The Sun.
London, England, 1844-06-14 00:00:00

months. The first question was, had every person who had
mercantile transactions a right to trust whom he pleased, but
this Bill attempted, to abstract that liberty. A might go to
under the present system, and offer him a price for his goods
which he,_ia as willing to accept of, but as A had not the money,
and as he was unknown to B, he gave him a bit indorsed by
C, who was known to B; A having put his name on the bill
was deemed satisfactory. B put the bill in circulation, but it
happened that neither A or C were known to D, but he was
willing to take the signature of E ; thus it was all the letters
of the alphabet, as he might say, were engaged. These
transactions were deeined perfectly innocent, and were never
interfered with so long as they kept above the sum of 5/. ; and
so long as the promise was to pay at the expiration of two or
three months, but if the prom e was to pay " on demand,"
and the sum beneath five pounds, all the malignancy, and all the
mischief was said to attach to it. Demand for gold caused a
reduction of price, and abundance of gold the reverse ; and,
therefore, he could perfectly understand how paper currency
might depreciate or rather hinder the appreciation of gold.
By our legislation, we certainly did run some risk of injuring
the convertibility of the Bank of England, and the great
danger that Bank had to fear was the loan of fourteen
millions to the Government which the present measure imposed.
He would now call the attention of the House to the way in
which they had legislated upon this suject, and to which he
(Mr. Gisborne) objected altogether. ( Here the Hon. Gen-
tleman took a h,storical review of the different measures passed
by the Legislature on the subject of the currency, but has the
same view has been given in reports of precedi• g speakers, we
refrain from repeating it.) The Hon. Gentleman having
d at the legislation of 1-19. said that he agreed in the pro-
priety of a return to cash payments, but he did not agree with
the proposers of that measure in the standard of value they had
established. When at a subsequent period this return to cash
payments was not found to be sufficient to ward off the evil
which afflicted this country, it was bound necessary to resort
to other measures, and they were told if they only suppressed the
issue of one-pound notes, all their difficulties would vanish.
They were suppressed, and very shortly afterwards the coun-
try was again in trouble. They were told the currency bad
only to be put on a sounder footing and all would be well
again, and to this end the infallible remedy was hit upon of li-
miting the number of partners in a bank to six. This
led him on to the time when trouble ccming
again joint-stock banks were established. In 1836 or
1837, he forgot which, they first heard the mention of one bank
of issue, which arose from a remonstrance addressed to the Go-
vernment by the town of Manchester, and Mr. Jones Loyd
having told them they were right in their view, they became
fully satisfied on the subject. They never thought, or they
could net see, that the object of Mr. Jones Loyd was to put
down every monopoly but his own.—( Hear, hear.) The Hon.
Gentleman concluded amidst loud cries of " Divide, divide,"
by stating that he would support the motion of his Hon. Friend
the Member for Lambeth.

Sir ROBERT PEEL said nothing which he had heard at
all influenced his judgment against the Bill before the House.
All the persons who had spoken against the Bill had also
exeressed themselves in favour of a metallic currency.
He did nut know from the Hon Gentleman who proposed the
resolution, or from the Hon. Gentleman who closed the de-
bate, why the metallic currency should be abandoned.—( Hear,
hear ) The Bill of 1819 was passed on the recommendation
of Committees which had examined the whole subject. The
House would recollect what had occurred in the inquiries re-
specting the establishment of silver as the standard of value.
A resolution was passed declaring the dollars to be worth four
shillings, but it was discovered that at that rate the dollars left
the country. The value of the dollar was subsequently de-
clared to be 4s. 6d., and the exportation of dollars ceased.
It was a contradiction of facts, which he thought the experience
of every man recognised as perfectly plain. The Hon Gen-
tleman had referred to the United States to show that the
analogy drawn from the affairs of that country was totally in-
applicable. Why, in the United States they had joint-stock
banks; :hey had a paper convertible into gold; in the consti-
tution of the banks they had every guarantee fur solvency ; but
there was an unlimited competition of issue, and the conse-
quence was, bankruptcy and general failure.—( Hear, hear.)
In 1811 there was a State bank, corresponding to
some extent, in functions and powers, with the
Bank of England ; this hank exercised a Lcontrol over
the others. In 1811 this central State bank was
abolished, and three years afterwards there was an universal
suspension of cash payments, in c msequence of the check af-
forded by the central bank being removed. In 1830 another
bank of the same kind was established—it ceased to exist in
1833, and a few years afterwards they again found all the
banks twice in succession suspending cash payments. This,
he contended, was an argument for an increased control. Then,
let him refer to the opinion of two men of the highest autho-
rity in questions of this kind in the United States—Mr.
Webster and Mr. Gallatin. The latter gentleman said
that the failure of the State banks was a natural
consequence of the dissolution of the Bank of the United
States, which exercised a salutary control over the circulation
and issues of the others. Mr. Webster again said that he was
in favour of a convertible paper currency, because no paper
could be made equal and kept equal to metal, except it was
convertible into gold and silver on demand ; and what body or
power ought to be made the regulator of this? What was
their experience in their own country? Did he pro-
pose to disturb a perfectly successful system. They all
adhered to a metallic standard ; but it was said there had not
been shown sufficient grounds for interfering with the issue of
paper. Why, what warnings had they not had within the last
twenty years? What proofs had they not had of the necessity
for legislative interference, in order to maintain the principle of
convertibility. There were four years in which there was
a great drain of gold from the country, 1825, 1832, 1836,
and 1839. In that period it was decisively proved that the
country banks did not conform in their issues to the exchanges,
and were not reduced according to the efflux of gold. On the
contrary, their issues had increased, when, if his principles
were tru they ought to have been contracted. It was said
that the Bank of England had the power of protecting itself.
He knew that the Bank of England had the power of main-
taining the convertibility of its own notes during the most dis-
tressing periods, but it would be by moat tremendous sacrifices
of the trade and commerce of the country. —( Hear, hear.)
It was that he wished to avert. It was also
said that no securities were taken against the Bank
of England. Why, the whole measure was founded on
taking securities against the Bank of England. and it com-
pelled the Bank of England to conform to certain principles, to
which, in certain periods of monetary crises, it was their opinion
it ought to conform. The amount of their issues or securities
was limited to 14,000,0001., and the remainder of their issues
was to be issued in gold. It was said that the Batik of England
might restrict the issues of their paper, but they provided
against the possibility of that, because they gave power to per-
sons of going to the Bank and demanding paper for gold. Thus
they obliged the Bank to pay gold for notes on demand, and on
the other hand, they took securities that the Bank should not
restict its issues by giving power to demand from the Bank
paper for gold. It was said that the restrictions thus imposed
on the issues of country paper would subject the country to
great inconvenience—that they interfered with one firm of
paper credit, and that another form of it would be substituted.
If country paper were essential to agricultural prosperity, how
was the fact to be accounted for, that in eight or ten agricul-
tural counties 1,300,0001. of country paper was circulated—in
Sussex, Middlesex, Kent, Surrey, Cambridgeshire, North-
amptonshire, and Suff Ik, which were comprised within a
radius of 65 miles of London? The whole o; the necessities of
that district were provided for by country banks issuing 1,300,000!.
They might depend on it, a very short experience of Bank of
England papers issued by them would remove the prejudices
which existed. The Bank of England, at this moment,
supplied Birmingham with a circulation to the amount of
621,0001., and he very much doubted whether there was a
circulation of the paper of other banks in Birmingham.
11r. MUNTZ—Not so much.
Sir R. PEEL—WeII, then, but if the country banks refused
to issue their notes would not the Bank of England take care
to supply the want of commerce? and if those banks wished to
eubstititte Bank of England notes for their own, as sixty banks
of issue did a this moment, the Bank of England was ready
to supply them with its own paper at a commission of one per
cent. if the restrictien of the issue of country paper would
lead to the issue of bills of exchange to supply its place, why
had not this taken place before? It was said that in
those districts the people were accustomed to Bank
of England paper, and would have a disinclination
to receive the issues of other banks. But here
was a great manufacturing district requiring paper to the
amount of 700,000/. and yet to carry on its large manufactur-
ing concerns it did not require 100,0001. of country paper.
Were bills of exchange issued there ? If the apprehension was
well founded that paper in another form would be substituted
for notes, how was it that bills of exchange to any considerable
value did not exist in Birmingham ?
Mr. GISBORNE said they did exist.
Sir. R. PEEL said tha- of course must be the case to some
extent, but the question was, were they issued to supply the
use of a local circulation ? The same was the case with the
great town of Manchester. The Bank of England supplied
Manchester with almost the whole of its circulation, and it
supplied Liverpool to the extent of upwards of one million.
Now a great deal had been said about the benefit of joint stock
ba, king. With respect to them what was the fact? Why
he bad returns with respect to those banks, the Manchester
Bank, the Northern and Central Bank, and several other
banks; and they presented such a detail of fraudulent prac-
tices as he had never befor- heard of. If he wanted any con-
clusive proof of the policy of interference by legislation with
the joint-stock banks, many statements would supply it.
There was the Commercial Bank of England,
with a nominal capital of half a million ; but in
point of fact, having only 260,0001. paid up, and
in February 1840, only four months before the bank
came to an end, the directors said " that they had the satis-
faction of stating to the proprietors that it continued to stand
firm in the estimation and confidence of the public, and to ad-
vance in its career of usefulness—also that the profits for the
preceding last half year had been greater than during any
similar period sines: their commencement."—( Laughter. )
Here was a bank of issue, which had advanced 180,0011/. to a
man of whom it was declared by one of the directors, that he
could not have got credit for 500/. from any other establish-
ment in the town where lived.—(Laughter.) It was all very
well for Hon. Gentlemen opposite to say that every man should
trust his neighbour, but the history of this bank showed the
necessity of some interference. He did not involve the whole
of fee joint-stock banks in the discredit which attached
to some of them, for many of them were conducted on the
best principles, and were conferring the greatest benefit on the
country, not merely by the advance of notes, but by the legiti-
mate use of capital. Still he believed it was as much for their
own interest, as for the interest of the community, to prevent
the abuse of such establishments.--( Hear, hear.) The Hon.
Member for Liskeard had stated that there was some mistake
in the returns of the number of the private bankers who had
failed. He (Sir R. Peel) had consulted Mr. Montague,
who was in the Accountant's office in the Court of Bank-
ruptcy, and he ascertained that with respect to six names out of
eighty-six, the fiats were issued against shareholders in joint-
stock banks, and ;to far there was an error in the statement.
He had so fully stated the general principles of this measure,
one former occas on, that he would not detain them by any
further remarks. He could not think that any objections
which had been urged would induce even a small
minority in that House to oppose the further progress of
the measure. He trusted that that House would bear in
mind that, during the last twenty-fitta years, they had had
four decisive proofs, on four several occasions, that the princi-
ple of convertibility was in danger. They had had in 1825 a
goat increase of country bank paper, when, if there were any
truth to
tbe doctrine of chances, there ought to have been a
reduction. In UM
they were exposed to panic; again the
44nk was in danger, and the circumstances under which that
&tiger was averted afforded a eenftrmatien of the theory for
wheel he eseeterided. It had been &glared by the
Chamber of Gortitiviereo that, in consequence ef the
fluctuations in the cirAtAtitlg medium, there heti
teen, in 1836 and 1837, a Om of forty millions.
The Ha;. Member for Paisley had referred to the cese of 1839
with apparent saj,iolsotion, asking what would then have been
ele
done if the bullion iaaee 14,sep reduced from nine to two
imitherie. He believed that ee eping his principles, the
occasion woelei got arise. Why the eneoeot of geld had been
reduced to two miiilop )839, because the Perak had tieen
neglected those principles. The iseties had net been based
upon the amount of the securities. They had disregarded the
two principie;, 4y which the monetary eyetecn in ibis 4..oupttty
ought to bftt regulated, rind the e9nserence had pe,en, that
tipft the Bank of England had been obligei to leap
Or assig-
anee on the Bank of France, and then to suddenly contract
its own ciectdation, Ira order to save its own credit, al-
though by so Oleg great inceevenience was produced.
Within their own experience-within the lest twenty years—
they had had proof that the present iyhtetn stood in pticci of
kraprpvmeßt. Government ba:dyrtlSosedl measure which, • • •