The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1844-06-11
THE NEW SYSTEM OF CURRENCY
PROPOSED BY
SIR BERT PEEL
IN THE
British House Of Commons.
MAY 9, Is44.i
fCcncludsd ]

1t is not for the purpose OF intermeddlng With
the affairs OF the Bank that we Introduce as an adj
dltonal guarantee the lnerv' nticn OF the govern
ment, and state, as the amount OF securities has
been liked by parliament, they shall not be increased
at your discretion, though you may cerive no proht
from them The government and the public are TO
derive The profit, and they to be the parties In
erested SO lar this that this Increase shall II I
take place without their sanction. That Is the ma
ture OF the proposal. In order that may make the
statement full possible, will just advert to
what is called the legal tender There is now
C ause in the Bank charter which enables country
ba nks, and other banks OF issue, To exchange their
notes for the notes of the Bank of England OPP
pose the introduction of that proposition. The ar
gument in its favor was that II had tendency TO
diminish panic and prevent a run tor gold Yon
want TO increase the controlling power OF the Bank
and do not know whether you do not facilitate
| the extension OF the Bank OF England currency by
permitting that clause still to exist and 10 continue
more than II you were TO abolish II altogether IL
is a somewhat difficult matter But what | want
Is 10 increase the controlling power OF the Bauk OF
England over he Issue, as the public ~ 10 derive
| the whole profit, and doubt whether | should not
increase 1t by torbldding The substitution OF Bank
of England notes for the notes of other banks, and
thus iamiliarise the public with the sight of the
notes OF the Bank OF England | wish to disturb
| as little as possible that which Ind now existing
certainly opposed II when 1t was first Introduced,
| but | do not wish 10 make ANY more changes lhdn
| are absolutely necessary on The present occasion
| (hear, hear) | now come to the peCunidry ar
engagements made with the Bank the part OF the
public The Bank Is retain the privilege of Is.
suing notes To the amount Of H. 600 0ON All issues
above that in gold are clearly not sources OF profit
The Bank gains nothing by the issue upon gold,
but II gains materially by the issue security. Ii
there are IL 600 OW OF securities returning interest
at the rate OF per cent, the gross gain by us total
issue will be represented by the sum OF 420,00K-
In estimating the net protils, let what deduc-
t,ons ought to be made from that gross produce
420,O 0N We first estmate the actual cost OF the
Issue The Bank, tor the accommodation and nd
vantage OF the public, conducts It's Issues on very
liberal scale. The Bank does not Reissue notes,
but II has provided the means OF keeping record
| OF every note issued for, l believe, the last ten
years, and this gives the public the greatest Ia
clty In tracing Transactions at the distance OF eight
or ten years, by having Immediate Access to the
notes which have been thus preserved. The total
cost of the issue now l07 ,OOW for issuing about
u, 100000. 1t was lU7 ,00N. as returned to the
Bank committee but 1t Is now said TO be III ,OOW
II take 7,OON from 42O 00W, that will leave
So3,oOW as the gross sum Then have deduc-
pays to the Stamp Office account Of the prlvi-
lege of issuing notes. and then in addition to that
there is about 24,O0W. paid to those banks which
deal with Bank OF England notes. The result will
be that there will be to deduct from the gross
amount OF 42o,0 the sums of 6O,00W., III 0OW.,
and A00V.; and the net profit OF the Bank will be
thus reduced to about PIG, coon, which will be the
net profit who the Bank will derive from the issue
of notes. We are going to affect the privileges OF
the Bank in this respect, that are going 10 take
TO the public the profit upon all its issues above
certain amount. We are going to permit them te
L
sum shall We claim from the Bank tor this conln
: ued privilege ? The Bank think we ought to make
| material reduction from the sum they now pay
namely, 10000. Our answer 10, that though III
| some respects we affect your peculiar privileges
we are going to give increased stability to your III
stitution and your banking concerns, and we mus
| insist on the tull payment We have hsd neso
citation with tile Bank, and l am bound In justice
. to the Governor and Deputy Governor OF the Bank
| to say that never men influenced by more dis
interested or more public spirited motives than they
nave been throughout the whole course OF these
negotiations. They have contemplated the public
interests TO the utmost extent consistent with thel
duty They have endeavored to reconcile theil
TWO duties; the duties they owe as the manager
of great establishment-the duties they owe Il
the proprletors OF the Bank, and the duties which
they owe to the public. They have considered
themselves as the head Of a great establishment
which Is to be the central bank OF issue, and then
chief object has been to promote the public inter
est. They have been unwilling to stipnlate for one
| exclusive privilege; their conduct throughout ha:
been marked blythe greatest iberality (hear, hear
| Notwithstanding the Restrictions which we impose
| upon their profits IN some respects, they have ac
| ceded TO our propOsiton--that the sum which the,
now pay to the governmen nj for the privileges whict
they had under the act of 1888 shall continue 10 b,
paid. They will therefore hereafter pay lSO,00M
| 1920 00M is the sum which they pay at present, anc
there will be 60, O0N account of the composition
for the issue of notes.
g An Hon MEMBER.-Annually?
Sir R. PEEL. Yes, 60 ,OOOl annually. We ar,
hereafter to have the whole of the profits derived
from increased issues. There is no Use in the
paying 70.O00i. and in our receiving 100000 anc
aaying GO, O00i. We therefore enter into a compo
-ition with them, during the existence Of the char
fr 1GT the annual OF 90 G IN order
TO us l2O 00N and 60,000 and believe that thu
total of the net profit which the Bank will derive
from the issue OF notes will not exceed 100 0OW -
| We now are liable to pay the Bank 24S 00N a Yea
| IN account of the management OF the public debt
OF that 248,0OW the sum of 100 0ON will contnu.
to be deducted. leaving l2s,OON. to be paid by tn
government. Now as to the period of the duration
ter for the same term nomlnalIy, but varying thu
! condition on which ii shall be granted At presen
it is for 81 years, but there is power now exislnI
put end to it at the end of ten years, provdr
notice be given; but VI you allow that opportunit,
to pass, you have poa er afterwards of revvni
It, We propose that, after the lapse OF ten years
parliament shall have the power of revising i
again that is to say, that although ten years may
have elapsed without any notice having been given
vet still IT at the end of twelve years circumstance.
should occur which would make it desirable to re-
wise the charter parliament shall not ose the oppor
fuuty of 90 doing II even at the end of fifteen years
events should occur which you cannot foresee
| which might make change desirable, it would
be a misfortune to the public if parliament should
expiration. Of the term We therefore think il bet
ter, both for the Bank and the public, to provide
that at the expiration of ten years there shall be
the power Of revisa, but the power of revisal al
| any time between Tue peTiOu OI teH years ana Tue
remaining period of the twenty, always Of course
| giving years notice of our intention to do so.
| rust that those who are connected with country
, banks will consider that we dealing Justly W tf
them but think they eughtto consider themse lves
placed upon the same footing AS the Bank of Eng
land that they ought TO consider this as notice
as long notice, and that parliament ought to have
unfettered right earerif it pleases, but certainly
after the lapse OF ten years. of dealing with prvat,
banks of ISSUE exactly as in the other case (hear
hear) | wish this to be considered notice.
Acting upon these motives, considering our unwil
lingness to interfere with existing interests, our un
| Willingness to restrict accommodation, wish "a
put in claim on the part of the parliament to place
other banks of issue on the same footing as the
Bank Of England, and wish it to be distinctly un
derstood that parliament has the Sniettered right
interfere in order to revise the system if it pleases
and to establish one bank Of issue, and to annih
late altogether the issues from other banks. mus