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

of
of
of

Vanserce it is likely to be taken out of the country.
w I maintain thee it is just because
sold is an article of commerce—(Hear, hear)—
subjected to the same laws which govern other articles of
commerce that it is fit to be made the standard ; because
Precisely the same laws as regulate the import
com-
merce and the
possession of all other articles of corn-
regulates the import and the possession
"3' 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
to 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
Which governs other articles of trade. Some say when
we 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
eXchanee for it. But I believe that bullion has rather a
Preference over coin for that purpose ; because the ex-
Porters have a guarantee that it is of a
certain weight and fineness. Depend upon it,
"in will never be sent out of the country,
Unless it is more profitable to send it. When
ecru is dearer compared with other articles, the fact
taat the laws which govern it, are exactly the same,
11 proved by this, that when there is a
!ndden demand for corn or anything else, if it
IS more profitable to send woollen, or cot-
r, or other manufactures in exchange for it,
~„eY 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
Aohange more than any other article whatever. I have
te ,w stated the great elementary truth which I apply to
thmeasure. Now, if there are contradictions I want
em to be pointed out by a clear and definite
;element on the other side.—(Hear, hear.)
_„ do sot bewilder you by any measures
"obtivigalam utrr' I bays taken a pound. But I object to the
which Hon. Gentlemen might impose upon
ro
eof reading a pamphlet, or perhaps an octavo, stating
hawhat the definition of a pound is ; the real fact is, that
arc:ifh these are great truths, yet occasionally there are
th
a occurrences which aear to be contradictions of
and if there are small facts and circumstances
ilacvanhtare not
easily
, explained, ingenious writers take
age of the9m, and say " these do not conform to
Your
not trtriree3t principles and therefore your principles are
truth that Why, when Sir Isaac Newton deduced the
the great great tphreingeripealets of
planetary movements were owing to
gravitation, there came slight
Vpnenomena and disturbances which he could not recon-
e; in the course of time, subsequent philosophers
Retested 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 too.—(Hear.) Depend upon
if if You had every cirumstance—everything tending to
fttne aPparent deviation fully eeplained, you would find
• would not clash with the great truth originally laid
". If these principles are correct, it would be con-
-latent with them to establish some other measure of
2„"!de than that which you have taken. You might con-
i;ttlentlY with those principles, if you were at li-
rtY to decide for a new state of society, adopt
a " °aver instead of a
.gold standard; you night, if
YOU thought it desirable, adopt a new metal ;
'l4°i'la /night abolish all metals, and might, as Mr. Ricardo
ake rotes the standard of value, so that a man,
tir having 50/. in notes, might demand bullion or coin from
t„I? Bank, and it would be in conformity with this great
al,ciple to adopt that. But, in our present position,
:tning would be more unwise than a departure from
great principle which regulates the currency of the
sgd°r°- I believe 'seven-eighths of the House concur
not," Inc on the subject. You may, however, select some
8.7 mode ; but, before you depart from that now
-""hlished, I would entreat you to recollect that the
measure of value you now have, viz. gold, is that
inuwiture of value which you have had upwards of a
ktitdved years, always excepting cases of bankruptcy.
the writers of authority on the subject—Sir W.
d'ttY, Mr. Locke, Mr. Harris, and Lord Coke—were all
iridedly in favour of a single standard of value.
iser',l,Lc'ehe was of opinion that silver ought to
as .'"e metal selected for the standard of value. He
v,Slerled reasons which appear to me to be erroneous,
say Silver instead of gold should be taken as the stand-
acuPf value. But as your transactions have been for
long
al period of time founded upon a single
7tal, and that metal gold, and as you have determined
at it should perform the functions of the lower order
r
t't!ghout at least England and Wales, I do hope that
ss(niliklgivill induce this House to disturb that monetary
i'.steto. That which we have now is in exact conformity
I,4th the opinions of the ablest writers on the subject, and
thq4 wrote under a different system, and in conformity with
jacet°Pinion of the greatest recent authority on the sub-
suici relative to coin—l mean the first Earl of Liverpool;
h• e, in his letter to the King, which, I think, contains
publication
truth and sound sense on the subject as any
'icetion lthat ever emanated from the press—he
esiensnely argues that the principle which we should
pri'v" is the principle of our coinage; and the
tOciple which is Dort established, Lord Liverpool says,
teditarfreultit3:4Teration of this extensive, abstruse, and
I humbly- offer to your Majesty, as the
that bet
deliberations (he was then writing in 184,
it is better that silver shoui,:t be made merely acreforesentativecoin." (The Right Hon. eentlema,n proceeded
6e+readi, the opinion of the Earl of Liverpool, which set
that the coin, which was the principal measure of
`rPertY. and instrument of commerce, should be made
e'n° ; and, secondly, that for many years past,
itittilWPractine and opinion of the people, gold was the
olPasl measure of property and instrument of corn-
Staarree, and that, therefore, gold should be made the
,
a 2"1111 of Nlllue, whereas, that silver should be merely
This is exactly the prin-
ebiePresentatjv• in metal.)
•
It •which is' in operation at
.the present time.
The humblest
~sts the system which still prevails.
ofkmber of societv having a 51. note has the
.commtanids
gold. Ins
my opinion. by taking h
--""e, you will provide a greater security,,Hfore
l‘ernlansil
corertibility than if you merely say,
i'llocauther Ire 1001'
andintriere shall be nothing but
gold coin shall be able to take
et circulating throehout the country." Sir,
elt kren°:°. it has been said that by some
erlslak"- i°4 might diminish the chance of panic, and in-
ane leCUritn Now, I very mob doubt whether
sialat've interference can have the slightest effect. in
Z• :e!iting panic.
I believe you may adopt certain re-
tie which which will give much greater security. I be-
- •e you will
ephice have a greater security against th.at.
.upon_
N81.1,1_11:. imPoesible to reason, and for which it is im
014-tki"m tO provide, by having a gold circulation through-
letist.'"s country, and by manifesting confidence, than by
g to provide against the existence of panic.
d 'lrt I h Ave done with the principles which I think
sine"mine the retetusure of value, and which I think in
4renluntry ought fro regulate, so far as coin is con-
the medium
of szxchange. I hope I shall not be
to ..gat to have exceeda,l the
hraiehserve. I thought limits which I ought
that considering. how
woi—Yd these great subjects corue
k
attltek 411 advantage to gi•
under our notice,
..se to my opening
Piea,,e,hts, as far as possible an elementary charac.tert.—e
Iritte,lnear.) Now, Sir, I come to that which is
.11
I re:4, %ate subject with which I have to deal. Ylere,tregatihne,
Priul` toe allowed to state what appears to me to b
ttlea,s‘9o3 which should regulate a paper circuisati,ont,
the
Le; the circulation ofromissory notes payable t. h_
'Pe "r* itpeakof those, and of those only, when 1
*lt or '
teem Ml:oaq. I mean by money the coin of the
04 de' °r ins promissory notes, payable to the bearer
t
S tisc mend in tie coin of the realm. Now, I will n
'nett myself, and will not disturb the House, by To-
tlesh 'Pee,. a
paper credit. boxt a variety of other descr!p-
hisc-
th or - will say little or nothing
m
411
...
T
the great question which was discussed
c• whether deposits or
117z1 ommittee, as
'treenature
h pa er currenc. I ss'W
t -8Y hi fthe ttir of
that in some re-
paper cur-
/ !Icy. may partake o nt.s
ti eitii demat on that particular point, wl4h which alone
a.mely, the e
st: pricesn ffect.which papenr Currency has
ch.ange, the
Fie effect which I.t has upo
Isyrpr uh it has in distributing the measure o, value,
hie onnsaory notes, payable to bearer upon des:remit,
'Meet. a Tdifferent character, and have an entirely different
coin I
the first place, those bills are used preeise,lv
There is no
They Pass from hand to hand.
zat'ut-a- guarantee required—there is no new indorse-
fto4 nut
transfer, but they are really substitutes
Asa t-t..a.n.:1 operate. upon prices as money does.—
gat b•
ei4ll_ But it must not be understood
of exchange do not affect the pre-
Aletels. They economise the metals, and
tradee4.t the necessity of so much gold being required in
the e-e." Lei. /would otherwise be wanted. They may have
oi displacing four or five millions of gold,
°f is stn eirect hardly perceptible, altering the value
tletree.witil reference to other countries in a very slight
hank "(Rear, hear.) But the promissory notes of the
h he'
Ills of payable on demand are very different from
itt-rt" the..*ahnn.ge. The effect of the issues of the Bank,
tlint• restriction MSS to raise the value of the guinea
:etc% YasShillings. T?'e Bank lent money to the Go-
t.-4 4(1)2 to Private instividuals, and advanced largely
-4rrtssa—"*. But they found that the exchanges
advice
°flaess. greatlY against this country; and, by the .
hots well-infornaed, they limited the number of their
Amlosn,the
tli:; exchanges were again turned in our favour.
Z't %,`asixi Scotland. In consequence of the largeness
sa,,aetZsites:•he exchanges became very much against that
‘ae 114', But the banks there took the same course that
4itttle of
!sh Eno,land had taken and the result was the
Th • - bia e issues; were limited, and the exchanges were.
Those 111 have paid attention to this subject
'ouLtaernber thew 'lrp,••v able report presented to the
'.°lllle 2?, Thr
ec c
441tiod.t)f Commons, lniSho.:E.)on the- subject of the Bank
Itltelithaantgetsi'me".ve;between Ireland and this
441( note •
Bank of Ireland were
much against Ireland.
r much
de r s issued by the ,
eciated. It requirea about 118/. of Bank
a° ea the Bank of Ireland to purch.
et"' °f
b " the Bank -oinea, too, was
100/. of Bank
)q eetly of England. The g.
Zehit
Bytes. enhanced The
in value as comparesl
onsider that
with Irish
he gan‘°s. The Committee appeared to a
issues.
,the BaJ of Ireland ought to contract th.
018 K. of Ireland denied that they had OYU'r issued.
dlesaY not • armed
issued anything, they said, but wbat
tolumit in the legitimate course of business. was
The
'a ft we told them they would never restore the ex-
fis nub.* they diminished their issues. They •a_ t
VI declined to
they
e 11311,_ O do so. The exchanges never improved.
lit", the consideredl,l: co that perhaps it might be as well to
Mmendations of the Committee. They re-
.thee‘hleeth'eir circulation from 3,000,000/. to 2,400,0001. ;
lite Irish thence was that the exchanges improved, and
Tira,nk note regained its relative value to the
;gasoey -71 note. Now are not these proofs that pro-
ehs i b„,sotus exercise an influence over exchanges,
?.? not ?ill of exchange, deposits, and cheques of bankers
‘611.s of exch ts useless, then, to tell us that there are
`1 ess,...tni-t'e to the amount of 300,000,000/., and that
ibirualcsitest .they were all presented at the same time
talso ,141* 41ank could hot pay, Bud that it

would be of no use to adept rules with reear
to promissory notes, which we are net prepared
to adopt with regard to bills of exch 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 Liverpool says :—" It is a
common artifiee"—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."—(Hear, 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 for the safety and welfare of society. Now,
I am about to contend that convertibility with gold, with
unlimited competition as to issue, does not give the required
security; that free competition is calculated to procure the
article you require at the cheapest rate; but 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 an ample supply of
paper currency, the supply of which is conformable to
gold, and that the supply shall be given 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 issued 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. Hobhouse, brother to the Right
Hon. the Member for Nottingham, a country banker,
was examined before the Select Committee appointed to
inquire into the bankine. system. He was the selected
organ of the private bankers. When 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 he 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 be 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.
Itj then becomes necessary to establish an equilibrium
between gold and paper. Competition may be very
useful 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 preveit 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 United
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 compro •
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
in consistent a ith 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
paert 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 bel.ieve 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
state of things, that such se 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 Althorp
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
bank 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
oeentinue as a central and controlling body of
issue, rather than appoint Commissioners, acting; under
the aitthority of Parliament. I propose, with respect to
the Bat* 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-
I tad shall have separat• offices, and a separate system
su

of accounts. I propose that to the issue department shall
be transferred 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 is, that there be a
definite amount of security ; and, secondly, with
regard to the bullion, the banking department
shall have no power to issue notes upon de-
posits—the discounting of bills be transferred to the
issue department. The amount to which I propose
the Bank may issue notes is 14,000,000/. 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 bullion ;
of the fluctuation of bullion ; of the deposits ;
accounts of every bankins, 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 effect. 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
are 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 demand 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 facilitate the business of banking. The joint-
stock banks complain that they have not the privilege
of suing and being arid being sued ; now there are two
principles of joint-stock banks, one established 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 months, 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 4, 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 100/. Now, there are many
banks which have shares of the value of 20/. 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 joint-stock 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
adhered to. Than deed must also regulate the mode of
appointing directors, and, above all, the means of issu-
ing audits. By these means joint-stock banks may
be established, entering into negotiations with the Bank
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
14,000,0001., 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 2,000,0001. 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 14,000,0001. 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 420,000/. 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 are
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 117,000/., then
take this 117,0001. from the 420,0001., and it will leave
303,0001. as the gross profit on the issue of notes. Then
there is a deduction to be made of upwards of 60,0001.,
which the Bank pays to the Stamp-office on account of
the privilege of issuing notes. In addition, there is
about 24,000/. 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 he, that the nett
profit left to the Bank out of 420,000/., will
be reduced to 219,000/. 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 Bask
claim in return ? Now, though, in some respects we af-
fe:it she interests of the Bank, yet, in some respects, we
thatgst
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have
never seen men influenced by a more disinterested spirit