The Sun.
London, England, 1844-05-07 00:00:00

THE SUN, LONDON, TUESDAY MORNING, MAY 7,

commerce it is likely to be taken out of the country.
Now I maintain that it is just because
gold is an article of commerce—(Hear, heir)—
subjected to the same laws which govern other articles of
commerce that it is fit to be made the stendard ; because
Precisely the same laws as regulate the import
and the possession of all other articles of com-
merce regulates the import and the possession
by this country of gold. Bullion is distributed
according to certain laws which we may not well under-
stand. It is distributed over several countries, according
Ito the several necessities of each country ; according
to principles which the people of those countries do not,
'Perhaps, dive into; but in general I contend that the
supply of bullion is regulated by the same principle
which governs other articles of trade. Some say when
eve have a deficient harvest, and there is a great demand
for corn, all our corn leaves the country because we have
no other manufactured article at the time to send in
exchange for it. But I believe that bullion has rather a
Preference over coin for that purpose ; because the ex-
perters have a guarantee that it is of a
certain weight and fineness. Depend upon it,
coin will never be sent out of the country,
unless it is more profitable to send it. When
corn is dearer compared with other articles, the fact
that the laws which govern it, are exactly the same,
is proved by this, that when there is a
l!uctlen demand for corn or anything else, if it
Is more profitable to send woollen, or cot-
ton, or other manufactures in exchange for it,
they will be sent out of the country instead of gold.
Therefore coin and bullion are identically the same,
and there is no reason why coin should be exported in
exchange more than any other article whatever. I have
now •
stated the great elementary truth which I apply to
themeasure. Now i , f there are contradictions I want
Them to be po'n.ed out by a clear and definite
statement on the other side.—(Hear, hear.)
d ' ant bewilder you by any me :sures
of value. I have taken a pound. But I object to the
Gbl ig:ition which Hon. Gentlemen might impose upon
me
of reeding a pamphlet, or perhaps an octavo, stet ng
What the definitien of a pound is ; the real fact is, 11 at
incnifeh these are great truths, yet occasionally there TO
small occurrences which appear to be contradictions of
wre ; end if there are small facts and circumstances
hare not easily explained, ingenious writers t: ke
advantage3,o of them, and say " these do not conform to
truth true Why,
the.n—dpal'es,
not rtrgre'tand therefore your principles : re
when Sir Isaac Newton deduced the
the gre t planetary movements were owing to
phengereat principles of gravitation, there came slight
detected Plena and disturbances which he could not recon-
cile; 1" the. course of time, subsequent philosophers
his slight errors, and reconciled all those
Phenomena and disturbances to the original of the
Principle. So that that which at first appeared to be a
contradiction, turned out to be a confirmation of the
truth, and so it will be here tore—(Hear.) Depend upon
it' if You had every cirumstence—everything tending to
e°4 me apparent deviation fully explained, you would find
It Would not clash with the great truth originally laid
mewn: If these principles are correct, it would be con-
sistent with them to establish some other measure of
value than that which you have taken. You might con-
!intently with those principles, if you were at li-
berty to decide fir a new state of society, adopt
silver instead of a gold standard; you might. if
you thought it desirable, adopt a new metal ;
you might abolish all metals, and might, as Mr. Ricardo
said, make notes the standard of value, so that a man,
501, in notes, might demand bullion or coin from
the Bin?;, and it would be in conformity with this great
Principle to adopt that. But, in our present position,
11?Illiog would be more unwise than a departure from
the great principle which regulates the currency of the
I believe 'seven-eighths of the House concur
th me on the subject. You may, however, select some
other mode ; but, before you depart from that now
established, I would entreat you to recollect that the
measure of value you now have, viz. gold, is that
nteasure of value which you have had upwards of a
hundred.l::, years, always excepting cases of bankruptcy.
t the writers of authority on the subject—Sir W.
Petty, Mr. Locke, Mr. Harris, and Lord Coke—were all
Lenidedly in favour of a single standard of value.
Cr Locke was of opinion that silver ought to
the metal selected for the standard of value. He
assigned reasons which appear to me to be erroneous,
..."7 silver instead of gold should be taken as the stand-
-74 0, f value. But as your transactions have been for
tong a period of time founded upon a single
fetal, and that metal gold, and as you have determined
ecat it should perform the functions of the lower order
throughout at least England and Wales, I do hope that
nothing will induce this House to disturb that monetary
21/tera. That which we have now is in exact conformity
W7,th the opinions of the ablest writers on the subject, and
the opinion
under a different system, and in conformity with
hn
• e °Pinion of the greatest recent authority on the sub-
Ject relative to coin—l mean the first Earl of Liverpool;
and he, in hisletter to the King, which, I think, contains
as much truth and sound sense on the subject as any
publication that ever emanated from the press—he
strongly argues that the principle which we should
f)Pt. 13 the principle of our coinage; and the
principle which is now established, Lord Liverpool says,
after a fiel consideration of this extensive, abstruse, and
mu:tilt suleject, " I humbly offer to your Majesty, as the
result of My deliberations (he was then writing in 1804),
that it is better that silver should be made merely a re-
Ireseetati cein." (The Right Hon. Gentleman proceeded
tI
0 read the opinion of the Earl of Liverpool, which set
forth that the coin, which was the principal measure of
Pi.roperty. and instrument of commerce, should be made
°` one riveal ; and, secondly, that for many years past,
'll the practice and opinion of the people, gold was the
Eriacipal measure of property and instrument of com-
'rree, and that, therefore, gold should be made the
3,aridard of value, whereas, that silver should be merely
representative metal.) This is exactly the prin-
ciple which is in operation at the present time.
It the system which still prevails. The humblest
member of society having a 51. note has the command
et. gold. In my opinion, by taking this
emfte you will provide a greater security for
Pe,..osrmanent convertibility than if you merely say, " He
can produce 100/. in gold coin shall be able to take
intote's's Banlc, and there shall be no hinge
but
Ik elrculating throughout the country.' Sir,
chan,ll„r'w it has been said that by some
crease
cu
Might diminish the chance (doubt, and in-
legislati "`;9l.itY• Now, I very much. whethern
Preventing Ye interference can have the slightest effect
fat.o panic. I believe you may adopt
.certain re-
ey, L ns which will give much greater security. I be-
have a greater security against th.at. upon
it is Impossible to reason, and for which it I 3 no-
Possible to to provide, by having a geld circulation through-
outlbwl,llt country, and by manifesting confidence, than by
iszeolsiatibe .0
ee et provide against the existence of panic.
d '3ir, I have done with the principles which I think
ermine the measure of value, and which I think in
rs country ought to regulate, so far as coin is con-
cerned, the medium of exchange. I hope I shall not be
°l.ll:Tht to have exceeded the limits which I ought
"u observe. I thought that considering how
rarely these great subjects come under our notice, it
scTid be an advantage to give to my opening
-fear,
as far as possible an elementary character.—
f ear, hear.) Now, Sir, I come to that which is the
immediate subject with which I have to deal. Here, again,
Must be allowed to state what appears to me to be the
Principles which should regulate a paper circulation, I
bean the circulation of promissory notes payable to the
anne4r,er• I speak of those, and of those only, when I
realm, or I mean promissory notes, payable to the bearer
tr-,,urnan 1 in the coin of the realm. Now, I will not
re-
fined myself, and I will not disturb the House, by
t•ft speculations about a variety of other descrip-
tions Of peper credit. I will say little or nothing
irra that great cpeestion which was discussed
eh the Bank Committee, as to whether deposits or
shertisesthneypon bankers or bills of exchange partake of
nature of paper currency. I say that in some re-
may partake of the nature of paper cur-
-1 11eY• But on that particular point, with which alone
Can deal, namely, the effect which paper currency has
ern prices, the effect which it has upon change, the
effect which it has in distributing the measure of value,
osaY promissory notes, payable to bearer upon demand,
effF or a different character, and have an entirely different
eet• In the first place, those bills are used precisely
Lt
bc,-,cein• They pass from hand to hand. There is no
—eenal guarantee required—there is no new indorse-
mellt at every transfer, but they are really substitutes
Money and operate upon prices as money does.—
ie.-Lear, hear.) But it must not be understood
at billsc of exchange do not affect the pre-
res metals. They economise the metals, and
Prevent the necessity of so much gold being required in
Jade that would otherwise be wanted. They may have
:}el.erfect of displacing four or five millions of gold,
which is an effect hardly perceptible, altering the value
of gokl with reference to other countries in a very slight
b:gnreet. •—(Hear, hear.) But the promissory notes of the
lyire being payable on demand are very different from
bills of exchange. The effect of the issues of the Bank,
t the restriction was to raise the value of the guinea
o thirty shillings. The Bank lent money to the Go-
vernment,on to private individuals, and advanced largely
u Posits. But they found that the exchanges were
eeire ,
Id greatly against this country; and, by the advice
ell' persons well-informed, they limited the numbrr of their
I,;..)t's,andthe exchanges were again turned in our favour.
_ so it was in Scotland. In consequence of the largeness
ecorthe issues the exchanges became very much against that
ilelrY But the banks there took the same course that
8 the Bank of England had taken, and the result was the
rree• The issues were limited, and the exchanges were
Rill Those who have paid attention to this subject
Planes
remember the very able report presented to the
'11111" of Commons, in 1804, on the subject of the Bank
e: end- The exchanges, as between Ireland and this
The Bank
were at that time very much against Ireland.
Bank notes issued by the Bank of Ireland were
rY touch depreciated. It required about 1181, of Bank
notesee of the Bank of Ireland to purchase 1001. of Bank
e
s of the Bank of England. The geinea, too, was
hgreatly enhanced in value as compared with Irish
ank
"tee' The Committee appeared to consider that
The 'link of Ireland ought to contract their issues.
Bank of Ireland denied that they had over issued.
de._ey had not issued anything, they said, but what was
manded in the legitimate course of business. The
Committeehrai told them they would never restore the ex-
changes, unless they diminished their issues. They at
The declined to do so. The exchanges never improved.
auk considered that perhaps it might be as well to
try th
du ,e recommendations of the Committee. They re-
ththeeoelontheir circulation from 3,000,0001. to 2,400,0001. ;
e sequence w
Irish Bank
was that the exchanges improved, and
finalise Bank
note regained its relative value to the
Bank note. Now are not these proofs that pro-
:hisisarYbill notes exercise an influence over exchanges,
do not sof exchange, deposits, and cheques of bankers
bills
of It is useless, then, to tell us that there are
exchange to the amount of 300,000,000/., and that
•b.. 11 Manifest if they were all presented at the same time
i, the Bank, that the Bank could not pay, and that it

would be of no use to adopt rules with regar
to promissory notes, which we are nut prepared
to adopt with regard to bills of etch enge, deposits, and
cheques.—(hear, hear.) I hope this House, therefore,
will admit the principle that promissory notes payable
on demand constitute matter worthy of separate consi-
deration, and having nothing to do with other forms of
the circulating medium. An attempt was made at the
period of the Bank restriction to make use of the same
kind of argument, but what said that wise man, the first
Earl of Liverpool ? In the book from which I have
already quoted, the Earl of Liverpo )1 says :—" It is a
common artifice"—l do not wish to apply so harsh a
term to those who adopt the same course in the present
day—" It is a common artifice on those who write in
favour of paper currency to confound paper credit
with paper currency."—(Bear, hear.) Now this was
written between the years 1802 and 1805.
" There may be many circumstances necessary to be con-
sidered relative to paper credit which is necessary to
carry on trade, and which is based on the circulating
medium, which do not apply to paper currency, which is
in itself of an undefined nature, and is used as a species
of circulating medium; but those who support this paper
currency endeavour to confound it with paper credit, so
that the arguments by which paper credit is supported
may also be brought forward in support of paper cur-
rency." Why, is not such the fact at the present mo-
ment ? As Lord Liverpool says:—" Paper currency,
strictly speaking, consists only of bills, or notes liable or
convertible into cash by persons issuing them, at the will
of the holder." Then I assume that a paper currency
differs in that essential character which entitles us to
deal with it as with a currency otherwise founded, and
that a metallic standard is alone the one which
can guard us against depreciation directly or
indirectly. Further it has been established that the
only satisfactory way of guarding against excessive issue
is to be found in immediate convertibility. That doc-
trine has been founded and maintained under the autho-
rity of Adam Smith, Mr. Ricardo, and others of the
most eminent writers of our country. But whilst main-
taining all doctrines which time and experience have
proved to be correct, it will not do to shut our eyes to
the new discoveries which have broken in upon us. Let
us profit by experience, but do not let us be deterred
from adopting those doctrines which our judgments tell
us are fur the safety and welfare of society. Now,
I am about to contend that convertibility with gold, e ith
unlimited competition as t i issue, does not give the required
security; that free competition is calculated to procure the
article you require at the cheapest rate; aut in commenting
upon that it must be remembered that a paper currency
is governed entirely upon different principles to those
which govern almost any other commodity. I don't
want the greatest quantity of currency at the cheapest
rate ; what I want is this, to have art ample supply of
paper currency, the supply of which is conformable to
gold, and that the supply shall be givers to me by the
party on whose honour and integrity I have the greatest
confidence. I want the best article, but the quantity is
to be governed by other principles than those by which
other commodities are governed. The amount and
quantity of papercurrency must be determined by the pre-
cious metal, and if exceeding that, it is rgsued to excess.
A different doctrine has been supported by those who
contend for unlimited competition. Now, we contend
that it must be a true principle that, where there is an
unlimited competition, although the value of the notes
issued might ultimately conform, there must be a con-
siderable interval elapse before the conformity is estab-
lished, and that the means of establishing it, although
certain, would produce great embarrassment and dis-
tress before completed. The predominance of the power
of gold was denied by many of the country bankers,
and many persons who gave evidence on the subject,
but they were all at last obliged to adopt its influence.
One gentleman, Mr. flobhouse, brother to the Right
Hall. the Member for Nottingham, a cluntry banker,
was examined before the Select Committee appointed to
inquire into the banking system. He was the selected
organ of the private bankers. Whea asked if there
would with rise of price be an increase in paper issue by
the country banks, he answered, that in his opinion
there would be an increase in the local circulation of the
country, when the prices would rise. And, again, this
witness said there might be " a glut of gold as well as a
scarcity." He was asked if there ought not to be a con-
traction of the circulation under such circumstances,
and ho answered, " Whether there ought or not I can't
tell. lam perfectly satisfied that it is quite impossible
for country bankers to tell how far the currency is in-
fluenced by foreign exchanges." He was asked if it did
not often happen that the circulation increased in the
beginning of a drain of gold ? He said it did frequently
so happen, and that their circulation was not guided by
gold. And another intelligent witness, examined before
the same Committee, said that the system of banking in
the West of England had little or nothing to do with
foreign exchanges. The fact is (said the Right
Hon. Baronet), the country bankers have no control
over issue, the amount of issue with them depending
on prices. When speculation is afloat and prices rise,
that is the period chosen for the increase of issue by
country banks. The activity is thus stimulated which
it is most desirable to check.—(Hear, hear.) There is a
competition as to issue. What I seek to establish is
that unless there be some control, or some check, the
danger will increase just at that very period when
warning is given. The country bankers have no con-
trol, and there is among them a total abnegation of all
attention to the foreign exchanges. It often happens
that the circulation is increased in the beginning of a
drain for gold, whereas, if at the critical period there
were a simultaneous check a healthy action would be
restored and nobody would he injured. There is little
use in individual contraction, and so individuals reason
with themselves ; the increase of issue goes on until the
period arrives when the paper is discredited and the de-
mand for gold arises, and then comes the severe ordeal
of distress and individual suffering and ruined fortunes.
It then
ee becomes necessary to establish an equilibrium
between gold and paper. Competition may be very
usetel in its way, but it will not give you security in the
fluctuation of the value of paper. If we con-
sult experience as well as reason it will confirm us
in the justice of these views. What has been
the condition of the United States ? Let us learn by the
misfortunes of our neighbours. Their private banks,
joint-stock banks, which were established under excellent
regulations—they had immediate convertibility into gold
—there was unfettered liability of the shareholders—the
issue was increased, for there was no control—a sudden
crash and a total suspension of cash payments—indi-
vidual fortunes were ruined, public credit was destroyed,
and the industry of the United States was paralysed.—.
(Hear, hear.) If convertibility be security against de-
pression, why did it fail in the United States?—(Hear.)
In the United States, so long as there existed control
over the action of minor banks by the central bank, the
issue was in some measure restricted, although it could
not prevent occasional failures. The other issue banks
were, in the first instance, bound to conform to the prin
ciple of circulation practised by the bank of the Uni. ed
States. But, when these wholesome restrictions were
removed, unlimited competition ensued, and desperate
speculation, and a vastly extended issue, and, finally,
almost national bankruptcy itself. With respect
to the coinage and the currency, and the prin-
ciple which regulates the currency, promissory
notes payable in demand, I have stated the broad and
general principles which ought to regulate those three
great elements of the monetary system. On this,
as well as-on other occasions of a similar nature, I have
stated great leading principles by which I think the Go-
vernment should be guided, without the slightest cornpro •
mise. I have treated them as principles, and gone the
full length to which I think in candour I could
go. I know to what I expose myself if I do not
carry out those principles to the full extent.
I shall be told—" Those are very good principles
you have laid down in the abstract, but you shrink from
putting them into practice." But I think, Sir, it is of
great importance that a public man should lay down
general principles and elementary rules. I would much
rather have it said of me, in discussing a question, of this
magnitude, "You have fallen short in the application of
your principle," than that "You have concealed and
perverted principles for the purpose of achieving a tem-
porary object." I shall always state, when I address the
House, in the first place what I believe to be the correct
principles—what doctrines our future legislation should
be based upon—and then I will consider, with the same
unreservedness, how far attention to existing circum-
stances and interests, and habits of the community, will
modify the manner of immediate application. All that
I can promise is, that I will propose no practical measure
inconsistent with the application of the principles I have
laid down, and which does not lead to the ultimate and
complete establishment of these principles. But it is the
part of prudent men, responsible for the management of
the affairs of a great country, to hesitate before they
take any course which may so seriously affect private
wants, which may create a panic, and which may raise
an undue prejudice against these very principles, and
make men believe that they could not be carried into
effect without bringing ruin on the people. Care should
be taken to secure the ultimate adoption of those prin-
ciples, but with as little risk as possible. Some con-
tended, and he was not prepared to deny the force of the
argument, that if we were in a less artificial state of
society, and about to establish principles of banking, by
far the worst plan would be to claim from the State the
exclusive privilege of issue as well as the exclusive privi-
lege of coinage ; but I do not think, under the present
:Aim. of things, that such a system would answer. Lord
Althorp, with whom I altogether differ in political
matters, is, I must say, sound in his views and well-
intentioned in his motives—a man every way entitled to
hold a high place in public estimation—Lord Alrhorp
said, when this question was under consideration in 1833,
that though there was the benefit of greater security in
the responsibility of a Government, yet still he thought
that the present system of banking could not
be changed without injury to the community,
and any advantage arising from increased security,
would be more than counterbalanced by the
State having a complete control over the circulating
medium. The !Noble Lord said he thought such a
system would be most mischievous. I entirely concur
with the Noble Lord, that the Bank of England is pre-
ferable to a Government bank. This brings me to the
measure which I have to propose to the House for the
future regulation of banks. I will state them without
comment, and fully, in order that the House may be
put in full possession of them. I think it is of great im-
portance to increase the controlling power of a single
batik of issue. I think it is better, as I said
before, to work with established instruments, and
to guarantee to the Bank of England that con-
trol which it formerly possessed -- that it should
continue as a central and controlling body of
issue, rather than appoint Commissioners, acting under
the authority of Parliament. I propose, with respect to
the Bank of England, that it should continue in posses-
sion of its present privileges, but that it shall be com-
pletely divided into two departments, which shall be
kept entirely separate and distinct : the issue and the
banking departments. That the banking business shall
be administered on a principle perfectly different from
that by which the department of issue shall be regu-
gulated, shall have separate offices, and a separate system

of accounts. I propose that to the issue department shall
be transf-erred the whole amount of bullion now in pos-
session of the Bank, that the issue of the Bank shall
hereafter take place upon two, foundations and two
foundations only. The first that there be a
definite amount of security ; and, secondly, with
regard to the bullion, the banking d-part:nent
shall have no power to issue notes upon de-
posits—the discounting of tills be transferred to the
issue department. The amount to which I propose
the Bank may issue notes is 14,000,0001. I pro-
pose that there be frequent reviews of the accounts of
the Bank —both of the banking and issue departments.
Objections have been hitherto made to the publication of
these accounts, but I confess I see no reason why these
accounts should not be published ; and I think publi-
cation of these accounts would be highly salutary. I
propose that it be enacted by law that there shall be
returns to the Government from the Bank weekly of the
accounts of the issue of notes; of the amount of bu lion ;
of the fluctuation of hellion ; of the deposits ;
accounts of every banking transaction in the issue
and banking departments of the Bank of England.
With respect to the other banking establishments, I
will state the changes which I propose, with the sanc-
tion of Parliament, to carry into eff eq. I must remind
the House, that the principle upon which these banks are
regulated is different from that by which the Bank of
England is guided. In fact, they stand on a different basis
altogether. I believe that the privilege of issue is one
which may be very wisely controlled by the State. But
with respect to the privilege of banking, I am
of opinion that there cannot be too unlimited and
unrestricted competition. In respect to the privi-
lege of banking, the Bank of England has no
exclusive privileges beyond other banking establishments.
We propose from this time that no new bank of issue
shall be constituted except under certain conditions.
We do not propose—as I stated before, our object is to
effect the great changes we propose with as little incon-
venience as possible to individual interests—we do not
propose to deprive existing banking establishments that
ere banks of issue of the privilege they possess. We do
not wish to raise that alarm, which we fear would be
raised if we did not adopt the course we are now about
to pursue ; but we propose that they shall not exceed
the amount of their issues past a certain extent. We
propose that existing banks shall retain their privileges,
but they shall not issue more than they have issued
within the last two or three years. This decision has
not been taken without mature deliberation. I know
I may be told that the Banks issue more at one period
than another. Now, on that subject I have obtained
returns from ten of the best conducted banks in the
country, from four joint-stock banks in different parts
of the country, and. according to those returns the va-
riation in the issues is very small. But, supposing there
should be a demend for an increased issue, nothing will
be more easy than for the bank to sell its securities, and
get notes from the Bank of England—it will always be
in the power of the banks to command Bank notes for
their purposes. Now, while we restrain issue we intend
to fa ;ilitate the business of banking. The joint-
stock banks complain that they have not the privilege
of suing and being and being sued ; now there are two
principles of joint-stock banks, one establisised in 1826,
and the other in 1832, and the time has now arrived
when the question should be decided whether you will
retain the system of joint-stock banks or put an end
to it. If you are determined to adhere to the sys-
tem, then give them every facility which other banks
have.—(Hear, hear.) The banks ask for the privilege
of suing and being sued, and we intend to amend the
law in that respect. The joint-stock banks complain
that they are bound by the acts of unauthorised part-
ners. Now, it seems to me that it is harsh to make any
concern answerable for the acts of an individual partner,
and we propose to alter the law by making provisions
that the acts of individual directors, instead of
partners, shall bind the whole concern.—(Hear.)
By that means I think we shall compel parties
to select competent, efficient, and responsible directors.
—(Hear, hear.) Now the great complaint of the joint-
stock banks in London is this, that they cannot accept
bills for a less date than six mouths, while the private
banks have an unlimited power to do so. Now we pro-
pose to place the joint-stock banks in London upon a
perfect equality with the other banks, and to give them
the power of accepting bills to any amount or at any.date.
It is thought by many that such a privilege will be absurd,
and that it will lead to small circulation. Now, for my
part, I do not see why joint-stock banks should abuse the
privilege more than private banks.—(Hear, hear.)
But I distinctly state this, that if it is
abused—if there is any attempt to circulate
small bills to the detriment of the Bank of England,
I shall not hesitate to apply to Parliament on the sub-
ject. These are the facilities. I now come to the con-
ditions I propose to apply to all. We intend to require,
in the case of all banks, that there shall be a periodical
publication of the names of all directors and partners.
The London and Westminster Bank voluntarily do so.
Another condition we have a perfect right to exact is,
that while we are going to give existing banks the
privilege of issue, we are entitled to have an account
of that issue. We propose to have a weekly account of
the issue of the Bank of England, and I cannot see how
any other banks should have any objection to it.
They say the effect of this would be, that their rivals
would take advantage of a weak place. Now, that is
just what I want, as I am sure it will
be advantageous to the whole conduct of banking. It
is the complete publicity of transactions of this kind that
is a sure guarantee against fraud and abuse.—(Hear,
hear.) With respect to existing banks, I don't want to
pry into their affairs, because I think the attempt to do
so would not be very useful. I should not require
from any existing banks any formal balance sheets,
because I have had several such balance sheet=, and the
more I looked at them, the more dissatisfied I was.
Many persons thought that joint-stock banks should not
have shares of less than 1001. Now, there are many
banks which have shares of the value of 201. only,
and it would not be right to consolidate those
shares, and therefore the Government intend to
introduce no measure on the subject. Then, with
respect to requiring banks to invest part of their
paid-up capital in Government securities, lam afraid I
should do no good by Government interference in that
respect. Then with respect to future joint-stock banks,
we propose that no new jointestock bank shall be es-
tablished without application to some department of the
Government ; that the bank shall be registered, to-
gether with the amount of paid-up capital, that the deed
of settlement shall be properly drawn up and strictly
issu-
ing
established, audits.
entering these
into an adhered to. Than deed must also regulate the mode of
mens ego appointing directors, and, above all, the means of
joint-stocktiation s
with banks
Bankm a y
of England, and issuing the Bank of England notes as
their own issue. Now, we will not exclude from these
advantages, if advantages they be, any existing banks.
—(Hear, hear.) Now, having made this statement, I
will now revert to the position of the Bank of England
and its relations with the Government. I said that we
intended to call upon the Bank for a division of the
issuing of the banking department, that there should be
a fixed amount of securities, and that that amount
should be 14,000,000/.—(Hear, hear.) We propose
that the Bank shall continue upon its present
footing, and that it shall have the power to
diminish the amount of its issues. But then we propose
this—that every issue that takes place beyond that
14,0000001., the profit of it shall belong exclusively to
,
the State.—(Hear, hear.) The Bank shall not be
allowed to issue notes for more than fourteen millions,
without transferring the entire nett profit of that portion
of the issue to the Government for the use of the Govern-
meet.—(Hear, hear.) But here will it be necessary to
introduce some controlling check upon the Bank, be-
cause if the Bank have an unfettered discretion, they
may transfer the profit of that issue to the Govern-
ment, but it may still be most unwise that this in-
creased issue should be based upon increased securities.
--(Cries of " Hear, hear.") We therefore give
the
power of increased issue on deposits, but do not
permit any additional issue on securities, except after_
making a report to the Government, and procuring the
assent of three members of it to that issue. Suppose
the Bank entered into negotiations with some of the
existing banks of issue, that these latter should annihi-
late 2,000,000/. of their issue, and substitute for this
issue two millions of Bank paper ; there would, in that
case, be a gap in the circulation of the country to the
amount of two millions. It would then be perfectly legi-
timate on the part of the Bank, as this void would
exist, to make an increased issue of notes. But if that
issue is made the profit of it will belong to the Govern-
ment. But, of course, the power to make that increased
issue will not depend on the mere will of the Bank,
it must have the sanction of three members of the Go-
vernment.—(Hear, hear.) The only circumstance that
can justify this increase of issue on securities is the fill-
ing up of the void caused by the withdrawal of that
amount from circulation. It is for this purpose, and
not for the purpose of meddling with the affairs of the
Bank, that the Government introduce an additional
guarantee that the Bank shall not increase its issue at
its discretion. In order to make my statement as full as
possible, I will now advert to the question of the legal
tender. There is now a clause in the Bank charter which
enables any bank of issue to exchange its notes for notes
of the Bank of England. At the time that clause was
passed, I opposed it. But while making changes, I
think it better to make as few changes as possible,
and I therefore propose to continue to the Bank that
power. I now come to the pecuniary arrangements
which the Government has made with the Bank. The
Bank is to retain the privilege of issuing notes to the
amount of 14,000,000 L All issues upon bullion cannot,
it is clear, be a source of profit. The Bank does not
gain by its issue on gold; but it does gain materially by
its issues on security. The gross gain and profit of the
Bank is estimated at 420,0001. The Bank, for the advan-
tage of the public, conducts its affairs in a very liberal
manner. It never re-issues a note, but it provides a re-
cord of every note issued for the last ten years,
and gives every facility to the public for trac-
ing the business of the Bank for that period
by giving immediate access to the notes thus cancelled.
The cost of the issue of notes is about 117,0001., then
take this 117,0001. from the 420,0001, and it will leave
303,000/. as the gross profit on the issue of notes. Then
there is a deduction to be made of upwards of 60,000/.,
which the Bank pays to the Stamp-office on account of
the privilege of issuing notes. In addition, there is
about 24,0001. more paid by the Bank of England to
those county banks, and those banks of issue which un-
dertake to issue notes of the Bank of England. The
result of these several deductions will be, that the nett
profit left to the Bank out of 420,000/., will
be reduced to 219,0001. We are going to affect
the privileges of the Bank to this extent,
to give to the public the profit on the issues above a
certain amount, and the question is what does the Bank
claim in return ? Now, though, in some respects we af-
feet the interests of the Bank, yet, in some respects, we
give it increased stability ; and we, therefore, demand
that the payment by the Bank to the Government
shall remain the same as at present, and with respect
to. these arrangements I am bound to say that I have
never seen men influenced by a more disinterested spirit

I than the Directors of the Bank have shown throughout
the whole course of their negotiations with the Govern-
ment. They have reconciled two duties, their duty as the
managers of that great establishment, and the duty they
owe the proprietors. Their chief object has been to
promote the public interest ; they were unwilling to
stipulate for any one exclusive privilege ; and, in fact,
their conduct throughout has been marked with great
liberality and a desire to promote the public, interests.
We propose that the sum the Bank now pays the Go-
vernment for their privileges, under the Act of 1833,
shall continue the same, namely, 180,000/ I believe the
total amount of nett profit the Bank derives from
tha. issue of notes does not exceed 100,000/. Now,
on the other hand, the Government is obliged
to pay the Bank 280,000/ a year for the management of
the public debt. From that 280,0001. we shall continue
to deduct 180,000/., which will so far diminish the pay-
ment made by the Bank to the Government. Now as to
the period of the duration of the Bank charter. We
pr pose to continue the charter for the same term as the
present one ; but we intend to vary from it in the con-
ditions with respect to its revision. On its present
conditions the charter would continue for twenty-one
years, but a power is given to Parliament to
revise it at the end of ten years. If Parliament, however,
should suffer that period to pass without giving it that.
revision, it did not possess the power of going into it
again till the lapse of another ten years. aWe propose
that, after the lapse of the first ten years, the Parliament
shall have the power of revising it in any one of the suc-
ceeding ten years, on giving one year's notice of its in-
tention to do so.. Now, with respect to other
banks, I trust that it will be considered
that we are dealing justly. I wish them
to consider that they are to be placed on the same foot-
ing as the Bank of England. I wish them to consider
this as a notice and a long notice, that the Parliament
has a right to deal with the private banks, and with
backs of issue, as it has done with the Bank of England.
I wish it to be considered that from motives of reluct-
ance to interfere with existing interests and from anxiety
not to raise an alarm, or to restrict accommodation, we
do not put any restriction in existing banks of issue, but
it must be distinctly understood that Parliament has an
undoubted right to reconsider this question, and, if it
should so please, to establish one central bank of issue,
and annihilate all present banks of issue. I now come
to the case of the Bank of Ireland. I wish to reserve
the consideration of the state of the Bank of Ireland
until we shall have established sound principles
in England—till we have had opportunity of
holding personal communications with those im-
mediately interested in the currency of that country
I am, therefore, not desirous of including in the present
Bill any legislative enactment with respect to Scotland or
Ireland, except one preventing the establishment of any
new joint-stock banks, or banks of issue, unless after a
process of registration, subscription to certain rules, and
such rules as the Government may think it fit to impose.
The case of Ireland is a peculiar one. The privileges of
the Bank of Ireland differ, in some respects, from the
Bank of England. It would require mature considera-
tion, and that consideration we are prepared to give it if
the House will allow us the opportunity of that commu-
nication with Ireland and Scotland which we think is
due to both countries. I have not said a word here of
small notes. Let us establish these principles. I do
not feel disposed to encumber this question with un-
necessary difficulty, or bring round my head the storm
that I should raise.—(Hear, hear.) This is the way to
succeed in legislation—not to provoke any opposition
which you are not prepared to overcome. I cannot apolo-
vise to the House for the length to which I have engaged
its attention. The principles I have stated, I believe, are
sound, and I wished to make myself intelligible to all.
The House, therefore, will not require me to make any
apology. I may now place before it a statement, in the
way of recapitulation, of my proposal. It is the reten-
tion by the Bank of England of its present privileges,
but restricting its privilege of issue to a circle around the
metropolis, of which 65 miles shall be its radius. From
the Bank of England we shall require a complete separa-
tion of accounts, and a separation of departments ; one
for banking, and another for issue. The business of the
bulking department to be governed on perfectly different
principles from those which regulate the issue, there
being no power to issue a single note in the banking
department, except it shall have been received from the
issue department. We propose that an issue shall take
place of 14,000,0001 upon securities, and the remainder
in bullion ; the Bank being at likely to claim from the
issuing department as many notes above 14,000,000/. as
they may require, the public having a right to receive
notes in exchange for its gold, and to demand gold in
exchange for its notes. We propose to compel a weekly
publication by the Bank of all its transactions, so that
every dealer will be able to regulate his business by a
knowledge of the exact state of the issue department of
the Bank. We propose that no new bank of issue shall
be formed in any part of the United Kingdom, and that
no joint-stock bank shall hereafter be established except
on a distinct understanding ; the subscription to contain
conditions and regulations for audit of their accounts.
These regulations are not meant as an interference with
the concerns of such establishments, but for insuring
all the security that legislation can ensure to the
country. Then we propose that existing banks being
now banks of issue, shall continue to have that liberty,
provided in no case their issue shall exceed a certain
definite amount. And we propose that no bank of issue
having ceased to exercise its privilege of issuing notes
shall afterwards resume it. We propose, that in cases of
all banks there shall be a complete and fair publication of
the names of all partners. We propose, that in cases of
banks of issue, and joint-stock banks, and private
banks, which shall choose to retain and exercise its pri-
vileges—in the case of those banks, as in the case of the
Bank of England, we propose a weekly publication of
the amount of issues. Thus the Bank of England will
know the extent of the issues of other banks, and it will
by this regulation be enabled to contract the
currency, if contraction be required, at an early
period. And there need not be much alarm about
this contraction, for, till they shall see means by which
they may extend their issues to the maximum amount,
there is any easy mode by which they can command the
amount of issues in addition to the present amount,
namely, by the sale of securities, or the application to
the Bank of England for notes, or by exchanging these
notes for securities or gold. I believe I have now com•
pleted the task I have undertaken. I have given a full
outline of the measure which her Majesty's Government
will propose, of the principles upon which it is founded,
of the limits beyond which we think it would
be unwise to interfere with existing interests.
___(Hear.) I ask for no vote or opinion to-night.
I hope there will be no expression of individual opinion
—(Hear, hear)--but that the House and individual
mlitwsiflalvouunrre o
sr ervaegdaliynstia i tL.
before
will maturely consider the whole of this great
and comprehensive measure in all its parts and probable
bearings on the country before pronouncing an opinion
eitherorr in
elfnoretheth
course
House
ef
theto -
ow
eorrespondence which has taken place between the Go-
vernment and the Bank of England, in which will be
found a more full development of the principles on which
we have proceeded, and a more complete explanation
of the terms on which we have secured the concurrence
of the Bank. The possession of that document is of
great importance to the formation of a sound opinion.—
(Hear, hear.) I cannot deny that it will be to me per-
sonally a source of gratification if, after the lapse of
now a quarter of a century—(Hear, hear)—after pro-
posing, in 1819, that great measure which has, I trust, for
ever abolished the mischief of inconvertible paper—
(C heers) —and placed the currency of the country on a firm
basis—l cannot deny, I say, that it will be personally most
gratifying to me, if I, as the organ of the Government,
shall be successful• •
• inducing the House to assent to
this measure, which is but the complement of that other
measure, and which is calculated to fortify and give an
assurance of stability to that former one of 1819 by pre-
venting fluctuations in the medium of exchange.—
(Hear, hear.) But my gratification will be of a higher
and purer nature than any I derive from any satisfaction
of mere personal vanity, when I contemplate the suf-
ferings this country has endured within the last
twenty years at the periods of 1826, 1834, and 1839
—when I see the danger incurred, the results
which have been produced by the Bank of Eng-
land having recourse to foreign establishments--
(Hear, hear)--when I see the fluctuations of the
currency, the ruin of private fortunes—(Hear, hear)—
the defeat of all calculations of commercial enterprise—
when I look back to all those thingswhen I look'to
details—the failure of joint-stock banks—to the amount
of dividends which have been paid; but when I know
that the amount of dividends is no test of the circu-
lation—when I see the sufferings and anxieties of
the humbler classes of society—(Hear, hear)—when
I see the amount of assets—when, in the case of joint-
stock banks, though we may know that they are ulti-
mately solvent, we see the long course and tedious pro-
cess which creditors have to go through, before they can
recover what is due to them—yet, when I see the
names of original proprietors having 101. or 201. shares,
and that persons in a humble situation of life are
induced by flattering prospectuses to enter into specu-
lations, and looking to the ruin brought upon them—
I cannot now enter into the details—but when I look to
those things—then, indeed, I shall be gratified if I can
prevail on the House now to adopt a measure which
will give value and just confidence to the medium of
exchange—which shall diminish the inducements to
fraudulent speculations, and gambling, and shall insure
its just rewards, and just profits, to commercial enter-
prise, conducted with perfect honesty, and controlled by
steady prudence.—( ight Hon. Gentleman sat
down amidst loud cheers, having occupied three hours in
the delivery of his speech.)
Lord JOHN RUSSELL said, he presumed the reso-
lutions would be printed with the correspondence, so
that the House might have the whole plan before it. He
supposed the Right Hon. Gentleman would give ample
time for considering the subject ?
Sir ROBERT PEEL said he was anxious to have the
subject fully understood, because the more it was under-
stood, the more he hoped it would be supported. He
should therefore be willing to allow ample time for con-
sideration.
Mr. HUME wished to know whether the Right Hon.
Gentleman would give a return of the number and
names of all the banks that had failed ?
Sir ROBERT PEEL said he had no objection to
give a return of the names of all the joint-stock banks
which had failed, and he would also give a return of the
number of private banks, but he would not give their

names.
Mr. HUME asked whether he would give a return of
of the loss to the depositors ?
Sir R. PEEL said that if the Hon. Gentleman would
put his question in a proper shape he would be ready on
another occasion to give an answer.
Dr. BOWRING said it would be important to know
the loss to the public.
Mr. BULLER wished to know whether it would be
possible for the Right Hon. Gentleman, in that return, to
inform the House what amount of notes were outstand
ing for each bank at the time of its failure.
' Sir R. PEEL replied in the affirmative.
Mr. GISBOBNE wished to know whether, if he had a

note to be changed, he should take it to the Issue-office
or the Bank department.
Sir R. PEEL was understood to say that it would be
optional.
In answer to a question from Mr. S. WORTLEY,
respecting the right of existing banks to continue the
number of their branches,
Sir R. PEEL said that he was very unwilling unne-
cessarily to interfere with the privileges of existing
banks as to the number of branches they might have.
But wit's regard to new banks, if it should be desirable
to provide that no branch should be established within
ten or twenty miles from the parent bank, it would be
easy to provide for that..
Mr. S. WORTLEY said there was evidence taken I
before Committees of the House showing that a prac-
tice prevailed of one branch not paying the notes issued
by another branch. He wished to know if that was con-
trary to law ?
Sir R. PEEL apprehelded that it was contrary
to law.
Mr. P. M. STEWART wished to know if the notes
of these banks of issue would be received in payment on
account of the revenue.
Sir R. PEEL—Certainly not.
Mr. M. PHILIPS wished to know whether it was
the intention of the Government that there should be a
general return of the stock, bullion, ace., from each bank,
or whether a separate return from each branch established
in the country would be required ?
Sir R. PEEL said it would be difficult to make the
returns simultaneously, but he hoped the Hon. Gentle-
man would allow him time to prepare an answer.
Mr. M. PHILIPS wished to know whether the re-
turns of stock, bullion, &c., would be published in the
Gazette?
Sir R. PEEL said he did not as yet know whether the
returns would be published in the Leaden Gazette or in
a separate publication of a similar description.
The following resolutions were then read:-
1. That it is expedient to continue to the Bank of Eng-
land, for a time to be limited, certain of the privileges
now by law vested in that Corporation, subject te such con-
ditions as may be provided by any Act to be passed for that
purpose.
That it isexpedient to provide by law that the Bank of
EnAland should henceforth be divided into two separate de-
partments—one exclusively confined to the issue and circula-
tion of notes—the other to the conduct of banking business.
3. That it is expedient to limit the amour.t of securities upon
which it shall henceforth be lawful for the Bank of England
to issue promissory notes payable to bearer on demand, and
that such amount shall only be increased under certain con-
ditions to be prescribed by law.
4. That it is expedient to provide by law that a weekly
publication should be made by the tank of England of
the state both of the circulation and of the banking de-
partments.
5. That it is expedient to repeal the law which subjects
the notes of the Bank of England to the payment of the com-
position for stamp duty.
6. That in consideration of the privileges to be continued
to the Bank of England, the rate of fixed annual payment
to be made by the Bank to the public shall be 180,0001. per
annum, and shall be defrayed by deducting the said sum from
the sum now by law payable to the Bank, for the manage-
ment of the public debt.
7. That in the event of any increase of the securities upon
which it shall be lawful for the Bank of England to issue
such promissory notes, as aforesaid, a further annual payment
shall be made by the Bank of England to the public, over
and above the said fixed payment of 180,0001., equal in
amount to the nett profit derived from the promissory notes
issued on such additional securities.
8. That it is expedient to prohibit by law the issue of
promissory notes payable to bearer on demand, by any bank
not now issuing such notes, or by any bank hereafter to be
established in any part of the United kingdom.
9. That it is expedient to provide by law that such banks in
England and Wales as now issue promissory notes payable to
bearer on demand shall continue to issue such notes, subject
to such conditions and to such limitations as to the amount
of issue as may be provided for by any Act to be passed for
that purpose.
10. That it is expedient to provide by law for the weekly
publication of the amount of promissory notes payable to
bearer on demand, circulated by any bank authorised to
issue such notes.
11. That it is expedient to make further provision by law
with regard to joint-stock banking companies.
The House resumed, the Chairman reported progress,
and obtained leave to sit again on this day fortnight.

FACTORIES BILL-COMMITTEE.

On the motion of Sir J. GRAHAM, the House weir
into Committee on the Factories Bill ; Mr. GREENE in
the Chair.
On the 22d clause, which relates to compensation for
accidents to operatives in factories, being read,
Mr. MARK PHILIPS objected to the clause, on the
ground that it was not called for. They might just as
well legislate for accidents occurring in the ordinary
course of domestic life.
Dr. BOWRING and Mr. HUME also objected to the
clause.
Sir J. GRAHAM said that the clause was in accord-
ance with the recommendations of the Committee of
1841.
Dr. BOWRING cited a return to show that fatal acci-
dents occurred only to ten persons out of 116,000 opera-
tives in factories, in the course of a year ; and he con-
tended that in such a state of things there should not be
that interference in the management of factories which
this clause proposed.
Sir J. GRAHAM said that if accidents were so rare,
still more rare would prosecutions be. The power given
by this clause, was not likely to be abused, and he con-
sidered it of great value.
Mr. BERNAL said 'that the return quoted by the
Hon. Member for Bolton (Dr. Bowring) contained fatal
accidents only, and made no mention of those accidents
that were more likely to occur in factories, such as the
mutilatiew and maiming of limbs, which might disable a
man fur life. It could not, therefore, be relied on in the
present case.
Mr. PHILIPS thought the return' a very fair one.
It showed that the fatal accidents in cotton factories were
in the proportion of 29 to 85 to those in coal-pits, and it
was a fair inference that the same proportion existed in
minor accidents.
Mr. HUME asked why it was the Government had
not got a return respecting accidents in factories for the
last ten years? The Government had it in their power
to collect the requisite information. He thought that
there ought to be some general account of how matters
really were in this respect, to show that they were war-
ranted in such interference.
Sir J. GRAHAM, at the suggestion of Mr. C. Wood,
consented to an alteration in the clause, allowing twenty-
four hours' notice to be sent by a messenger.
The clause, with amendments, was agreed to.
Clause 23 was also agreed to.
On clause 24, relating to prosecutions in case of acci-
dent, being proposed,
Mr. HUME moved to insert the words " provided
such machinery shall not be properly secured and guarded
as required by this Act."
Sir J. GRAHAM opposed the clause, on the ground
that if an action were commenced, and it should turn
out the machine had been properly guarded, no damages
would, in that case be awarded. It was a question en-
tirely for the jury.
The amendment was negatived, and the clause agreed to.
Clauses 25 and 26 were agreed to without discussion.
On the reading of clause 37,
Mr. STRUTT objected to that portion of the clause
which would render the owners of mills liable to actions
under circumstances in which they must be sure to suffer
heavy costs, whether they had infringed the laws or not.
He moved the omission of that part of the clause.
Sir JAMES GRAHAM did not think that the clause
would, as it stood, have so much hardship in effect as
the Hon. Member supposed. The Right Hon. Baronet
suggested a verbal amendment, which would remove
all' possibility of doubt as to the intention of the Legis-
lature.
The amendment was after a short conversation con-
sented to, and the clause so amended was agreed to.
Clause 28 was also agreed to with verbal amendments.
On the reading of clause 29, to the effect that children
above the age of eight years might be employed in
factories,
Mr. FOX MAULE said that this was an innovation
against the children, for, as the practice was at present,
children under the age of nine years were not allowed
to be employed.
Mr. FIELDEN opposed the clause, and assured the
Right Hon. Baronet, from his own practical experience,
that (as we understood the Hon. Member, who spoke at
some length, but in a tone scarcely audible) children of
so tender an age were not capable of enduring the labour
of the factory. He moved that the clause be omitted.
Sir JAMES GRAHA &I said that the clause, taken
with that which followed (the 30th clause), would greatly
limit the hours of labour during which children should
be employed. The hours of labour for young children
would be restricted to six hours and a half.—(Hear.)
Mr. FOX MAULE was disposed to support the mo-
tion of the Hon, Member for Oldham. He did not
think that the additional protection to be afforded to the
children would be a compensation for their employment
at so early an age as eight years.
Sir J. JAMES GRAHAM said he would take the
sense of the Committee, if the Hon. Member for Oldham
persevered in his amendment.
Mr. FIELDEN again addressed the Committee in
support of his amendment.
Mr. AGLIONBY wished the Hon. Member for Old-
ham would repeat what he had said at the table, for
really no one had heard what he said—(Laughter)—and
if he meant to divide the Committee, it would be most
desirable that gentlemen should be able to understand
what were the reasons derived from his great practical
experience, upon which he now opposed the clause.
After a few words from Mr. FIELDEN,
Strangers were ordered to withdraw.
The Committee then divided, when there were—
For the clause
For Mr. Fielden's Amendment
Majority
97
On the 30th clause being proposed, for regulating the
manner in which relays of children were to be worked,
Mr. STUART WORTLEY expressed a wish for
a relaxation of some of the provisions of the clause. In
places where there was a dense population the clause
would work well, but it would inflict great hardship in
places where the population was scattered, more espe-
cially in mills which were worked by water power. He
therefore put it to the Right Hon. Baronet whether it
would not be right to introduce some relaxation of the
clause.
Mr. STRUTT said the effect of the clause would be
to destroy all the small manufacturers. It would inflict
great injury upon the woollen manufacture which was
carried on in country places, where it would be, in many
instances, impossible to procure relays of children. He
therefore proposed the addition of a proviso, to the effect
that if it could be proved to the satisfaction of the in-
spector, that from local or other causes great inconveni-
ence would arise in the working of woollen mills driven
by waterpower, in consequence of the enactment of this
clause, it should be in the power of the Secretary of
State for the Home Department to issue a license autho-
rising the working of children in those mills for any
period not exceeding eight hours in the day, or forty-
.eight hours in the week.
Sir J. GRAHAM opposed tho proviso. The clause,