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

es. • .
the attention of the house to what seem to me the moat served the consideration of the Chancellor of the Exchequer.
important questions involved in the act of 1844, and Whey they considered the nature of the inquiry which was
which will require consideration from the commit- to be submitted to the committee, including the embarrass-
tee. It is of the utmost moment to the country that its ' ing question of the whole currency of the United Kingdom,
currency should rest upon a sound basis. On the sound- and involving the nicest pellets of law, and when they re-
noes of its currency the trade, the industry, and the credit flected that the committee would be called upon to lay
of the nation depend ; and no effort should be spared to before the house a new commercial code affecting the whole
maintain in their integrity such provisions of the law as I banking business of the country, he thought it would be
secure so valuable a blessing, and so great a source of wealth i evident that an investigation of such magnitude would be
much more satisfactorily and speedily conducted by two
and prosperity. But there are other questions connected
with this subject which, although subordinate in their im-
committees than by one. (Hear, hear.) The Chancellor of
portance, yet deserve, and I hope will receive, theattentive the Exchequer had referred at some length to the question
consideration of the committee. I allude to the arrange-
of convertibility. He (Mr. Glyn) had always considered
ment subsisting between the Bank of England, in its rein-
that the question of the currency and of the Bank privy
tion of a banker, and the Government—that is to say, with loges was most unnecessarily mixed up with the question
of convertibility, with the intention, as he thought, of
regard to the deposit of the public money in the custody of
throwing a slur upon those who did not assent to the act
the Bank of England, and also with regard to the manage-
of
.1844, but whose object was, if possible, to improve the
ment of the national debt. The pecuniary relations sub-
principle laid down in that act by extending rather than
slating between the Bank and the Government do not, like
diminishing its operation. He would not enter at length
the subject of the currency, affect the interests ito a consideration of the act of 1844, for no doubt the house
and for-
tunes of trade and production. Nevertheless, within their
would assent to the motion of the Chancellor of the Exche-
limited sphere they are of undoubted importance. Under
000 s, quer, and the subject itself was a very dry one. He might
the late act the Bank of England now pays about 188,
observe, however that he had always regarded the act of
annually to the Government for the privilege of issuing
notes. I think 120,000/. is the sum fixed by the act, in 1844 as dividing itself into three parts, distinct from each
other, and operating very differently with regard to the
addition to which the Bank pays 60,0001. a-year for stamp
duty, and another trifling item of 8,000/., making the total Public welfare. The first important portion of the act pro-
vided for the separation of the issue and banking depart-
amount which it. pays to the Government in connection
n
with the paper currency 188,00 e e The profit derived by ; the second for the limitation of the amount of cir-
the Bank of England from the currency is calculated upon culation advanced upon securities; and the third laid
different principles, and it is perhaps not very easy to de-
down regulations affecting country banks. With regard
tide its precise amount ; but the highest estimate that I
to the first of these provisions he did not hesitate to say,
have heard places it at about 170,0001., and the lowest at although he knew it was rather an unpopular doctrine,
about 80,0001. The Government, therefore, receives from that, though he had always been an advocate for the
the Bank a larger sum than that made by the Bank in the separation of the two departments, he regretted that
shape of profits. In addition to the contribution in re-
the machinery for regulating those departments had not
set. of the issue of notes, the Bank also makes a payment been left in the hands of the Bank of England. If
f
there had been no statutory enactment giving to them
or the management of the national debt. The scale of
the management of the circulation of the country tha duty
that payment is prescribed by act of Parliament. They
might have been still in their hands. Their power was
pay at the rate of 4501. per 1,C00,000/. for every part of
great, and having the command of the Government ba-
the national debt not exceeding 400,000,0001. ; 3401. per
lances they would have been in circumstances to carry on
1,000,000/. for every portion between 400,000,0001.
and 600,600,0001. ; and 3001. per 1,000,0001. for all the necessary operations. Bat the Bank of England
themselves rejected that view of the matter, and by m-
all above 600,000,000/. This is the scale fixed bY act cepting the act of 1814 they had prevented all chance of a
of Parliament, but it will be open to the committee,
return to that state of things. The question could no longer
in connection with the general question of renewing the
be argued as it was in 1844, for there were now other bodies
charter, to revise the terms upon which the privileges of
who might step forward and say, " Why not entrest the
the Bank shall bo continued. I may also state that lam
duty to us as well as to the Bank of England ?" As to the
now in communication with the Governor of the Bank of
third point (which he would notice before the second), viz.,
England on the subject of the pecuniary arrangements sub-
the regulation of the country bank iseues,he was not aware
aiming between the Government and that corporation.
theta was any such compact entered into with them as the
Upon the result of that communication it may depend whe-
ther or not the Government will deem it advisable to pro- hon. member opposite (Mr. Bernie) alluded to. But,
whatever the case might be, the renewal of the Bank Act
pose any modification in the terms of the present arrange-
could not alter the position of the country bankers ; nor
ment. If such a modification should be thought expedient
did he see that they had any claim whatever. He had
and it is likely to receive the assent of the Bank, the Go-
always thought the arrangement with the country bankers
vernment will of course bring the matter under the con-
one of the best provisions of the bill. It provided a ma-
si deration either of the house or of the committee. I have
chinery by which, in point of fact, they might substitute
been compelled to trouble the house at, I fear, a wearisome
other paper for their own at a great advantage, and many
length on this question ; but the matter is one of so much
importance to the whole community that I have preferred to of the country banks availed themselves of the option thus
a
appear to be unnecessarily tedious rather than to withhold afforded them. Bat, after all, the most important point was
anything which might be essential for the information of the second, which referred to the limitation of the amount
of notes. It was impossible to advert to this without bear-
hon. members. Before I sit down I have only to add that
ing in mind what took place in 1847, and it was remarkable
the subject of joinnstock banks hae, from circumstances well
how very anxious the advocates of the bill were to get over
known to every hon. gentleman, attracted a great degree
the events that occurred in that year. The right hon. gen-
of public attention during the last twelvemonths or more.
tleman the First Lord of the Admiralty told them last
Sotue of those establishments have failed in the most alarm tleman
that what had occurred in 1847 was entirely to be st-
ing manner, producing the moat disastrous consequences to
tributed to the state of the commercial body; but he found
their unfortunate shareholders. It therefore appeared to
that another advocate of the bill, in some remarkably lucid
me that the subject was one well worthy of investigation
letters which had lately appeared, took another view of the
before a committee of this house. The procedure by which
the affairs of insolvent joint-stock banks are wound up is matter. He attributed the events of 1817 not to the com-
anything but satisfactory. Suggestions have been made— mcrcial body, but, in a great extent, to the prejudice and
although I confess that lam not one of those who approve want of prudence of the Bank directors, who ought to have
them—for the substitution of an inspection of the state of raised instead of reducing the interest. But the writer
their affairs by a Government officer for the vigilance and made a mistake in the matter of fact. The Bank directors
control of their own directors. I, for one, greatly deprecate did not reduce the rate of interest in 1847. They reduced it
any attempt to improve the management of joint-stock in 1846, acting upon the doctrine laid down by their
banks or any other mercantile undertakings, by weakening friends, that they should look to their own reserve merely
the motives for due care and caution on the part of those as bankers, and not to the amount of bullion. Accord-
directly interested in such enterprises by holding out the ingly, when they found their own till full in 1846 they re-
shadowy safeguard—for, after all, it never can be any real dared the interest. At the same timo they were entitled to
protection—of Government control. However, this is one do so, for the bullion was increasing in the Bank. The
of those matters which may fairly receive the attention of fault of the Bank directors in 1847 was, that they did
the committee. I freely admit that there is a great die- not in time raise the rate of interest, and when they did
similarity between the question of joint-stock banks and so they did it in a gradual way. With respect to the limi-
the all important subject of the currency, which will con- tation of the issue of notes to 14,000,0001., the rest of the
stitute the mein topic for investigation by the committee. issue being based on bullion, he had never heard any rea-
Still, it appeared to me that it would be difficult to form son assigned for that limitation. The Chancellor of the
two committees, to sit both at the same time, on subjects bullion Exchequer had told
in t them that, under this system, the
at one time he Bank amounted to 20,000,000/. ,
as closely related to each other as the affairs of the Bank of
The effect of such an accumulation was to raise great ex-
England and the currency generally, and the law. of joint-
pectations in the country, to inflate prices, give encourage-
stock banks. On the other hand, I think it would not be
ment to speculation and the creation of new companies, all
expAient altogether to omit to consider the question of
which was sure to be followed by a commercial crisis, and
joint-stock bank., and I therefore propose that it be sub-
mitted to the same committee. The rich hon. baronet thus drive the country from one extreme to another. This
(who had spoken throughout in a tone too low to be die- was the result of having a fixed sum of 14,000,000/. as the
fleetly heard) then concluded by moving for the appoint- limitation of the issue of notes. They had been told that,
meat of the committee. as a certain consequence of having this fixed amount of
circulation, whenever the bullion began to give way the
Mr. DISRAELI (whose remarks were at times inaudible
there:inind circulation would be diminished ; but nothing of
from the same cause) said—lf it be desirable that both ofha( I occurred. Take last year. There was a dimi-
the subjects brought under our notice by the right lion nation in the amount of bullion of 3,900,0001., but the notes
gentleman should undergo the investigation of a select com: in circulation continued the same as before. There was no
mitten, I think it would be very unwise that they should corrective for this in the existence of the limit. The truth
was that in framing the bill the fact was totally forgotten,
both go before ono and the same committee. Between the that the moment money becauie more valuable that instant
currency and joint-stock banks I see no necessary cermet:- the Bank reserves were acted upon-. He could not conceive
tion ; and, moreover, the question of joint-stock banks has how such a system should be thought necessary, or how the
by itself attracted the greatest amount of public attention, idea had been lost sight of that the rate of interest should
be determined by the amount of bullion, and not by the
and is likewise one of sufficient difficulty and importance to state of the Bank reserve. He did not wish to go into de-
demand the undivided labours of a committee. (Hear.) tails which would hardly be understood, but the general
Bat, after listening to the statement liven by the right principle on which we should proceed was something like
hon. gentleman of the intentions of the Government re_ the following : Don't allow the amount of notes issued on
sporting the currency and their relations to the Bank, lam securities to be a fixed amount. Let a certain amount be
fixed, but all above that issued at given sates of interest,
really at a loss to understand what are to bo the duties of and let these rates of interest be determined by the amount
the proposed committee on that important subject. (Hear.) of bullion in the Bank, making the amount of notes in cir-
Tho Government appear to have entirely made up their ex:dation always to bear a necessary proportion to the
minds on every point of moment connected with the ques- amountl of bullion in the Bank cotr,rs ; if, for expample,
tion before us ; and surely, therefore, it would have been a should be one million of bullion, let there be two-
preferable for the right hon. gentleman at once to intro- thirdsr of notes, or some proportion of that kind. He hoped
dace a bill embodying his views, and thus to afford the his right hon. friend would not give up the committee, as
house an opportunity of expressing its approval or disep- perhaps something might transpire there which would lead
proval of them. With the exception of one solitary point, him to change his mind on this question. Ho thought
of no very great moment—viz., whether the Bank of Ire- it was possible to improve the machinery of 1811 very
I end should have permission to lend money on mortgage, materially. He had great doubts whether the time
the Government, according to the speech of the right hon. had not come when all this machinery should be placed
gentleman, have clearly made up their minds on the whole in other hands—whether-the day ha t not come when we
question which they now wish to ruler to a committee; and should have not Bank of England notes, or notes of an
therefore the course he proposes to us is equally unsatis- vernment circulation, but what might be called Mint notes,
factory and futile. Where the questions are of such a or something of that sort. Let it be an issue founded on
nature as those on which the right hon. gentleman has the receipt of bullion by the Mint, and they should thee
touched, and on which tho Government also entertain a very bare a currency free from all chance of risk, and establish a
decided opinion, the proper merle far investigation is the system which would assist most materially the commercial
whole house. (Hear.) The Ministers have a policy which interests of the country.
they are no doubt prepared to support. Then, why do they
not at once boldly submit it to the verdict f this house. Mr. HENLEY hoped that the Chancellor of the Excho-
I question very much the propriety of referring the Bank quer would divide the inquiry into two, dealing separately
Act to a select committee, and I should much prefer that with the question of the Bank charter and that relating to
the Government should lay before us their matured views joint-stock banks. The country took a great interest in
in the shape of a bill, which would be discussed and criti- beth questions, but especially in the latter. It was highly
cised by all those hen. members who take an interest in the desirable, as the Chancellor of the Exchequer had truly
subject, aid the Government would then be able to defend said, to reconsider the mode of windingup joint-stock 3
the point which they recommend. Of coarse, c n such a banks ; but that was a DOW ter different from banking, nd
subject I shall not attempt to divide the House should one which ought to be investigated by different members.
there appear to be a predominant feeling in favour of On the committee charged with the inquiry into joint-
adopting the proposed course, but I beg the house to con- stock banks they ought to have members of the legal pre-
sider weather it would not be more advisable, as I have fession. It was a very intricate subject, upon which great
suggested, that the committee on joint-stock banks should difference of opinion existed, and it was desirable that
be confined to that topic, and that the renewal 2f the Bank legislation should follow the report of a competent commit-
Act should be brtmght before us is the shape of a Govern- tee. Now, nothing could ho more general than the terms of
meet bill, which could be discussed in this house. the reference to the committee. The Chancellor of the Ex-
111r. TITE said that the speech of the Chancellor of the chequer seemed to wish that they should not go into the
Exchequer bad confirmed the impression produced on hie operation of the act in 1817 ; but the terms of the reference
mind by the Royal speech, that the Government. wore would not exclude that year from the inquiry, and that
about to lay this question before the House with a fore- right hon. gentlemen might depend upon it that when the
gone conclusion upon it. On no subject was there such committee came together they wouli examine into the
an extraordinary difference of opinion among men of the whole operation of the act from the beginning to the present
greatest ability and most extensive information. The time. Well, that would open up no inconsiderable field of
reports of the select committee of the two Houses of inquiry; the investigation would necessarily be a length-
Parliament were completely opposed to each other, ened one ; and in these circumstances he would ask, was it
though the report of the select committee of that House fair or prudent to postpone the consideration of the joint-
was carried by a small majority only, and many members stoek-bank question till the fag-end of the session,- when
of it agreed entirely with the report of the House of everybody would be wearied out and legislation hopeless ?
Lords' committee that the panic of 1847 was materially At present the interest in the question of joint-stock banks
aggravated by the operation ef the act of 1814. Mr. Tooke and their insolvency was irameaeo—much greater than that
also was of that opinion, and he was completely opposed to in the general subject of banking. Joint-stock banks when
prosperous ware closely allied to banking, but directly
the character and the arrangements of that act. The
writers and speakers on this subject did not appear suM- they came to deal with insolvency the question then as-
ciently to have taken into c essideretion the enormous moue- awned a very different aspect from that of the Bank of
tery circulation of the country, amounting, in all, including England. He thought that, upon reflection, the Chan-
foreign bills of exchange, to something not much under celior of the Exchequer would say that each of tho corn-
-200,000,0001. The machinery which was to move this mittees would have quite enough to do—probably as much
great mass ought to be adjusted with the greatest as would permit them to report in time for legislation to
nicety, and so enabled to work without any jerks, such as follow during the present session. (Hear.) He would not
were
occasioned
by changes in the rate of interest.
Of at that moment offer an opinion on the act of 1844, but he
these there had been nine during the last year, and the did' not think that the labours of the committee would be
chances of them had been greatly increased by the of refvae vary agreeable nature if they were to commence their
1844, which cut the capital of the Bank into two pa tnet parts—the the notion that the Government had
ordinary banking capital, and the capital for the issue comes to '.a
icoontecnlnu • might be inferred from the speech
partrnent. The circulation of the Bank was almost aE'
fixed- of the Chaneellorsmonf—thseeExchequer—with respect to the
quantity, about 20,000,0001., but the banking department, most material parts of the subject. (Hear, hear.)
_ owing to this division of capital, fluctuated very much.
thMr. MALINS concurred with the last speaker in wishing
Neither had the enormous amount of gold brought into ereChncellor cf the Exchequer to divide the inquiry into
this country since 1813 been taken into consideration. tw the disasters which had taken place
Since that year gold to the amount of 175,000,0001. had during tohneeileasietrinfegw years, involving points of the highest
been discovered, of which no leas than 135,000,0001. had importance, nobody could doubt that the whole question
been imported into this country. The disturbing force of of joint-stock banks should undergo the most rigid investi-
that element had naturally been very great, for the impor- gation in regard both to management and mode of wind-
tatious had varied considerably in amount, having only ing-up. The house was aware of the decisions which hail
been 1,000,0001. in some quarters of the intervening years, recently been • ven in the case of the Royal British Bank,
and 3,000,00 a. in others. A material effect had been pro- and of the gmisfortunes to which the shareholders in that
duced by these importations upon the discount of the Bank, concern were exposed.
ea He hoped that the present session
and the subject was one which he thought deserved the would not come without an enactment being
careful attention of the committee. In 1847 the Bank sud- passed providing that after the winding-up of a joint-stock
denly reduced the rate of interest to 23 per cent.,and in some bank, or any joint-stock company, whether in the Court of
instances the rate of discount was only I per cent. The con- Chancery or the Court of Bankruptcy,mny, creditors should not
sequence was that enormous building speculations were un- be at liberty to ane individual shareholders to any extent
dertaken, and when the Bank found it necessary to raise they pleased. The proceedings in the case of the Royal
the rate of interest the speculators became bankrupts. The British Bank were a disgrace to a civilised country. Debts
large
4__„_ number of workmen now out of employment was at- had been bought up by litigious Demons for the sole
le pnr-
eett table to this state of things. He conceived that a pose of suing the shareholders. gow, if after the winding-
change
was required in -the constitution of the Court of up, the privilege of suing individual shareholders
Directors.
means of calls, he had no doubt
were
Under the present system eight of the abolished, and contributions to pay the debts of the bank
directors mired every year, and were reraced by eight or company obtained by
other gentlemen
plans which wheoe were on the list, so that financial that the shareholders in every joint-stock concern would
week might hadbeentbiren sanctioned by a majority in one be found abundantly competent to meets all the demand
quence of the admissiolyncelanged the next week, in cense- made upon them. There was thus no necessity for Beings
that full opportunity woulf d
now directors. He hoped individual shareholders. He believed it had been ascer
mines or in the house, of be afforded, either in the corn- tamed that the shareholders in the Royal British Bank.
to which he had called' attention.discussing the important poieta were able to pay the debt three times over by the system
of calls; but as long as they allowed shareholders to be
Mr. BAILLIE had understoocblattahie Chancellor of the sued by any creditor who chose to raise an action, the
Exchequer to say that he would
detanilaonfthe part of the consequent litigation would cost more than the entire
Government, from indicating the
this subject, until after the report of thee a measure on liabilities of the concern; and the shareholders, instead of
been presented, and he (Mr. Beillie) e()remitteo had meeting their responsibilities at home, would fly to escape
constitution of the.fer
the
eatirie was thereforea conceived the monstrous cost of legal proceedings. With regard to
that thematter of the main subject of debate—the Bank Charter, he agreed
opinions entertained by with much that had been said by the last speaker but one.
very eurious importance,
views of the
the advocates of unrestricted and of restricted banking He had been disappointed with the speech of the Chan-
were as much opposed as were formherelycitillateveilelceenner of the Exchequer, because, when he saw the notice
Protectioniets and Freetraders.
of the
Exchequer had referred to the opinions of the late' Sir the paper, he did trust that the members of the Go-
vernment would enter upon the inquiry with a mind open
expressis But the Chancellor of
R. Peel on this question ; but those. who recollected' the to conviction.the Exchequer had
piece
zt
of
etbeisol satisfaction with the act of 1841, as being a
discussions on the present Bank Charter Act would remem-
ber that Sir R. Peel never regarded it as a final ineasnrr,
were
to have
wisdom ; and, therefore, if the Govern-
(Hear.) On the contrary, the right hon. baronet distinctly
stated, when he introduced the bill, that ho intended to
, however,
oproceed with the investigation. °He
wouldq
er wbe an
tvitni :o tt i
i. a preponderance in the committee, it
that when the Chancellor of the Exche-
carry it much further, and that his ultimate object was trusted
male
emmittee he would be joined by men
that there should be only one bank of issue. Indeed, Sir R.
was not so simple as he
Peel gave private bankers throughout the country to under- who had not so
stand that the privilege of issuingso, the right hon. gentleman
their minds - and, if that were
aleared to imagine. One of the
ceded to them for aand wouldb e only
invited
man would find that the question
Period of 10-ypeaaprse,r
bankers who were disposed to give up the privilege of paper many surprising statements
issue to do so, and to receive in compensation an annual tleman in the course of his made by the right hon. gon-
payhient of 1 per cent. upon the amount they were actually discount had very little to do speech that the rate of
issuing at the time. A number of private bankers accepted during the whole of last winter, we enact of 1844. Now,
that proposition, upon the clear understanding that the called a money panic, and the rate of clsml what might be
issues of all private banks should cease at the termination August had been as high as 7
per
cent iseounnwhich stare
of the charter; and these bankers were now placed in a moment 6 per cont. at the Bank of England.w at the present
very disadvantageous position, as compared with the bank- the Gazette of last week the amount of gold According to
era who had not entered into the arrangement, for they Bank was 10,000,000 e, which being
added to
nowii in the
were without the power of issuing paper, He thought the nary 14,000,000/e mentioned in the act brought up inaagi-
committee ought to consider whether, if the banking sys- amount on which notes could be issued to 21,00%000
ulp the
tern of the country was to remain in its present state, all believed that the public bad in their hands rather less thie
private bankers should not be placed in the position in 20,000,0001., leaving reserved or unemployed notes to the
which they were previously to the act of 1844. amount of 4,800,000/. The Chancellor of tho Exchequer
Mr. GLYN thought the suggestion of the right hen-. memo had stated that in 1842 the goldin the Bank of England
ber for Buckinghamshire, that two committees should be rose to 20,000,000/n which, added to the 14,000,0001. of
appointed to inquire into this important subject, well de- ' the act, made a total of 31,00),0004 At that time the ac,