the unauthorised interference of the Government of the
country in the currency in such a measure and at such a
period as in fact materially to affect and alter the value of
money. The question of the noble baronet the member for
Evesham was one of very great importance ; and he trusted
the Government would give an explicit answer to it, and
state whether the currency of the country had, to their
knowledge, been affected by the action upon it of specu-
lation.

Mr. BUCHANAN said that the opinion of his GlasTow
constituents ou the subject now under co usideration had b •►
characterised by the noblelord the member for the city of Lon-
don as wild and revolutionary. He believed the noble
lord referred principally to the opinions expressed by the
Chamber of Commerce of Glasgow, which was an assem-
blage founded by the friends of the great Adam Smith,
and rhich had always been distinguished for the soundness
of its opinions. The Chamber of Commerce was well known
to many members of the house. The first principle which
the Chamber had always advanced was the principle of the
convertibility of paper money. Another principle which
they entertained was, that there could be nothing more
injurious than an excessive issue, and that paper being
convertible against gold, it was altogether impossible that
it could be over-issued. The Chamber of Commerce had
also drawn a distinction which did not appear to be suffi-

cicetly borne in mind in that house—he meant the dis-
tinction between currency and capit (Hear, hear.)
With respect to the present commercial difficulty, it must
ha looked upon as one arising from causes affecting cur-
rency, and the act of 1844, certainly at such a time as this,
aggravated the crisis, for every one had wrapped himself
around with his own credit, and surrounded himself with
his friends, destroying both credit and confidence together.
He had stated what were the opinions of the Chamber of

Commerce of Glasgow, and it was for the house to condemn
or approve of those opinions, and not to condemn that
Chamber upon a judgment formed from statements in the,
public prints of what the opinions of the people of Glasgow
were. He hoped to see the time when there would be a'
thorough revision of the balking system, particularly with
regard to the practice of re-discounting in the London
market, of boi rowing upon the security of their own stock,'
of excessive accommodation to those not worthy of it, and
before all, of keeping small reserves, or no reserve at al;
at credit with their London bankers • on all of which;
points ho thought improvements might effeeted. He did!

not mean to vindicate the Western Bank, or any other
bank, bat at the same time he was not at all ashamed of
having been present at the meeting which had been referred
to. There were present at that meeting many noblemen and
gentlemen of great influence, in no way connected with the
Western Bank, and the object of that meeting was not to
restore that bank, but to see if something could not be
done to put an end to the existing panic. He should
have been glad to have seen the Western Bank restored,
for the sake of depositors, there being a large
amount of family money deposited with that bank. A great
deal of good would thus have been accomplished if that in-
stitution had been restored to public confidence, and it
was upon these grounds, and not that they had any sym-
pathy with reckless credits, that so many gen tlemen wished
to see the restoration of the Western lsank of Scotland.
Ho believed that the condition of the currency under the
Act of 1844, was a great credit to the country ; and he ad-
vocated the placing of power in the hands of the directors.
of the Bank of England, to relax the stringent effects of
that act on occasions of emergency.
Mr. KIRK said he might congratulate the Chancellor
of the Exchequer upon the agreement that seemed to exist
on two points—namely, the notes should be payable in
gold, and that the Act of 181.4 was no longer tenable. The
convertibility of notes was not dependent on the Act of
1844, but on the Act of 1819 ; and, therefore, the intro-
duction of the fortner act added in no way to the security.
With regard to overpowering the Bank of England Direc-
tors to relax the stringent operations of the act that was
entrusted to them, he considered they might as well be
without the law altogether, or abrogate it at once. The
Act of 1844 was founded upon two fallacies. It was be-
lieved that it would stop over-speculation, and put an end
to over-trading. But over-trading had occurred, and over-
speculation was the cause of the present panic. The other
fallacy was in supposing that if they had not given such
act there would be an over-issue of notes in Ireland. But
the contrary was proved to be the case in Ireland. It was
quite as impossible for a bank in this country as in any
other to issue and maintain an over-issue of notes, as it
was to put a quart of water into a pint bottle. The great
error of the Act of 1814 was to apply an unyielding and
invariable rule to a thing so fluctuating as currency, and
in that respect, as well as others, it had been productive of
much injury. (Hear, hoar.) As to joint-stock banks,
be thought them one of the best things a country could
possess, if properly managed, and with unlimited lia-
bility. Before concluding, he begged to make one sugges-
tion, which, if adopted, he thought would do much to pre-
vent the issue of speculative paper and over-trading, and
that was to make the drawing or acceptance of a bill of
exchange " for value received" where no value was given
or received, a fraud, punishable as such. (Hear, hear.)
He should support the present bill.
The CHANCELLOR of the EXCHEQUER—I will
first answer the question which was put to me by the hon.
baronet the member for Evesham, inasmuch as it involves
the important question raised by him as to the necessity of
a preliminary inquiry, to be conducted, I presume, by a
select committee, or by the examination of witnesses at our
bar, before the second reading of this Bill shall be agreed
to. The hon. baronet asked me whether it was within the
knowledge of the Government that there had been a con-
spiracy or confederacy a certain bill brokers, bill dis-
counters, and other persons in the metropolis for the pur-
pose of intimidating and influencing the Bank of England
with the view—l do not exactly know what the view
might be, but with the view, I presume, of embarrassing
their operations to such an extent as to render necessary
the interference of the Government. That, I apprehend,
1 was the question which he put to me. The answer which
I have to make is, that I have no knowledge of the exist-
ence of any such combination or confederacy—(hear, hear)
—and, moreover, that having had occasion during this
crisis to watch with great closeness all the successive events
as they occurred--having had access necessarily to authen-
tic information, and having availed myself of it to the best
of my ability—l have no belief in the existence of any such
conspiracy. (Hear, hear.) And therefore, unless the
house shall have placed before it some more specific, de-
tailed, and authentic information than the hon. baronet
was able to bring before it, it does not seem to me that it
would be called upon, or, indeed, justified, upon a mere
suggestion or surmise of that sort, without any authentic
testimony to rest upon, in instituting a solemn inquiry at
the bar of this house. Unless, then, the house shall re-
ceive some information of an authentic character in that
respect, I hope that it will accede to the second reading of
this bill. I will now proceed to advert to the questions
put to me by my right hon. friend the member for the
University of Oxford. He objected in the next place to the
manner in which the first clause of this bill is drawn.
He said that the Bank of England not being an official de-
partment of the Government, it would not be regular to
confirm its acts, and that the only acts which the Legisla-
ture could confirm would be those of some member of the
Executive Government. Now, in answer to that remark,
I would state that the Bank of England, though certainly
not a part of the Executive Government, is intrusted with
important functions which are partly of a public nature.
One obligation of the Bank of England—an obligation by
force of a statutory enactment -has been violated at the
suggestion of the Executive Government, and it is on ac-
count of that infraction of the law that we have brought
forward the Indemnity Bill which is now under the con-
sideration of the house • and I apprehend that there is
nothing in the smallest degree irregular or improper in this
house confirming the act of the Bank of England, which
involves a departure from the Act of 1841. There are acts
of the Company and Governor of the Bank of England
which are not in conformity with the statutory obliga-
tions imposed upon that corporation, and in framing this
bill the Government were advised that it would be proper
to borrow a precedent from the act by which the Bank of
England was legislated for in the year 1797, when the first,
departure was, I believe, made from its then statutory ob-
ligations. Athat time, when Mr. Pitt was Prime Minis-
ter, cash payments were suspended by the Bank, and that
departure from their obligations was confirmed by an Act
of Parliament, in which there was a clause which referred
to a minute in Council, and which provided that all acts
done by the said Governor and Company cf the Bank of
England by the direction of, or in pursuance of the said
minute in Council, shall be and are hereby ratified and
confirmed. Well, sir, that. I think is a sufficient precedent
for the phraseology which we have adopted in the present
bill. (Uttar, hoar.) Thorn knol.S n lalula
has been raised by my right hon. friend. My right hon.
friend referred to the issue of the Bank of 2,000,000/.
from the Issue Department, and he likened that issue to
a Government loan, and said that it was of the nature
of an issue of Exchequer bills. Now, I confess, with
great deference to the accuracy and knowledge of my
right hon. friend, that I cannot quite accede to that doc-
trine. It seems to me that it is of the nature of an issue
wholly different to an issue of Exchequer bills, which are
instruments issued by the Government under the authority
of acts of Parliament, and which have attaching to them
particular legal incidents; whereas in this case all that the
Bank has done has been to make an issue of 2,000,0001,
upon securities, as it is generally authorised to do by act of
Parliament. I am aware that these 2,000,0001. are in excess
of the limit imposed by law, but they are in their nature
precisely analagous to those 14,000,0001. which the Bank is
authorised to issue by act of Parliament, and therefore I
do not see the justice of my right hon. friend's comparison.
My right hon. friend again wishes to know whether the
Government intend to make any and what arrangement
with the Bank with regard to the excess of interest, and
whether that interest will be borne-to the public account.
Now, Sir, as the matter Is still in progress, and as the Bank
has not yet announced that the excess has been entirely
withdrawn, I have not thought it my duty to come to any
definite conclusion upon the subject, and I think that the
house will agree with me that it would not be desirable to
come to a conclusion upon the subject until the day shall
arrive when the Bank can announce that the issue has re-
turned to the limit which has been fixed by law. These,
Sir, are my answers to the questions of my right hon.
friend, but there are one or two other points upon which
I wish to make a few brief observations. _ The Mort and
learned member for Wallingford has expressed an opinion
that the rate of discount ought not to have been fixed at
so high a rate as 10 per cent., and he appeared to me to
suggest that it would be desirable to allow the Bank to
diminish the rate of discount without putting an end to
the present relaxation. Now, in answer to that suggestion,
I wish to remark that when the first letter was issued the
rate of discount was 6 or 7 per cent., and the- Govern-
ment of the day made a condition, in granting a relaxa-
tion, that the rate of discount should not be less than
8 per cent. [Mr. Malins—" It was a very bad precedent."]
Very well, but I was going to remark that we have not
quite followed that precedent, an-1 that element which the
hon. and learned gentleman condemns is excluded from
the present bill, because the Government have not them-
selves fixed upon any rate of discount, but have simply
adopted that which they found in existence--a rate which
was caused directly by the spontaneous act of the Bank,
and without any suggestion whatever upon the part of the
Government, and which was in existence before the issu-
ing of the letter. All, therefore, that the Government
did was to adopt the rate of discount which they found in
existence. I certainly will admit that 10 per cent, is a
very high rate of discount, but when we bear in mind the
great importance of arresting the foreign drain of gold,
and preventing its revival, I think that this house and the
Government would not be exercising a sound judgment if
they did not insist upon a condition that the existing rate
of discount should be maintained until a more favourable
state of things shall have arrived. (Hear, hoar.) There
is now only one other point to which I wish to call the
attention of the house, and that is to a repetition of a
statement which I have heard in other quartera, but which
I should never have expected to hear from the mouth of
the hon. member for North Warwickahire(Mr.Newdegate).
The hon. gentleman says that the effect of this issue of
2,000,0001. is to alter the value of every man's property
in the country.
Mr. NEWDEGATE was understood to explain that
what he had said WM, that the value of the currency would

. ,
be lessened.
RofefththeehEoiXi.
egelluEtlQemTjaEnß--, wAassltnhaot-
deTrshteeoedifhAeNargeEurjmLea
thisffec issuet
the
valuewou ld
f every depreciate
man'sthe
property,
rcouprerre
tnyc,y
a,
nand I wouldw a
s asto-
nishedthus
a
to hear that statement from the hon. gentleman,
because
ecauselalways considered that both himself anti colleague
were eminently favourable to a large issue of paper—
(hear, hear)—not always guided by the convertibility of
tha note. (" No," from Mr. Newdegate.) Well, then, to a
large issue of paper which they have appeared to me to
think will in some mysterious manner greatly increase the
prosperity of the country ; and I confess that having made
some progress in satisfying those views by authorising the
Bank of England to issue in excess for a temporary object,
I am disappointed at meeting with so little gratitude from
those hon. gentlemen. (" _Hear, hear," and laughter.)
When we are told that we are altering the value of every
man's property in this country, I presume that it is meant
that we are altering it for the worse, because if for the
better then it is not a charge against the Government ;
and therefore, if I understand the hon, gentleman cor-
rectly, he charges us with depreciating the value of every
man's property. (" No," from Mr. Newdegate,) Well, if
that be not the meaning, what is ? (A. laugh.)
Mr. NEWDEGATE made an explanation across the
table which did not reach the gallery.
The CHANCELLOR of the EXCHEQUER—I still
return to what I said bafore, and .f think I have a
to expect gratitude from the hon. gentlf roan, instead of an
accusation. Perhaps the hout,e will allow me to explain a
matter in relation to an argument which has been used by
an hon. member this evening with regard to which there
has been as it seems to me some misunderstanding. It was
suggested the other evening that the effect of the issue of
these 2,000,0:10/. would be a depreciation of the currency.
I said I could not understand how it could be alleged that
the currency was debased when the notes so issued were
received at their full value—when every 51. note so issued
was received in exchang
e for five sovereigns at the Bank of
England, or when any person in the country is willing to
tak it at that value. This, I confess, is whatt I
currency
by the depreciation or deb. ment of a pap
itshowvhaelnuethwehviaelhueitaptuwrphoierhtsstoochbpeaarp.ar cihrcutlates isles
be the commonly understood moaningtolessolteeetno
cur-
rency. I remember once having a maven That
aaat seemsio depreciatedi with a g