The Sun.
London, England, 1844-05-21 00:00:00

merchants for making their remittances to
India and China, and other places, which he
feared must be given up if they rigorously per-
sisted in confining their issues to gold, and gold
alone. Ile would now proceed to other parts of
his explanation, which referred to joint-stock banks
and private banks. Ile proposed that every bank
which had, on the 6th of May last, the privilege
of issuing notes should continue to exercise that privi-
lege as long as it thought proper. lie proposed that
the stamp•otfice should make out immediately an esti-
mate of the amount which each bank of issue had issued

in the two years last preceding the 6th of May, and that
every banking establishment having this privilege should
continue in possession of it to a limited amount till Par-
liament should otherwise determine. He proposed, also,
that every bank should make a daily return to the
Government of the amount of its issues, from which
daily return the stamp-office should draw up a weekly
return, to be published in the Gazette, or some journal
which should ensure equal publicity. Ile proposed to
make a modification of his plan with respect to the
excess of the daily circulation of such banks. Thus,
instead of taking the circulation of each day, he pro-
posed, to avoid penalties, to take the average of the
year. Thus, if a bank issued on one day 50/. more
than its maximum, and on another day 501. less, that
bank should not be subjected to penalties. lie proposed
that the stamp-office should also fix the day
in the following week on which it would be most con-
venient to publish the circulation of distant banks in the
week preceding. This would in all cases be regulated
by the distance of each bank from the metropolis. There
had been some cases in which there had been a union of
banks. In these cases the returns would be made in

such a way as to cause the least inconvenience. He had
been asked what he intended to do with joint-stock
branch banks. lie had been asked if joint-stock banks
were to be allowed to add to the number of their branch

banks. His answer was that they might ; but that they
were not to increase the average maxininnt of their issue

on that account. It was but jii;t that there should be no
objection to this consolidation of the banks, and that the
issues should amount to the aggregate amount of both
banks. With regard to the number of branches, he
thought the law required amendment in this respect.—
(Hear, hear.) He thought it would be for the interest of
the banks themselves that there should not be so many
branches, because it was a source of great expense. At
present the law required for the payment of duty only
on four branches. lie would not object to the estab-
lishment of new branches ; but he would require a
payment of 30/. on every new branch established.
lie had been asked if he would permit the substitution of
the son for the father, and allow bim to take the father's

place. Certainly he would. All he wished was that
the banks should give guarantees for the continuance of
their privileges, but should not attempt vexatious inter-
ference in private transactions.—(Hear, hear.) He had
been asked if he would interfere if there were five new

partners amongst six. It was like the old stocking that
was darned, of which nothing of the old stocking re-
mained. His answer was that he could not interfere
with the sale and transfer of banks. If he made a law on

the subject it would be evaded. Ile had been also asked
whether he would allow those bankers who now circu-

laced Bank of England notes to substitute their own
paper for the Bank of England paper, and take the
average of the two years. lie did not propose to permit
any such arrangement. But then he proposed that the
13a-nk of England should grant those banks accommoda-
tion on the most favourable terms. The Bank of Eng-
land had transactions with those banks of a double cha
racter. It permitted them, in some cases, to open
a discount account at a rate of three per cent.
In other cases tho banks have given one per
cent. on the amount of bank notes in circulation.

The Bank proposed to put an end to the three per cent.
account, and to substitute the one one per cent. for the
three per cent., and the Bank of England were quite
prepared to enter into engagements with the banks
issuing its paper for this purpose. lie thought it right
to make this public declaration on this subject. lie did
not think there was any other point of importance which
required explanation; and here he might terminate his
observations, and permit the House to resume the dis-
cussion, but that he had been told his chain of argu-
ment on the former occasion was incomplete— that there
was no necessary connexion between his premises,
which some readily admitted, and his conclusion—
that he did not show a necessity for interfering with
the circulation of country banks and of joint-stock
banks, or of establishing a central bank of
issue, and giving increased control to the Bank
of England. He was not conscious that any link
in the chain was wanting, because he had at-
tempted to show that competition among the issuers of
notes was a bad principle, that the same arguments did
not apply to that branch of commerce which applied to
others. He had shown that unlimited competition in the
issue of notes was had, from the example of America.
If they would let him go to the colonies he could bring
forward greater proof that the principle was a bad one;
and he would now try to bring it to their conviction,
from the experience furnished both by England and
Wales, that if they were wise they would take
security against unlimited competition in issue ;
they would increase the control of the superintending
banks, and thus prevent those terrrible alternations and
vicissitudes in that medium which was to regulate the
value of every thing, and from which they had so griev-
ously suffered. Now, he would take the five great
periods when this principle of convertibility had been in
danger ; and he would attempt to show them that that
danger had arisen from the unwillingness or incompe-
tency of country bankers—he excluded joint-stock banks
—to contract their issue. There were, in fact, five great
periods-1825, 1832, 1835, 1836, and 1839. In Novem-
ber 1823, the Bank was possessed of bullion to the amount
of 13,760,000/. In November, 1925, it was reduced
to 3,012,0001. Now, it was quite clear that there
ought to have been a great reduction in the
amount of circulation. lle knew some persons thought
he was entering into a useless conflict by attempting to
demonstrate that ; but pamphlets, based on the oppo-
site principle, were issued every day. There was one
published that very day—" A Metallic Currency a Bar-
rier to the Progress of Civilisation, and the Primary'
Cause of Restrictions on International Intercourse, with
Suggestions for placing the Currency of Britain on a
new basis." That basis was a paper currency, which
was said to be adequate to the growing demands of the
age. here was the old doctrine that the State might
issue whatever it pleased. But he assumed that the
great majority of that house were in favour of one
staudard, and that standard a metallic one. If that
principle were right., thare ought in 1825 to have been a
reduction in the amount of circulation ; but, in-
stead of diminishing, the notes of the country banks
had increased from four millions to eight.
In 1834, the bullion in the Bank of England amounted to
9,849,000/., in 1837 it had diminished more than
4,000,000/. Did the circulation of the country banks
decrease during the latter period ? No, it increased—in
1834 the circulation of the country banks was about
10,000,0001., in 1837 it had increased to 11,310,0001.
In August, 1836, when the country was on the verge of
a crisis in monetary affairs, the circulation of the coun-
try banks was more than 12,000,000/.—(llear, hear.)
What he wanted to show was that during these periods
of great embarrassment, the country banks, so far from
sympathising in the embarrassment, were daily increas-
ing in circulation, and thus aggravating the evil. On
the 26th of June, 1838, the bullion in the Bank of Eng-
gland was 9,722,000/, in June, 1829, it was reduced to
4,344,000/, whilst the circulation of the country banks
instead of decreasing had increased from 11,740,000/.
more than 12,000,0001., when the Bank of England had
only 4,000,000/ in its coffers. Making every allowance
for improvidence on the part of the Bank of England
(and he did not wish for a moment to defend that bank
where it was liable to the charge), it was quite clear
that the country banks were, even in times of monetary
difficulties regulated by prices, and that their increased
circulation only added fuel to the fire. The country
banks had no doubt rendered great service, but he asked
their advocates to remember that when such disasters
occurred as must be now fresh in the mind of every
lion. Gentleman who listened to him, and occurred too
through the want of sympathy between the country
banks and the Bank of England, it must be
clear that caution was requisite, that they had
to legislate not against the use but the abuse
of country banks, and that legislation on
the subject, in some shape or other, was imperatively
necessary, in order to put a stop to improvident circu-
lation.—(Bear, hear.) When he looked back to the his-
tory of private banks for the last thirty years, ho was
only surprised that it was reserved for the 20th of May,
1844, to take precautionary measures.—(Hear, hear.)
He would read to the House, from a return, the number
of private banks which had become bankrupt within a
very short time. In 1840 there were twenty-four bank-
ruptcies of private banks—twenty four bankruptcies of pri-
vate banks in one year ! In 1841 there were twenty-six ;
in 1842 twelve; and in 1843 eleven. And as an illustration
of the system, he would inform them, that out of the
twenty-four banks, seventeen paid no dividends—seven. !
--
se
What
teen out of twenty-four banks paid no dividends
an intensity of individual suffering must lavlt,lbveaesn
said
pro-
duced by these failures.—(Hear, h
that the people might have refused teoai.t.a)ke their notes,
But what was the poor farmer or retail dealer to do.?
What choice bad he ? This description of persons had
It was impossible for the
nll' option.—(hear, hear.) e
to let the occasion pass without giving some se-
curity against the recurrence of these evils. A return
had been made of the number of bankruptcies from the
Bankruptcy Court from April, 1839 to 1844, and he
would read to the house extracts from this return, in '
order to show the nature and cause of these bankruptcies.
In the first instance, the cause of bankruptcy was
over-speculation in Spanish bonds. A bank in a
country town, in which everything appeared to be
going on well, and in which the utmost confi-
dence was reposed, was at the same time
engaged in a most hazardous speculation in Spanish
Bonds, and when the sudden crash came upon the bank
it could pay no dividend. In the second instance the
banker was a spirit-merchant, and the cause of his bank-
ruptcy was alleged to have been paying his father's
debts. There was no dividend in this case either. In
the third case it was bad speculations too, and there was
no dividend. In the fourth instance the bankruptcy was
occasioned by loss on railway speculations. These
bankrupts supplied the medium of exchange—they
were not trading in capital—they were converting credit
into money, and then entering into great railway
' speculations. In the fifth case the bankrupt had suc-
ceeded to considerable property, he had mortgaged his
estate, and overdrawn his private accounts, issued pro-
missory notes to tho amount of 14,0001., and, after ab-
sorbing the whole profit of the bank, failed, without
being able to make any return to his creditors. In the
sixth case the bank, although apparently going on fa-
vourably, had been insolvent for many years ; at length
it became bankrupt from having lost large sums in sugar
refining, and 66,0001. by a commercial house in Glas-
gow. In the seventh case Ale bank was conducted by
the uncle and the nephew, and the nephew dissipated
100,0001. In 1838 the uncle died, leaving a large for-