§ The Order of the Day for the Adjourned Debate upon Commercial Distress was then read, and the debate thereon resumed.
§ MR. URQUHARTSir, the unfortunate occasion of the premature assemblage of Parliament appears to me to have been very inadequately represented in the discussion which took place in this House on Tuesday evening. We have been assembled for the avowed purpose of granting a Bill of Indemnity to Ministers for infraction of the law; and we find them intent and engaged only for its defence. The Government proposed to us a Committee of Inquiry; by the proposal public alarm is to be allayed, and this system is to be upheld. Committees of Inquiry are proposed with the view of getting rid of an obnoxious law. The Chancellor of the Exchequer maintains the system, and proposes inquiry—to modify a defect in the parlour of the Bank. Upon this there is an Amendment, and the speech of the proposer is an argument that the currency laws have nothing to do with the present distress. Now, it appears to me that the question before us is one of far greater gravity as to its causes, its circumstances, and its effects. We have here to deal with a system carried out in a series of legislative measures which had their origin at the Peace. That system has had its advocates and its enemies. Each, while expounding their reasons for opposing or supporting it, have prophesied the consequences that it would bring. We are now arrived at a period when there remains no further necessity of investigating into the causes; for we have before us results so often repeated, that by them alone we can judge of the value of the one or of the other. These results have totally falsified the hopes and prognostications of its supporters, and have confirmed the fears and predictions of those who are opposed to it. Sir, it appears to me that the currency system is at once the most difficult and the most easy of questions; the most difficult when approached in one way—the most easy when approached in another; and the reason of the difference is this, that the difficulties that surround us are not natu- 532 ral, but artificial. In like manner, I believe that the remedy is either most difficult or most easy—most difficult when attempted by the enacting of laws, and most easy when attempted by their repeal. In fact, the distress of the country is the work of this House, and the only remedy is the abrogation of the laws that we have made. But it would now appear that these measures are most popular—that it is most agreeable to the House to defend them—and that to quote the present commercial distress, except as proving the efficiency of the system in averting, not producing, panics and catastrophes, is unseemly and improper. The question was, however, differently dealt with by the hon. Member for Huntingdon, who, though merely exposing the Chancellor of the Exchequer upon his commercial view of the case, declared, in a speech that redeemed the debate, that the country had already decided upon the Charter—that it had already sat in Committee upon the Bill, and thrown it out; he further announced his conviction of danger—not prospective, theoretic, or remote, but practical and inevitable—so long as this system was maintained; yet he himself had voted for this very Bill. I have different grounds; and I may in some degree relieve myself from the reproach of presumption in daring to touch upon this subject, by stating that at the time that this Charter was passed, I entertained respecting it the same opinion that I do now. When the right hon. Baronet introduced the Bill, he avowed it to be a measure which affected society to its very foundation. No subject, he said, of greater importance could be presented for the consideration of Parliament. How was the country to be affected? It was to be affected for good or for evil. He did not say that it would be for good; and in the nature of things it could not be so. Prosperity can be created by no laws, no more than health can be introduced by medicine. The only effect that could be produced by laws upon commerce was therefore necessarily bad, as the results have shown. The declaration of the introducer of the measure was bold, if ambiguous, and fairly challenged the Parliament and the country to investigate before they adopted a system of which each individual might be the victim. It required a case of clear advantage and of imperative necessity before such a measure could be adopted; and no such were shown by him, or sought by them. This system not only convulses our material condition; it abro- 533 gates the laws of our constitution; it treats with defiance the dictates of wisdom and philosophy, and leaves us in the midst of chaos. The power of this House consists in voting the supplies—what signifies our control over supplies when property can he cast down or raised up, and money transferred from one hand to another? What signifies our right to impose customs and other duties when the rate of interest can be swept up or down by an instrument over which we have no control, called the screw of the Bank? It has been admitted by the highest authorities that the emancipation of industry and the creation of the middle classes of society have in a great measure depended upon the progressive depreciation of coin through the influx of the precious metals from the mines of America. The tide has now turned—the precious metals are becoming more scarce, and therefore more dear; and this is the moment that we seize not to counteract this tendency, but to aggravate and increase it. The reduction of the rate of interest has been recognised by the most practical men, as well as by theorists, as the test and means of an improved condition of trade and of society. In proportion as that interest has been reduced, has value been given to all things except mere capital in money; in exact proportion to its reduction has risen the value of land, and the facilities of manufacture; and now in this so-called period of progress and civilisation we suddenly carry back the rate of interest to what it was two centuries ago. Again, in all admirably constituted Governments—in those great systems that have flourished for many ages—one undeviating rule has been to impose taxes so that they should fall upon large accumulations of property, to prevent those largo additions to the power which wealth gives for its own further increase. We, reversing these maxims, and subverting our own constitution, not only spare wealth in taxation, but convert the public burdens into inexhaustible mines for the avarice of a few. And, in addition, you have an increased necessity of taxation, further to augment each of those causes out of which it has sprung. In regard to the most essential purposes of Government, there is a balance between the privilege of this House and the prerogative of the Crown. To the one is confided the control of the expenditure, to the other the making of peace and war; and the system which destroys the one, extinguishes the 534 other. In what condition is one country in respect to others, which is at every moment upon the verge of internal bankruptcy and confusion, and the means of producing which in its own breast is, as I hope to be able to show before I sit down, placed by this system at the disposal of a foreign Power? Thus is it, as it was truly said by the proposer of this measure; and I refer not only to the Act of 1844, but to that of 1819—that it is one which deeply affects every member of the community, the Queen Victoria upon the Throne, to the humblest individual in his meanest occupations, and affects them for evil and not for good. I feel that I am, perhaps, unduly trespassing upon the indulgence of the House; but I am satisfied that this question cannot be approached except by an effort to place the system as such in contrast with other systems and with other times; and that therefore these preliminary matters are not less requisite than the minutest details. On Tuesday night we heard of every thing but the Bank Charter—circumstances, potatoes, human nature, all came in for their share. There was every reason but the reason—the Bill which had been introduced to render that which has happened impossible. The first cause assigned for this distress was the railways—by converting floating into fixed capital. What is a railway if not an association to spend money and employ labour? Where does the money go, but for sugar and for tea, for meat, for bread, and for beer? Is it not laid out in wood, in iron, as soon or nearly as soon as it is received; and the difference only is, that in the meantime you have created a fixed and real capital. There may be cases of injurious speculation and false investments; but still how could these be an absorption of capital or of money? And if there really were 160,000,000l. so spent, as was stated to us on the first evening of the Session, no more could it be brought in to account for the monetary crisis than if you were to assign as such cause the sums total of the butchers' and bakers' bills throughout the country. Besides, if railways had caused the distress, what would the argument avail? Who were those who most sedulously promoted railways? The next pretext is the drain for corn. What! a nation with 5,000,000,000l. of capital, and 500,000,000l. of yearly returns, convulsed and impoverished because 10,000,000l.have been paid out for value received? Be- 535 cause 10,000,000l., or say 20,000,000l. go abroad, is property to the amount of some hundreds of millions to be sacrificed at home, and your whole fortune to be deteriorated 25 per cent? When, Sir, so preposterous a reason as this is urged, I do say it is a still greater public calamity than even the disasters which are thus accounted for. We who in our last war with half our present population, and with half our means of production, supported a yearly drain of above 100,000,000l., are now in the midst of peace to be ruined by 20,000,000l. of produce purchased from abroad. We have an abundant harvest, we are in the midst of peace: what natural cause could have produced a panic that has only stopped short of bankruptcy? But if the proposition is absurd as an argument, the argument is dangerous to those by whom it is used. By whom is this argument used? By those very men who have hitherto told us that the relaxation of our duties upon grain would lead to a large export of our manufactures. Was not this that upon which they built their hopes? Was not this that which those who opposed them apprehended? I recollect the right hon. Baronet the Secretary for the Home Department, in the year 1838, anticipating the changes to be effected in the condition of the people of England, by the opening of our ports to foreign grain, pathetically describing the dismal tinkle of the factory bell superseding
The breezy call of incense-breathing morn.Rural life was to be utterly driven forth from the vales of once merry England by this enormous drain of traffic, and as land after land was open for the supply of grain, so would market after market be opened for the export of our goods. How is it then that this demand for foreign grain has not carried away British manufactures instead of Mexican gold? How is it, that instead of the occasion which was hoped for by the friend, or feared by the foe of free trade, we have results that justify neither? It is because you have a fixed price for gold. How was it that in war time, with the price of grain as high as the point it has attained to in the course of this year, namely, 120s., we could manage to endure and even to prosper? For this reason, that you had then no fixed price of gold, and consequently you paid your 120s. with one-third less gold than you do now. Supposing that on the restoration of peace, you had not thought fit to break down the 536 system that had carried you through the war; supposing that you had not thought fit to confide yourselves to the hands of a Currency Committee—if you had not trusted yourselves to the guidance of the right hon. Baronet—-then would you have paid in the present emergency no more than you paid during the war, that is, one-third less. But what would have been the effect of paying less by one-third? Why, it is that you would have paid none at all. Had the gold which you exported been purchased here at 5l. instead of 3l. 17s. 10½d., you would not have given to the foreign merchant a bonus upon gold, and you would not have placed for the British manufacturer an embargo upon his goods. This is the cause of that drain of gold—that drain of four or five millions—which by its reaction in some circuitous and incomprehensible manner has depreciated your whole fortune to one quarter of its amount. Another argument in support of the Amendment, which as far as I can see has no ways amended the original Motion, was the strange proposition," that in this country the price of gold was not fixed. "When I heard those words I thought that I must have been mistaken; but they were repeated and enforced. But great as was my astonishment at hearing such a proposition, how much greater was it to observe that it was cheered by the right hon. Baronet near me, and the noble Lord opposite (Lord J. Russell). I know not how I am to deal with such a proposition. The price of gold in this country not fixed! What was the Bill of 1819? What is your standard of value? Why, an Act of Parliament upon the subject! How was it that the money sent out during the war to pay for foreign grain should have been paid for at 5l., and that to-day the same gold goes forth at 3l. 17s. 10½d.? The statement is not true. It is ludicrously false. But how can such a misstatement be made in the presence of this assembly, and at such a moment? How is it announced with the emphasis of a discovery, and assented to as an undoubted or an unquestionable truth? How is it cheered from the Treasury bench, and the Opposition one? The reason is that it was a sophism, with which not indeed to answer, but perhaps to puzzle those who might be surprised that free traders in grain were not free traders in gold. ["Hear, hear!"] I thank the hon. Gentleman for the observation, and the right hon. Baronet for the cheer. He objects, then, to a fixed 537 price of gold, and only supports the present system, because he has falsely reasoned from true premises. If it can be made to appear to him that the price of gold is really fixed, and that its being so fixed constitutes the whole system, then must he be opposed to that system; because it is opposed to his own principle. His principle is, that the price of gold shall not be fixed. Such is mine; either then let him show that the present system does not fix it, or let him abandon it. The hon. Gentleman has not given any proof that the price of gold was not fixed in this country: immediately afterwards he says that he is an advocate of convertibility. What do they mean by convertibility save the exchange of paper for gold at the Mint rate, instead of as during the war at the market price? But as his "no fixed price" is a misstatement, so is his "convertibility" a phantom. The right hon. Baronet has said, that when the laws of Parliament controvert the laws of nature, the laws of nature will ultimately prevail. But still it is not without a struggle; and we are now undergoing that struggle both in our opinions and in our circumstances? Convertibility at a fixed rate is yours by law, but it is not so in fact. Your 5l.. note is to be exchanged for five sovereigns; but you can carry that law into effect only when not more than a quarter of the community desires this exchange; should a third part ask for sovereigns you are ruined. This law of convertibility is only maintained by its own infraction; when the necessity comes, you either abrogate it, or you evade it, or you struggle through it at enormous sacrifices; and whenever it is brought into operation, you are placed in the alternative of being ruined or abandoning it; and then hon. Gentlemen say I am for the system of convertibility. ["Hear, hear!"] I consider the assertion, cheered as it has been, that there is no fixed standard for gold in this country as the most important feature of this debate; for it carries the question entirely away from all the matters of detail in which we have been absorbed, and under which it might have been buried—we are met by a direct denial. On a matter of fact the question is reduced to this—is there, or is there not, a fixed price of gold? In his celebrated speech of the 6th of May, 1844, the right hon. Baronet comments on "the absurdity of being charged with monstrous injustice and folly, when he ties down the Bank to issue gold at the low price of 3l. 17s. 10½d. per ounce." The 538 author of the Bill has no hesitation in using the words, "price of gold;" and the object of his Bill of 1819—after that of 1816 had reduced us to a single metal—was to fix that price by law. Sir, I know no predicament in which I should less choose to stand, than in that of the free-traders; they have proclaimed a maxim of justice, a principle of policy, a condition for England of greatness, a remedy for her evils, a hope for her future prosperity. That principle, maxim, remedy, and hope, is one—the abrogation of restriction on the material articles of commerce. They have not one maxim, or principle, or word, with respect to restrictions upon that which is the representative of all articles of commerce—they will quarrel with a penny in the pound of cotton, they will resist a shilling on the quarter of wheat; but as for gold, the Bank, or the Bank Charter, may raise to double in one day, and reduce to one-half the next the price of all the cotton and all the grain in the country, and of everything else. On the other hand, I observe with extreme and equal surprise a body, if I may be pardoned the use of the word, called "Protectionists," holding to the last remnants of protection for grain, and entirely forgetting that there was a restriction, nay, proscription against them which they might have broken through at any hour; and giving up protection on grain, without stipulating for a relaxation which would have achieved for them much more than all the advantages which could possibly accrue from the restrictions which they were forced to abandon. They forget that when the restrictive measures were adjusted in 1819, there was a compact. The landlords were to be secured against the currency laws by the protection of agriculture. How was it that in the recent measure of free trade, they did not resume what they then gave up? How was it that they did not then say—Here we take our stand; if we cannot resist the abrogation of the laws that have protected agriculture, at all events we insist on having free that gold in which is measured the currency—in which alike manufactures and agriculture must adjust themselves? Thus has this question been carried by an absolute resignation on the one side of principle, and on the other of interest. It has been a matter of congratulation that this is no party question. Seeing the results, Sir, I deplore that it has not been so. Had it been a party question, the interests of the country might have found 539 support in the motives of this House; but as it was not a matter that interested any-party, it became to this House a matter of indifference: the interest of the Stock Exchange prevailed; and the usurers having found means to gain the heads, secured both the parties. But while it has to be deplored that it was not a party consideration in its inception, it certainly is or may be fortunate that the ties of party are broken or loosened at the time of this discussion. The discussions in this House have been conducted hitherto with reference to the existence of a Ministry; but those who sit behind the Ministry know that in regard to this question their hold of power is endangered by no vote that may be given. On the other side there is no project or design, or purpose of unseating them; and, therefore, we have obtained a truce for the moment from the customary warfare; and hon. Members may leave their minds free to consider the case upon its merits, and their conscience at liberty to give their verdict accordingly. A significant expression fell from the right hon. Gentleman in reference to the banks of Scotland. The Scottish banks, he said, had to be supported. This statement was cheered. The object of the statement and the cheer was to throw discredit upon the banks of Scotland. It is no new thing to charge upon the victim his own wrong; but never before has a Chancellor of the Exchequer come down to this House, as on this occasion, to speak disparagingly of houses that had failed, or to treat in so harsh and cruel a manner the gentlemen connected with the houses that have suffered in England and the metropolis, several of whom have been Directors of the Bank, and have passed the chair. But why were the banks of Scotland sneered at? The banks of Scotland were sneered at, because they stood an irrefragable argument against the whole banking system of the right hon. Baronet. The banks of Scotland present to you an admirable condition of commerce without those laws. They have shown to you the facility of carrying on banking when subjected to the ordinary rules of commerce; they have shown to you banks in their real and essential character, namely, establishments where large capital could be deposited, thence to be distributed in small portions to spread activity throughout the country. They show you that one pound notes are not dangerous to prosperity; they show you a country prospering under the sys- 540 tem that you have denounced, and are using every means to put down. I will venture to refer to my own former opinions upon this subject. I do so in order that what I say may not appear to be the result of evils that I have not foreseen. Before the right hon. Baronet attacked the Scottish banks, I had, as far as in me lay, warned the people of Scotland against such a design. The announcement of the right hon. Baronet's intentions in 1844 aroused fear and alarm throughout the whole of Scotland; the people would not have their one pound notes taken from them; and the resolution of that small portion of this large empire, and who have so weak a voice in this House, showing itself in a thousand ways, and coming forth from numberless channels, paralysed the operations of that powerful Minister; and his hand thus arrested, he promised in this House that he should delay legislation for Scotland till the ensuing year. I beg to quote the words of the right hon. Baronet: "Of Ireland or of Scotland I have hitherto made no mention. I propose to reserve for separate legislation the state of the currency in each of those parts of the United Kingdom. "I ask the House whether this be not a pledge from the right hon. Baronet that he should not legislate for Scotland in the course of the year 1844? And if that be so, I ask what are we to think of this—that without a separate Bill, without a distinct measure, but in the Bill for the Bank Charter of England a word should be changed, insidiously introduced, which made that Act apply to Scotland? The people of Scotland were no more aware than the people of England that the Bank Charter of 1844 legislated for them; they relied with that generous confidence that has always marked the people of this country in its relations with the right hon. Baronet—they relied upon his word. Had they not relied upon his word, had they examined the Act, they would have ascertained that in the 10th Clause there is an enactment which regarded them. The 10th Clause I shall read:—And be it enacted, That from and after the passing of this Act, no person, other than a banker who, on the 6th day of May 1844, was lawfully issuing his own bank-notes, shall make or issue bank-notes in any part of the United Kingdom.Here was the Scottish bank system stabbed in the dark. What I state is not known in Scotland to this day, and probably only to a few Members of this House. 541 Anticipating, however, the intention of the right hon. Baronet, I wrote these words, which I will venture to read to the House:—Be not deceived—your system is marked for destruction—it is so marked out because of its excellency. It cannot be suffered to co-exist with that of England—you can only save yourselves by rescuing England. The banking system of Scotland stands to that of England, as freedom to neighbouring slavery, which will destroy, if not destroyed: and which therefore inspires the despot with the double motive of lust and fear.But without reference to the means by which the Scotch system has been impaired, the fact is there before us. There is the Charter of 1844, and the measure of 1845. When, then, the Chancellor of the Exchequer speaks of the Bank of Scotland being under the necessity of receiving accommodation, I answer, here is the best proof of the valuelessness of the one system, and the excellence of the other. When did the banks of Scotland ever require assistance before? It is because of the insidious Clause of 1844; it is because of your patent Act of 1845. Convertibility is the word upon which the matter is now brought to issue. We have passed a law to ensure convertibility. We had attempted it by former measures: these having failed, we made one more experiment in 1844. This too has failed. This crisis has come upon us as the result of a measure which would be infatuation as an argument, but which is terrible as a law. Your system amounts to this—you will use a small number of measures to meet an enormous amount of produce. Suppose that the farmer from a neighbourhood brought in grain, and that the people from the town came starving to obtain it; and that the Government passed a law that grain should not pass into the people's hands until it had been measured in certain standard pints and bushels that could suffice for a tenth only of the grain in the market; what would be the consequence? And if those measures had intrinsic value, and being of a precious metal, were taken away to be used up as metal—would not the people be left on the road-side to starve, and the grain on the other to rot? The Charter of 1844 was but a patching up of a measure that had already failed. In 1844, the right hon. Baronet, in introducing his now Bill, assigned this reason for its introduction, that it was to prevent fluctuation. He said—The object of the measure is to prevent, so far as legislation can prevent, the recurrence of 542 those evils from which we suffered in 182S, 1836, and 1839. It is better to prevent the paroxysm than to excite it, and trust to desperate remedies for the means of recovery. I now commit these measures to the consideration and judgment of the House.And he congratulated himself upon the great and glorious name he would obtain in future times, by the great benefit he should have conferred on the community, in preventing those alternations of value which excite undue prosperity at one time, and lead to drenching misery at another. Here is the promise; look at the performance. Confidence was given to the man—not assent to the measures. The measures no one understood. The measure, at least, you ought now to understand. Gold is now our idol. Nothing is of value to us but gold; we may have an abundance of grain, of timber, of wool, of cotton, of all that constitutes real wealth; and because you have not gold, none of these are of any value. It would seem as if man had been made for gold, and not gold for man; and gold proves amongst us more terrible than iron or steel. Well, then, when your gold has gone forth, you must call it back'—and by what do you call it back? You call it back by what is called the screw of the Bank. What is that screw? The screw of the Bank is a metaphorical expression; but no metaphor is required. It is in this House that has been fabricated that screw; and that screw is nothing save the auctioneer's hammer. By it you have driven down the value of all your produce—the cotton that has come from America, or the tea from China, is selling in the city at less than its cost of production; by it these are exported again because of that reduction of price: and thus are the enormous resources of this country expended for the profit of strangers? England ought to be in possession of the greatest prosperity and the greatest power. There is nothing in her circumstances or in nature—there is nothing in our relations with foreign Powers—there is no diminution of the means of production, of our mines, our industry, our machinery; we are able to supply the world. We have got accumulated capital from our past gains, and if only left to the exercise of our own energies, we would at this moment be as much above the rest of the world in prosperity as we are above the rest of the world in the means of producing wealth. Sometime ago the French Government sent two gentlemen to this country to ask, "How a 543 country which possesses the means of commanding more of the precious metals than all the rest of the world, is periodically upon the verge of ruin by the want of a small surplus? "The question is easily answered. The law which makes gold exchangeable for paper at a fixed price, and the other law which makes so much paper be cancelled when you have parted with so much gold. These two regulations, so absurd that no one can admit them except by not comprehending them, have rendered you an enigma to yourselves and to the world. Thus have you made for yourselves a condition of misery in the midst of wealth, and now you have recourse to idleness to restore trade. Your means and resources are scattered to the four winds of heaven. And you lavish your means on the nations of the earth to place yourselves in entire dependence on their Governments? In the last crisis we turned in all directions for relief; we begged the Bank of France to come to our aid. She did so; she generously assisted us, and by her help we were enabled to escape. But what would have been our condition, supposing that this demand had come a year later, or supposing that, in 1839, circumstances had occurred to disturb the relations of the two countries; suppose that it had not been the interest of the French Government to support us; suppose it had been their object to embarrass us, would the Bank of France have advanced that money? Suppose now, again, that at that moment the French Government had had some end to gain in this country, would not the condition of the Stock Exchange have materially advanced it? Who can tell what conditions might have been exacted? who can tell what wrongs may have been submitted to, what dangers incurred? In fact, are not the Government and the country placed in dependence upon a foreign Bank and Government? In former times, England was the money market of the world—when loans were to be effected for Europe, Asia, and America, in London they were raised. It cannot but strike any man as an alarming sign of the times, as one which may well justify the prognostications of our decline that have been advanced by men of high philosophical and political standing in foreign countries, that we are now so changed and so dependent. How, Sir, did we redeem our obligation? When France came, in 1846, to ask the same favour at our hands, you could 544 neither do her a favour, nor take advantage of her necessities. You could not (I leave the morality of the question, I speak of the fact) have made secret conditions with her Government, for ours had no more power to act than the Bank. Although you had sixteen millions of gold, you could not give a penny. She got a loan indeed; she got it from a Power that has been looked upon as barbarous, as weak, as ignorant, as one that would never be dangerous to Europe, because it was poor! The French Government, after appealing, in vain, to wealthy England, got what she wanted from poor Russia. Is not this a question which affects England in her most essential interest? And when we consider that the right hon. Baronet the Member for Tamworth has by the labour that he has expended on domestic concerns, rendered it, according to his own confession, impossible for him to attend to foreign ones, I ask, has he done himself justice? Has he not established a lever in the heart of England, the handle of which is placed within the reach of any foreign Power who can afford to purchase it. But, Sir, the danger is not merely with respect to France and Russia, or France and England reciprocally, as acting upon one another. We are ourselves indebted to Russia for a similar favour; we are ourselves placed in the same position with respect to the Russian Government as is the French Government. The Russian Government attains this result by a financial system introduced upon the advice of commercial men of this country—which advice we have neglected. The ukase of the Emperor I hold in my hand: it shows that they contemplate drawing the money out rapidly; it places the loss if any, upon the Imperial Treasury; 6,500,000l. are avowedly consecrated (and 20,000,000l. are in reserve) for acting in every possible manner upon the Stock Exchange of Europe. He has contracted ostensibly with the Bank of France—the Bank of England is now his agent. Sir, this currency system under which we stagger, supersedes the functions of this House by withdrawing from us the control over taxation; it supersedes the Sovereign of this realm in the exercise of the prerogative in respect to peace and war, which is the basis of the conduct of our foreign relations. A more grave subject never came before this House½one more minute in its application—one more gigantic in its nature—one which affects us not only in the disturbance of our circum- 545 stances, but in the very quality of our minds—one which leaves unpolluted no branch of public affairs—which disturbs the relations of society amongst the humblest peasants, as it does amongst the richest bankers of Lombard-street—one which lowers our station by the misery, degradation, and poverty of our people at home—which degrades us as a commercial people by the gambling habits introduced into trade—which endangers our existence as a nation, by the command over us which it places in the hands of foreign Powers. I therefore, Sir, would meet by a direct negative the Motion of the Chancellor of the Exchequer. This House have it this night in their own hands to emancipate England. I have no hesitation in saying that any measure short of the abrogation of the fixed standard will fail in its effects. I further say, that any step that we take, except a resolution to that effect, will only prolong this evil. You have had Committees enough—you had a Committee before you passed the Bill; that Committee, after long inquiry, could come to no conclusion—and are you better prepared now? You brought in your measure without a conclusion. Will you abrogate your measure without a conclusion? The absence of decision allowed you to let in a measure. Will not the absence of decision allow that measure to go on? By the appointment of a Committee you will merely shelve the question; you will lift the Government over its difficulties; the chapter of accidents will thus come to its aid, and, as usual, those inexhaustible resources of the British empire, to which the Chancellor of the Exchequer has referred for hope, will prove, as hitherto, a ready fund upon which legislative folly will draw. Our Sovereign is the Monarch of three kingdoms; we are assembled three nations in this place. I should like to know what interest my people has in the currency measure of the right hon. Baronet? I should like to know what interest the representatives of the kingdom of Ireland have in this measure? If this is a system which has brought mighty England upon her knees, is it not fit to prostrate or to keep Ireland in the dust? Ireland is without capital you say; has she not soil and arms? Ireland is not without capital; but you allow no other capital than gold. Ireland has an abundance of capital, almost equal to that of England; but this system paralyses, blights, and withers; and what is more clear than this, that England 546 cannot go on with this system? How then is it possible that Ireland should? I appeal then to Irish Members—those who are divided upon almost every question of political import—whether it is not possible for them to come to concurrence for once upon a question of money? If there is no Scotch Member here that can be in doubt or hesitation as to the value of the system of the right hon. Baronet, why should an Irish Member be more in the dark? You do not require to support a Ministry—there is no ministerial crisis at stake—the life of the Ministry is safe—there is no parliamentary necessity to vote black white, or white black. If then there is no such party reason, surely there is every national necessity—take example from us. How have we in Scotland been marked as a people different in industry and character? Why, it has been by our banks. If the system of the right hon. Baronet had been forced on Scotland, it would have met with a resistance which I do not choose to characterise here, but which I know by my own feelings to be such as to equal any resolution that the mind of man is fit to form, or his body to achieve. Consider whether you may not, for yourselves, achieve to-night or to-morrow that same position which our past experience holds out to you as so desirable an end. By leaving what the free-trader ought not to shackle—what the protectionist wishes to set free—by leaving gold to find its own level—you may restore prosperity to yourselves, to us, and to England. I conclude by imploring you to condemn and abrogate these laws, which have introduced amongst us a providence the reverse of that of God—which have enacted by the blindness and the will of man this decree—that to him who hath much more shall be added, and from him who hath little shall be taken away even the little that he hath.
MR. ELLICEsaid, that the constant interest he had taken in this most embarrassing subject, induced him to offer a few observations on the question then before the House, with a view to bring back the discussion within those practical limits to which it would be well for it to be confined. He thought it an extraordinary, and hitherto unaccountable fact, that in this great and powerful country, with means far exceeding those of any other nation, with mines, machinery, and all means of creating wealth, periodical convulsions had occurred, shaking the industry of the coun- 547 try to its centre, and consigning masses of men to ruin. If he could think that the remedy proposed by the hon. Gentleman was one that could release us from that continually-recurring distress, he should be more willing to enter into the arguments the hon. Gentleman had opened to the House; but he thought that at this day he might search in vain to find any considerable number of persons who would think that a remedy could be found for the difficulties under which the country suffered in a fluctuating standard. By what means were the transactions of this great country to be carried on? There must be some standard of value—some invariable measure, by which all transactions might be directed. If the hon. Gentleman had told them in what way he was to use his fluctuating standard, how it was to be made applicable to our condition—he should have been more willing to have followed the hon. Gentleman in his arguments; but he was sure they would lead the House very far from the question before it. But he did think, and he had always expressed that opinion in that House, that one of the most unfortunate determinations come to in this country—he would not question its justice, although he believed there was as much injustice as justice involved in it, after they had incurred enormous debts, and after the relations of debtor and creditor in all the fixed property of this country had been so entirely changed—was the resolution come to at the Peace that they should return to cash payments at the old standard. He thought at the time that resolution was taken that it was one which they would find great difficulty in accomplishing. He had not changed that opinion. When the right hon. Baronet the Member for Tamworth brought in his Bill in 1819—for his measure of 1819 was not to be saddled with the merits or demerits of that resolution—the right hon. Baronet found the currency of the country deranged. He was bound by a resolution, passed by the House at the termination of the war, and he proposed that measure of 1819 merely to carry into effect in good faith that which Parliament had determined upon. The right hon. Gentleman had stated his opinion to the House, that the burden to be imposed on the country by the return to cash payments, was to be estimated by the difference between 41. 2s. the price of gold at the time, and 31. 17s. 10d., the old standard. He had moved an Amendment, to return at once 548 to the old standard, instead of by the gradual steps proposed in the Bill, in order that he might be no party to the delusion thus practised, as he thought, on the public. That was his sole reason for interfering on that occasion, and not because he wished either a fluctuating standard or a return to the former system of inconvertible paper, the source of all the difficulties and evils from which we were now suffering. The question, however, of standard and currency had little to with the matter now before the House. The right hon. Baronet (Sir R. Peel) would admit that the Bill of 1819 having been carried, he (Mr. Ellice) had since done all in his power to maintain it in its integrity. The hon. Member for Birmingham (Mr. Muntz) behind him, exclaimed that they could not maintain it. That might be his (Mr. Ellice's) opinion also, seeing that during thirty years of peace, this main difficulty of eight hundred millions of debt had not been diminished; but until the very last emergency they were bound to maintain it. It was not unimportant, however, to refer to the former history of their monetary system. In 1815, at the close of the war, came the renewed resolution to return to old cash payments. The measures then taken led to the first crisis in 1816. Then followed a new flood of inconvertible paper, which depreciated the exchanges, and drained the Bank of the gold brought in by the previous contraction. This state of things continued till the correction applied by the Bill of 1819. Two years of the working of that Bill produced the next crisis of 1822. Everybody recollected the scene of that year. Lord Bexley, the Chancellor of the Exchequer, scarcely knew how to account for the distress of that period, but thought it might be remedied, to use his own expression, if he could place an additional sovereign in the pocket of every man in the country. For that purpose he borrowed and issued thirteen millions of additional notes from the Bank. Prosperity, as it was called, immediately followed. The South American mining mania was only one symptom of the general speculation pervading every branch of our trade. As Lord Bexley was at some loss to understand the distress in 1822, Lord Ripon, his successor, scarcely knew where to find terms in which to vaunt the flourishing condition of our resources in 1825. Before the end of that year, however, a change came over the vision of our dream. In the scene that 549 followed, some parallel might be found to the present time. The Bank, with thirty millions of paper in circulation, with scarcely a hundred thousand pounds of treasure in its coffers, was so near stopping payment, that the Governor sat watching the minutes of the clock, in the anxious hope that the usual hour of closing its daily payments might arrive before the last sovereign was exhausted. He would not follow the details of the subsequent crises in 1837 and 1839. They were less severe, but always characterised by the same difficulties and inconsistencies in the management of our currency. The right hon. Gentleman did not interfere till it was necessary, or till ample experience had proved the urgency of some control on the issuing of paper money on credit, both at the Bank of England, and the country banks, by his Bill of 1844. He (Mr. Ellice) supported that Bill. He did not suppose it would be as efficient as the right hon. Baronet expected, because he doubted the possibility of any sufficient control over a currency so mainly dependent on the fluctuating condition of public and private credit. And further experience had confirmed these apprehensions. He doubted whether they could long maintain the existing convertibility, and prevent these revulsions, without further restrictions. His right hon. Friend the Chancellor of the Exchequer, in the able speech with which he had introduced this subject, wished the House to be satisfied with the present state of things. The right hon. Gentleman could conceive no better security than the Bill of 1844, or no better footing on which to place our monetary system. Why, then, the late majority for abrogating its provisions? He (Mr. Ellice) agreed to the appointment of the Committee, as far as the connexion of our credit, money, and banking management, with the existing distress, was involved in the inquiry, for the especial reason, that examination should be made into the sufficiency or insufficiency of the Act of 1844 to effect the purposes for which it was intended—one main purpose, as insisted upon by the right hon. Baronet, on its introduction, being to check the alternate periods of excitement and depression from which we had suffered on previous occasions; but on no occasion so much as in the present case, during the period of its operation. We might take useful lessons on this question of a convertible currency, founded chiefly on credit, by comparing the operation of similar 550 causes on the monetary condition of countries having wholly, or nearly so, a metallic currency. The wants of France and England for a large importation of corn to supply the deficiencies of the last harvest may have been nearly the same. The balance paid by both countries in specie beyond the exchange of other commodities, and the conversion of foreign funds or securities, might for the sake of the argument be taken as similar. In France, the money required for the payment of the balance was taken proportionately from each district and department in which the imported corn was consumed; and although the subtraction of so much from the general stock of money might have caused temporary pressure, it was only to the extent of the actual amount of money withdrawn, and produced no greater derangement. In England, on the other hand, the consequence had been very different. The whole money required was taken from the central depot in the Bank of England, the sole basis of a circulation of three times its amount. The Bank necessarily took precautions, contracted its transactions and circulation—the country was infested with the alarm, and our whole system of credit was convulsed and paralysed. What remedy did his right hon. Friend the Chancellor of the Exchequer suppose the Act of 1844 would provide against the recurrence of this difficulty? He had made a very able defence of the policy of the Government to avert the panic on the late occasion. So far from finding fault with it, his (Mr. Ellice's) only complaint with their interference was, that it was not adopted at an earlier period, and that wider measures of relief had not been considered. When he said this, he knew his right hon. Friend could neither add to the money or the capital of the country; but when these panics, the result of an overstrained system of credit, for which our traders were not alone to blame, were clearly foreseen, it was wise to anticipate their effects, and to take measures to palliate and mitigate them. Neither money nor capital were so much required as confidence. It was unnecessary to explain to his right hon. Friend that the restoration of confidence, or even the mitigation of alarm and apprehension, produced capital and money which he could not otherwise supply. The present was a peculiar case. Beyond the drain for corn, they had been oppressed with an enormous demand of capital for railroads. He concurred in the view taken by his right hon. Friend 551 of that part of the subject. He (Mr. Ellice) had long foreseen the consequence of this drain on the productive interests of the country. But, again, the railroad mania was only a symptom of the general spirit and spread of speculation, engendered by an exaggerated system of credit, similar to that of the South American mining transactions in 1823 and 1824, and the North American transactions in 1837 and 1839. His right hon. Friend ascribed the mischief to over-speculation of the merchants who had failed. Similar cases, if not to an equal extent, at least to an extent proportional to the prevailing pressure, had always occurred. The banks went in 1825—the merchants now. Those always became the first victims to the storm who had spread most canvass to the gale; but did his right hon. Friend think that the houses which had been compelled to suspend their payments were the only sufferers? It was said no merchant at Newcastle or Hull had failed. They might have been more watchful and prudent men, but the loss from depreciation of goods and securities had been fearful and universal, and had fallen with the greatest severity on the most solvent. He spoke feelingly on these subjects, from old associations. To return to one cause of their difficulties, the railroads. On this subject he begged the right hon. Member for York (Mr. Hudson) would not misunderstand him. So far from being an enemy or opponent of railroads, he knew no men to whom the country was more indebted than to the able and energetic men who had engaged in and managed these undertakings; or no discovery or modern improvement likely to confer so many important and lasting advantages on the country. All he had in vain endeavoured to impress on directors, and on the last and the present Government, was caution and prudence, in not attempting too much at once, and in imposing some restrictions on a competition which threatened—and which had, at last, been permitted to produce—a large share in our present embarrassment. He had implored the last Government, as well as the present, only to take the precaution of limiting the powers of issuing debentures and paying interest out of capital granted without scruple or hesitation to everybody who applied for them. The right hon. Gentleman (Sir Robert Peel) was especially responsible for setting the example in this respect—rather an inconsistent policy to that of his Bill of 1844. It was im- 552 possible to conceive a policy more calculated to defeat the success of that Bill. However, it was too late to look back to the past, except for wisdom with respect to the future. There was at all events the consolation that the money expended in these undertakings was not thrown away, as in the previous cases of South American mines and North American adventures and loans. There were other important considerations connected with this subject on which he would trouble the House with some observations. These were the connexion of the Bank with the Government, the state of provincial banks, and the general condition of our finances. His right hon. Friend had ascribed a large share of the earlier derangement to the indiscretion of the Bank Directors—their over-issues at one time, their sudden contractions at another, and a general misunderstanding and neglect of the provisions of the Act of 1844. That might or might not be so. But what did that prove? The Bank Directors had infringed none of the provisions of the law. His right hon. Friend had been in constant and weekly—almost daily—communication with them. He might have advised them to avoid the error of which he now accused them. But according to his (Mr. Ellice's) opinion, neither the Bank nor the right hon. Gentleman were to blame. It was the system, and the inefficiency of the Act of 1844 to accomplish any of the objects for which it was intended. It was the same thing on former occasions. The Bank had always been to blame. It would be so to the end of the chapter, unless the Committee to be appointed could devise a better system to check the anomalies and inconsistencies of our administration of the currency. The Committee would do well especially to inquire what effects resulted from a perpetual appeal from the Government to the Bank for deficiency bills, and other accommodation; and how far the absorption of their whole capital by the Government rendered them less able to support trade on emergencies, in proportion to their nominal capital, than the smaller banking establishments in Scotland and England. There was also the internal management of the Bank, and their dealings in their new character of stock-jobbers. In former times the Bank did not deal in stock or Exchequer-bills: what they bought they held. Now, if he was to believe the representations in the public papers, they bought, and sold, and even borrowed on stock, like 553 other individuals. It was even said, that after having been consulted by the Chancellor of the Exchequer with reference to the last loan, and after the contract had been taken in circumstances of a somewhat precarious character, they threw a million of stock on the market, to the great injury of the gentlemen who took the loan. These things were probably not so; but they were reported, and such reports had an injurious tendency on the character of the Directors. See what a power would be possessed by individuals sitting at the board, aware of the intentions of the Directors to buy and sell stock. He was certain from his knowledge of the Directors, that they never had and never would avail themselves of the knowledge; but it was important both to themselves and to the public, that they should not be open to such imputations. The inconsistent duties of the Directors were likewise to be considered. How could men satisfy both the appetite of stockholders for dividends, only to be maintained by making the most of their notes and deposits, and the expectations of the public, that they should regulate their dealings only with reference to the exchanges? Their capital was fourteen millions; their rest between three and four; their loans to the Government, eleven; their permanent investment in unconvertible dead weight between seven and eight. These not very tangible investments absorbed more than their whole capital, and produced a rate of profit not much exceeding 3 per cent. How were they to make up the difference between that and the dividend paid to the proprietors, except by taking every safe opportunity of employing their notes and deposits? And opportunities very safe, as far as their interest and security were alone concerned, might be very inconvenient with reference to a due regulation of their issues. It had been proved by experience, that the Bill of 1844 produced no influence, or supplied no correction on this important point. So far the Bank. Then consider our financial history and present condition. Prom the year 1819 to the present period, our Chancellors of the Exchequer had generally preceded and constantly outran our speculators in their reliance on and abuse of credit. Whenever it suited the convenience of their Exchequer, either to blow the bubble for the sake of a forcible reduction of the interest on portions of our debt, or to supply their deficit by means of deficiency bills, excesses in the issues of the Bank were their 554 resource. He had already alluded to the first instance in 1822. He would not follow up the details of subsequent transactions. Turn to every page of their debates on successive budgets, and they would generally find the Chancellor of the Exchequer of the day taking credit on all opportunities for a fictitious prosperity, and encouraging speculation in times of an artificially excited state of trade, and of money dealing, instead of cautioning the public on the hollow foundation on which everything rested. In this way they had neglected funding their Exchequer-bills, when the stocks were nearly at par, looking to some happy occasion of reducing our 3 per cents. But it was said, Exchequer-bills were so convenient a security, that banks and bankers could not manage their concerns without them; and thus again the public were sacrificed to this connexion, which complicated our whole system. If Exchequer-bills were to be maintained in time of peace, at least it would seem expedient not to encourage the competition of railroad debentures to discredit them. These questions of finance were intimately connected with the present subject, but were conveniently kept out of the discussion. In which of the branches of his administration was his right hon. Friend the Chancellor of the Exchequer less embarrassed than the traders; with greater abundance of means and capital in proportion to his wants; or less dependent on credit, and the assistance of the Bank? He had supplied his wants of last year by a loan, because it would have been inconvenient to have raised the money by taxation; but he had been obliged to pay heavily for the accommodation of prompt payment, in order that he might not incur the risk of adding to the pressure on the Bank, or of raising a question as to the means of facing his October dividends. The reaction in trade, the contraction of mercantile transactions, and the prostration of private credit, would now force money back to the Bank; and so far from there being difficulty of providing means for the January dividends, it might become difficult to find other means than public securities for the employment of the Bank deposits. But was his right hon. Friend so certain that no absorption of this money might take place between January and April, and that his wants at that time might not again drive him to have recourse to deficiency bills to pay his April dividends? Was that eternal cause of disturbance in Bank 555 arrangements to go on without remedy? What were his right hon. Friend's prospects? he could scarcely ask him what were his intentions with respect to further financial arrangements. It was evident there would be a large deficiency. How was that to be supplied? By direct or indirect taxation? The free-traders were consistently demanding reductions in indirect taxation for the relief of manufacturing industry. The landed proprietor, waiting for more experience of the effects of free trade on his interests, after the disturbing consequences of the potato failure had passed away, objected to any alteration in the present proportion of direct and indirect taxation. Necessity would of course cut this knot, and, in fact, the difficulty arose more from a conflict of interests than from any inability of the country to hear fresh burdens. He (Mr. Ellice) always thought that we were the great nation in the civilised world, least taxed in proportion to our means. But his right hon. Friend must set his house in order, as he desired the merchants and traders to set theirs; and he would probably contribute more in this way than in any other to the restoration of general credit and confidence. We had been engaged for one quarter of a century in rearing a vast artificial system on the falsest principles of paper credit and protection. For another quarter of a century we had been maintaining it in a state of transition to better and wiser principles; and, notwithstanding the vicious expedients that had been resorted to, and the checks which our industry had experienced in these revulsions, the national means and prosperity had constantly increased. The whole system was now to be exposed to the trial of the experiment of the natural and sounder principles—a vast undertaking—the success of which depended mainly on a sound and healthy system of finance. That would be a better security against a recurrence of these evils than many others that had been brought into more prominent importance in the present debate. Among other subjects referred to by his right hon. Friend in his able speech, he had alluded to the pressure on the Bank of England by provincial, and especially by Scotch banks. Certainly there had been ample proof both now and formerly of the danger and inconvenience of ill-conducted establishments of this description. They aggravated the danger always arising from competition in our extensive system of dealing with de- 556 posits. But surely there were some means of controlling and correcting excesses in all cases of banks of issue. If publication of transactions was rightly required from the Bank of England as the condition of exceptional privileges granted to her, why not impose the same conditions on all banks to which the privilege of issuing notes was given? It was reported in the streets, that one Scotch bank applying for aid, had six or seven millions of liabilities, four or five millions of deposits, and scarcely money or convertible securities, without re-discounting bills, to pay its engagements for a couple of days. Suppose this bank had been obliged to publish monthly, or even quarterly, the amount of its liabilities, public and private securities, and money, could this state of things have arisen without producing a check from its depositors, and jealous neighbours? And in referring to this part of the subject, he wished to be understood as not casting the least imputation on Scotch banks generally. Their success, and the entire confidence which the more considerable ones justly enjoyed in the country, was the result rather of admirable management by judicious, able, and sagacious men, than of the principles on which they were established. They had, however, large capitals, and understood the value of credit too well to abuse it. These banks were in similar difficulties to that of the Bank of England, under recent circumstances. They had ample means of accommodation for all their dependants, although it suited their convenience, or possibly their sense of the necessity of some check to irregular transactions, to throw their indiscreet neighbours on us for assistance. The only other point he wished to revert to with reference to past transactions, was the letter of his right hon. Friend the Chancellor of the Exchequer to the Governor and Deputy Governor of the Bank. He had already said he approved of the interference of the Government, and only regretted it had not been at an earlier period. It was also essential that the interference should not be to an extent involving a reaction on the exchanges, or the least risk to the convertibility of bank notes. But he could not approve of the condition required by the letter of raising the rate of interest to 8 per cent. When he said that, he did not mean that the Government ought not to have cautioned the Bank in the use of the discretion and latitude that had been given to them, or that 557 they should not have imposed on the Directors the responsibility of not making money sufficiently cheap to create an unfavourable exchange, nor should he have complained of the Bank imposing their own rate of interest for their purposes; but he thought there was much ground for the grievance felt in the country, and more especially by the smaller traders, with the additional tax thrown upon them by money lenders under the justification of what was called the Government rate of interest. The landed proprietor felt his share of the grievance. It was true the infliction had not been general. In the manufacturing town which he represented, for instance, the banks had not raised the interest to their usual customers beyond 5 per cent; but these exceptions made other people feel the rule more heavily. The rate of 8 per cent could only be a temporary rate for a temporary purpose, and therefore it would have been better left to the discretion of the Bank. His right hon. Friend, in his animadversions on incautious speculators caught in the gale, had observed, that there was so much the less excuse for them, as every body had foreseen the coming storm. That might be true in some instances, with great merchants, bankers, and money dealers—although it was not quite true with respect to his right hon. Friend himself, judging from his transactions with regard to the loan: but what did the little trader, following his ordinary occupation, and accustomed to the usual accommodation of his banker, know of the causes and premonitory symptoms of these revulsions in the money market? Care ought to be taken to shield him as much as was consistent with safety from the pressure of them. The present state of things could not continue without the most ruinous consequences. [Lord J. RUSSELL: It is over.] His noble Friend was sanguine in the anticipation. [Lord J. RUSSELL: I said only the 8 per cent was over.] He (Mr. Ellice) was sorry he had misunderstood his noble Friend. He was aware the Bank had reduced the rate of interest, and that it was to be reduced to-day to 6 per cent. That was still too high a rate for the ordinary transactions of the country. If they could not sift the causes of these fits of fever and ague, these rapid changes in the relative value of money and commodities, and devise means of mitigating, if they could not altogether prevent, these sudden revulsions in the mercantile transactions of the country, they might 558 seriously endanger the existence of the Government that laid the golden eggs. He had thorough confidence in the power and energy of the country, that it would pass through this trial, as it had passed through former ones, and that our losses and difficulties would be easily repaired. But we must relieve the springs of industry, and keep them free, by every effort in our power. He was the more inclined to doubt the soundness of the principle of a convertible paper currency, founded on a proportional basis of bullion in a central depot, that basis liable to be acted upon in the violent manner of which they had so much experience in the rapid flow and ebb of coin in the Bank on so many occasions since 1819—both from the reasons he had before stated, and from the fact that extensive monetary revulsions during that period, and indeed in antecedent periods, had been confined to England and America, the only two countries in which the system had been established. In other countries, in Europe, in France, Germany, Holland, and Russia, there had been the usual alternations of trade, dependent principally on good and bad harvests, but in no instance characterised by the violent revulsions which had been felt in England. Of course he did not intend to compare the mercantile transactions of these countries with ours; but there was something peculiar in our relative monetary condition, which required careful reconsideration. He wished to be understood as throwing out these observations rather to suggest inquiry, than as proposing to ground any new theory on them, or more especially to propose any nostrum as a remedy. He saw all the difficulty of the dilemma. The country was much more disposed to adopt expedients for extending paper money, even at the risk of its convertibility, than prepared to resort to probably the only complete security—a paper currency—the actual representative of marcs banco. He admitted the advantages of our present system, both with respect to economy and facility. He only hoped the Committee might be able to devise better guarantees and securities than now existed against constant derangement. It was in the hope of such a result that he supported the proposition of his right hon. Friend. He (Mr. Ellice) regretted that he could not agree in his right hon. Friend's opinion that the present condition of our monetary and banking system, even with the check provided by the Bill of 1844, was either safe or satis- 559 factory. It could not be so, while any part of such difficulties as the present could be justly imputed to it; and the whole subject, including the other considerations connected with the present crisis, ought to undergo a most careful revision, with a view to efficient amendment of our existing legislation. Whether that should be applied to the connexion between the Government and the Bank of England; to the regulation of the dealings of the Bank in stock and Exchequer-bills, as distinguished from the great object of their establishment and exclusive privileges, the credit and support of the trade of the country; to further publicity of the transactions of provincial, and Scotch and Irish Banks, so as to bring public watchfulness and opinion to bear upon them, as upon the operations of the Bank of England, or to any more disinterested superintendence of the general management of our credit money, than that of the Directors of the Bank, he would not pretend to say. Much more light had been thrown on the whole subject by our recent unfortunate experience; and he hoped that might guide the deliberations of the Committee to some practical measures to prevent the recurrence of the monstrous evils under which the country was now labouring, and which the Bill of 1844 had been confessedly inefficient to counteract or to remedy.
§ MR. NEWDEGATEcordially rejoiced at the very able speech which had just fallen from the right hon. Member for Coventry. It appeared to him that the right hon. Gentleman was only pursuing the consistent course which had ever marked his conduct on this subject. He had bowed to the decision of Parliament in favour of the Bill of 1819, after resisting that measure and the system founded upon it as long as he could; and he (Mr. Newdegate) believed that the right hon. Member would end by bowing it out. In the course of his speech the right hon. Gentleman had alluded to the conduct of the Directors in throwing a quantity of stock on the market almost immediately after the contraction of the loan of last year. The right hon. Gentleman said, that reports were prevalent that the Bank had, immediately after the loan was contracted, gone into the market to sell securities; and he severely censured the Directors for having done so. Now he (Mr. Newdegate) thought that, in dealing with this subject, we ought to be just to those who administered the affairs of the Bank, 560 and to recollect that the Act of 1844 placed the Bank Directors in a position, in order to maintain which, they must sell securities. For the purpose of proving the truth of what he now stated, he would quote the evidence of Mr. S. J. Loyd. It applied to the state of the Bank in April, 1838. The evidence was given before the Bank Committee in July, 1840:—
Then, to the Bank, what difference does it make whether bullion was extracted by notes out in circulation, or by notes taken from within their walls by deposits?The difference appears to me to be this, if bullion is drawn out of the Bank by means of bank notes paid into the Bank, the simple duty of the Bank is to cancel the notes so paid in. If the bullion is drawn out of the Bank by the demands of depositors, the duty of the Bank is to sell securities against those demands, and to cancel the notes which she obtains by such sale of securities.Does it not, however, appear that 6,283,0001. of the deposits were equally active in extracting bullion to that amount, as any portion of the circulation which was applied to that purpose?There is no doubt of this feet, that whilst the union of banking and issue exists with regard to the Bank of England, she is in possession of a power which enables her to meet the demand of her depositors by a diminution of her bullion, unaccompanied by a corresponding contraction of her circulation. I can only say that when she does so, if it is to an extent beyond the amount of bullion which she holds as a reserve in her Banking Bill, she does so improperly; in consequence of the union of the two functions, an abuse in the management of the circulation takes place.This was the prescription of the author of the Act of 1844, and the foundation of the present fictitious division of the departments of the Bank; and he need not refer to the debates on the introduction of the measure itself to prove that this prescription was enforced by the Act of 1844. He, therefore, trusted they would not throw undue blame on the Bank Directors, who had merely complied with the provisions of an enactment which had been forced upon them, for they were compelled to sell securities in order to support the Act of 1844 at a time of difficulty. The right hon. Gentleman the Chancellor of the Exchequer had alluded to the amount which had been expended in railways, and stated that for the year ending October 10, 1846, the expenditure amounted to 21,336,000l. [The CHANCELLOR of the EXCHEQUER: I said 26,000,000l. for the last half of 1846, and 25,000,000l. for the first half of 1847.] To which was to be added 33,000,000l. expenditure for corn, making in all about 70,000,000l.; but the 561 Chancellor of the Exchequer had not deducted the one-fifth from the expenditure on railways, although he subsequently admitted that proportion was not taken out of circulation, being merely a transfer of money from hand to hand in payment for the land taken and legal expenses incurred by railway companies. This would reduce the sum expended on railways and for corn to something more than 60,000,0000l.; but he (Mr. Newdegate) was prepared to dispute altogether the analogous effect upon the resources of the country, produced by the expenditure on railways and the payment for foreign corn. The expenditure of railways was purely domestic; the money so spent did not diminish the capital of the country, but was merely employed in labour, transferred through the hands of the manufacturers, the artisans, the labourers, and the shopkeepers of this country, back to the banks, and there remained. The expenditure in payment for foreign corn was totally different: that was a positive abstraction of money from this country; and he admitted that the pressure was produced by the payment of 33,000,000l. for that purpose, since it caused a grievous and inevitable abstraction of money and capital from this country. He did not mean to deny that this large expenditure upon railways and in the purchase of corn was a grievous strain upon the energies of this country; but what he denied was, that the expenditure upon railways was at all comparable in the amount of injury it inflicted, to the evils produced by other causes. Of the money invested in railways, far the greater part was employed in productive labour. The country was not by it deprived of capital. They did not bury their gold under the railways. Why, good God, Sir (said the hon. Gentleman), we might as well say, of the expense incurred in building this House—that the sovereigns would be found among the mortar, which went into the pockets of labourers, artisans, and manufacturers. In the whole statement of the right hon. Gentleman, there was, he thought, too much stress laid upon this expenditure, which, at the most, did not amount to more than 60,000,000l. in a year, half of that sum being for a purely domestic purpose, and caused no positive abstraction of capital. He could not help comparing this expenditure with that which occurred at the period of the war. Let it be borne in mind that the population at that time was one-third less than at present. The reve- 562 nue then amounted to 72,000,000l., from which deducting nearly 20 per cent for the depreciation in paper money which occured during the last three years of the war, gave 57,500,000l. Then deduct 20 percent from the average of the annual loan of 50,000,000l., and they had 40,000,000l. in our money. The population then was 18,000,000; it was now 28,000,000. The trade and commerce were not half so great as it was now; and yet, with all these disadvantages, the country triumphed, and sprung up during the severest trials whilst at present she almost sunk under an expenditure of 60,000,000l., nearly half of which was for purposes purely domestic, and caused no absolute abstraction of capital. Allusion had been made to the period of 1815 and 1816, and the financial embarrassments which had then occurred, by the right hon. Baronet the Member for Tamworth, in his speech on this subject last May; and he argued that these embarrassments occurred under the currency system existing previous to 1819. But was this a fair argument? That period was not marked by the continuance of the old system, but was the commencement of our present system; that was the period at which our free trade and restrictive monetary policy had, according to the right hon. Baronet the Member for Ripon, commenced. It was then that the trade of the world opened to us. By this change more than 200 banks were broken; and the banks which remained had contracted their issues by one half, according to the evidence of Mr. Loyd, senior, in order to prepare for the system of 1819. He did not mean to say that the condition of the country during the war was a sound one. He would not wish to see the country return to such a system; but when they compared this period with that, let them not attribute the failure of 1815 and 1816 to the mode of currency which had previously prevailed. Let them consider how far far free trade had relation to the present depression. He knew hon. Gentlemen opposite would say free trade had nothing to do with this crisis. Those Gentlemen said, "You bigoted Protectionists conceive all the evils of the country to arise from free trade, and you do not take into account the large railway expenditure, and the large sums sent abroad for the purchase of corn." He had never argued that the large importations of corn during the late scarcity were to be attributed to free trade, because under any system they must 563 have imported largely; but what he wished to call their attention to was the large exportation of bullion, and the evils which it produced. They supported the present free-trade system because they expected that, by the purchase of foreign corn, our manufacturers would advantageously dispose of their goods in exchange, so that, after all, the money would be kept at home. Those people said, the manufacturers of the United States would buy our goods; but he wished to see a calculation made, showing the proportion between the goods exported and the corn imported; and he would also like to know upon what terms the Americans had consented to make such purchase. Why, the fact was, those people had bought a certain, comparatively small, quantity of goods at a ruinously low price; and we could hardly congratulate ourselves upon selling at a loss, whilst they had taken a very great amount of our bullion. Our total exports were, in declared value, for the first nine months of 1845,41,700,000l.; inl846,40,000,000l.; in 1847, 39,000,000l.; thus showing a falling off of more than 2,500,000l. between 1845 and 1847. Those figures had been quoted by the noble Lord at the head of the Government. But did they furnish a picture of the state of things at the present moment? No such thing; for the state of the exports within the last few months was even worse than previously:—As far as the transactions of the month are concerned, they exhibit a very unfavourable comparison with those of the corresponding month of last year, showing a reduction of upwards of 800,000l., which arises chiefly on cotton manufactures and yarn, linen manufactures and yarn, and woollen manufactures. This reduction upon the export trade of the month has reduced the aggregate amount of the exports, during the nine months under review in the present year, somewhat below that of 1846, and considerably below that of 1845. The exports of the nine months ending the 10th of October thus compare with the two preceding years:—Declared Value of Exports of British and Irish Produce for the nine months ending 10th October 1845, 1846, and 1847:—For the last month, ending October the 10th, as compared with the similar periods in the two preceding years, the comparison is as follows:—
1845. 1846. 1847. 41,732,148l. 40,008,874l. 39,975,207l." Exports—September 5 to October 10:—Was not this clear evidence that the balance of trade not only was against 564 England, but that it was become more so? He (Mr. Newdegate) would now say a few words with respect to imports. They had enormously increased, not solely in consequence of the necessity for the staple of life, corn, but the importation of articles of secondary necessity, which must be attributed to the operation of free-trade measures, had enormously increased. He alluded particularly to the articles of butter, cheese, cocoa, and coffee, of which the returns were as follows:—
1845. 1846. 1847. 5,323,553l. 5,477,389l. 4,665,409l.
1845. 1846. 1847. Butter, cwt. 189,056 177,165 243,140 Cheese, cwt. 183,891 216,191 243,601 Cocoa lb. 3,016,301 1,938,669 3,764,353 Coffee lb. 32,166,932 35,099,814 35,769,747 He would next allude to sugar and tea, of which the following were the returns:—
Less in 1846 than 1845. Increase in 1847 over 1845. Butter, cwt. 11,891 53,984 Cheese, cwt. 32,300 incr. 59,710 Cocoa lb. 1,077,632 748,052 Coffee lb. 2,932,882 incr. 3,602,815 Now, the statement he had made with respect to these imports, referred to the quantities only; but he would give the value at the present current prices of the increase upon the two last articles:—
1845. 1846. 1847. Sugar, cwt. 4,413,969 4,469,772 6,510,693 Tea lb. 36,825,461 41,432,794 44,912,880 So that the value of these articles alone showed that we had expended nearly 5,000,000l. more upon them in the nine months ending October, 1847, than in the nine months ending October, 1845; but had we succeeded in increasing the importation of all articles alike? No; the decrease in some articles of luxury, such as wine, showed that it was in vain to calculate upon forming a taste for luxuries with a view to increased revenue, by the diminution of duty:—
Inc. of 1846 over 1845. Inc. of 1847 over 1845. Sugar, cwt. 55,803 2,096,724 £4,193,448 Tea lb. 4,607,278 8,087,419 803,741 £4,997,189
1845. 1846. 1847. Wine, gallons 5,839,679 5,410,863 5,599,322 In this case it was plain that, although the duty was decreased, they failed to increase the quantity imported, and, therefore, it was nothing more or leas than a sacrifice 565 of revenue. So much for free trade. He did not wish to weary the House with detoils, but thought it best to state facts and figures. It appeared, then, that under tibia boasted free-trade system the sober reality was, that the exports had fallen off 1,500,000l. in the last nine months, as compared with 1845, and nearly 1,000,000l. within the last month; and would they, with such evidence before them, continue to support so restrictive a currency? The country was, he regretted to say, daily becoming worse in many respects; for thousands of men who had, up to this time, obtained employment upon railways, had been lately disbanded, and would be a burden upon the rates. But, then, how did our monetary system stand as regarded foreign States? The Russian Government, taking advantage of our depression, had sent to purchase stock, and expended 300,000l. or 400,000l. worth of bullion; but was not this rather a delicate affair? this was only one instalment of a larger sum. He asked the House to consider the position in which this country might be placed, supposing the Russian Government to have purchased 2,000,000l. or 3,000,000l. of our securities, now that it was provided by the Act of 1844, that the Bank of England must, under certain contingencies, throw securities into the market? Russia bought up at a low price and afterwards, being anxious, perhaps, to embarrass us in our monetary concerns, forced the securities purchased by her into the market, also at the very moment, perhaps, when the Government and the Bank were themselves obliged to sell. Why, such a stroke of policy would more effectually control us than any foreign war. The Chancellor of the Exchequer, in the returns which he read to the House, had not seemed much disposed to enlighten the House as to what the amount of circulation generally in the country was, but fixed our attention almost altogether on the Bank of England. He said little of the banks of Scotland, or Ireland. He did not give the circulation of the United Kingdom. [The CHANCELLOR of the EXCHEQUER was understood to say that he had stated the amount of circulation in England, Scotland, and Ireland, at a certain period.] He (Mr. Newdegate) would, however, read a few figures to the House, showing the comparative statement of the circulation of the Bank of England and the United Kingdom for four months ending November 7, 1847, and the same periods in 1846:— 566
Decrease in Decrease in 1846 to 1845 1847 to 1845. Wine, gallons 428,816 240,347 But let him now show to the House the contraction which the circulation of this country really experienced. These were the figures:—
BANK OF ENGLAND. Aug. 14. Sept. 11. Oct. 9. Nov. 6. 1846 £20,603,010 20,280,558 20,282,897 21,239,674 1847 18,784,890 18,102,589 18,340,832 20,286,714 Decrease £1,818,120 2,177,969 1,942,065 1,012,960 Now, this showed that the circulation of the Bank of England was about one-seventh more than the circulation of the other banks in the United Kingdom, and that the contraction of two millions of the Bank of England's circulation produced a contraction of more than two millions in the circulation of the other banks, and that the action of the Bills of 1844–5, in producing contraction of circulation, was greater upon the provincial circulation than upon the circulation of the Bank of England. But he would beg the attention of the House to another fact. Under the Act of 1844, the Bank was empowered to trade in discount with their reserves, arising from Government and other deposits. With the capital which appeared in the Bank returns under the head 'Notes,' the Bank went into the money market, not with their own capital, but a free gift made to them, under the operation of the Bill of 1844. This cost the Bank nothing, and, therefore, of course, the Bank could afford to undersell other discount houses. The other securities, as they were called, showed to what extent the Bank could afford to reduce its rate of discount, and had increased its discount business. In the month of September, 1844, these amounted to 8,645,214l.; in 1845, they amounted to 12,951,080l.; in 1846, they amounted to 12,982,631l.; and in 1847, they amounted to 18,514,805l.. The House would immediately see the important bearing of these facts, and that the framers of the Act of 1844 had, by its provisions, secured that there should be a contraction of credit previous to, or at least simultaneously with, a contraction of the circulation. He should be surprised indeed if the right hon. the Chancellor of the Exchequer were to deny that this was the case, or that the amount of accommodation thus afforded by the Bank must necessarily vary with the amount of notes kept in re- 567 serve, after what occurred last spring; or that this was according to the intention of the Act of 1844. [The CHANCELLOR of the EXCHEQUER: I do deny it.] Perhaps that might not be the intention of the framers of the Bill of 1844, but it could not be denied that that was the effect. He was glad to find, however, that the right hon. Gentleman was not prepared to carry out the Bill at all hazards, and that in that respect he was at variance with the right hon. Baronet the Member for Tamworth, who said in the course of last spring—such was then his confidence in the operation of this Act: he said—
UNITED KINGDOM. Aug. 14. Sept. 11. Oct. 9. Nov. 6. 1846 £37,879,788 37,817,416 39,155,523 40,954,591 1847 34,587,487 33,778,482 34,705,245 36,736,205 Decrease £3,292,30 4,038,934 4,450,278 4,218,386 Let the Bank feel that its own position is in danger, and the convertibility of its notes is doubtful, then the Bank will have to consult not alone its own security, for that would be a subordinate consideration, but the permanent welfare of the country by securing at any hazard the great object of the convertibility of paper into gold.But perhaps they might be told that this convertibility was never in danger under the Act of 1844. Then let the country understand that it is to retain double the amount of bullion required previous to 1844, in order to satisfy the fears of the bullionists that convertibility, which had never failed sincel819, might be further secured. However, he was glad to find that there was that point of difference between the two right hon. Baronets. He would now advert to another circumstance which, he thought, had been much undervalued. It was this—that on the 23rd of October last, there was imminent danger, either that the Bank of England should violate its charter, or that it must stop payment altogether. What were the circumstances of the case? The notes kept in reserve in the Bank amounted to 1,176,000l., and, unless rumour were very much mistaken, which he had reason to know it was not, such was the pressure on the money market that various influential bankers waited upon the Government, and intimated that unless some relief were given, they must withdraw their deposits. These private deposits amounted to 8,000,000l. sterling; and if even 3,000,000l. had been withdrawn, he would ask what alternative was there for the Bank between the violation of the Act of 1844 or stopping payment? He might be told that they could obtain money by selling their securities; but, under the circumstances that had then arisen, he need scarcely ask what their value would be, or whether during a panic it was possible to sell them. In fine, all he had to urge 568 upon the Government was this, that the present condition of the country should be considered—that, with the prospect of a long investigation before them, they should not tamper with the best interests of the country, by maintaining a law by which it was certain that the commercial pressure was increased, so long as the balance of trade was against us, and there was every reason to believe that it would not be immediately favourable. A law which had endangered the solvency of the Bank of England—a law which had already most unjustly made merchants sacrifice their property. He was told—and he had high authority for stating it—that the commercial losses in Liverpool this year alone amounted to 2,000,000 sterling. This law had produced unnatural cheapness. It had reduced the price of cotton 1d. per 1b. less than it was at this time last year, in spite of a vastly diminished supply owing to a bad crop; and with such facts staring them in the face, could they congratulate the country on the pressure which had been produced? He had stated to the House the other night the number of failures which had taken place in the country. They then amounted to 117 first-rate houses which had stopped payment, and now they amounted to 143. Then look at the number of bankruptcies. The bankruptcies during the last four months amounted to 557, while the number in the corresponding months of last year amounted only to 406—thus showing an increase of 171. He trusted, in the face of these facts, that no dogmatic adherence to a principle which had already proved impracticable, would prevent the Government from agreeing to a relaxation of this offensive and restrictive law. The right hon. the Chancellor of the Exchequer said, in 1846, that no power of relaxation ought to be left in the hands of the Government; but it appeared that they were now obliged to depart from its regulations; and he would ask whether it was not more respectful to the Legislature that it should relax the laws which itself had made, rather than that the circumstances of the country should drive the Government to relax them? What was the opinion of the right hon. Baronet the Member for Tamworth on the question whether the Government ought by the law to be permitted to exercise such a power? He said—We declined to accept that power, not from any unwillingness to undertake the responsibility, but because we thought that Parliament, and Par- 569 liament alone, ought to exercise the authority to relax that which Parliament had enacted. After the fullest consideration, we felt that it was a power which Government ought not to assume.He believed the majority of the House had confidence in Her Majesty's Government; but did they mean to leave practically in their hands such a power as this? For be it observed that during the recess the power rested solely with the Government; and through the exercise of it the Government possessed the power of altering the monetary laws of the country: thereby they had the power of changing the value of every man's property in the kingdom. He was not jealous of any legitimate power being placed in the hands of the Government; but he must say that this was a power which was unfit, and, more, which was unprecedented. It had been contended that, as no actual violation of the law had taken place in consequence of the letter of the 25th of October, no indemnity was needed. But as the letter was contrary to the law, and as it was impossible that the letter and the law could have both been in force at the same time, he must say that the argument, that, because no increase of the circulation had taken place, therefore the law had not been violated, was a pretence too flimsy to impose upon any one. The letter of the Government was declared both by the Government and the Bank to have been in force till it was cancelled: we had experienced relief from it; and it was directly contrary to the Act of 1844—therefore, whilst the letter of the Government was in force, the law had been of no effect. He, for one, must say, that the House would show little regard to its own privileges if it did not require Her Majesty's Government to receive what they were willing to offer freely—an Act of Indemnity for having contravened the law and the decisions of Parliament. He trusted that they would assert this right, and that they would further insist that this weight should be taken from the springs of industry, as had been wisely suggested by the right hon. Member for Coventry.
§ MR. MITCHELLsaid, the hon. Member who had just sat down had argued that the pressure in the country was in no degree owing to the expenditure on railways, which, he said, was retained within the country; and yet soon afterwards he went on to quote the great increase in the imports of butter, cheese, &c, as one element in the distress, because they had 570 been paid for in bullion and not in manufactures. Now, the argument of the hon. Gentleman made against his own position, because these increased imports of secondary articles of food had been caused by the demand for them by railway labourers and others, who had been paid an increased rate of wages; so that whatever derangement of the currency could be traced to these importations might be directly attributed to the railways. This was still further proved by the hon. Gentleman's quotation, that, while the articles consumed by the labouring classes had so enormously increased, the importation of wine, which was used by the rich, had not increased at all. He, for one, was not disposed to attribute much of the present distress to the railways; he attributed it rather to the enormous losses sustained by this country in the bad harvests, aggravated, he must say, by the unwise policy of the Government at the beginning of last Session. He did not wish to speak lightly of such a calamity as befell them last year; but he must say that the archiepiscopal letter, the proclamation of a day of fasting, the notice that the royal household were to use coarser bread—all these were, as it were, advertising our wants to the whole world, who accordingly raised their prices upon us, and the consequence was that we were called upon to pay 10 per cent for the corn more than we needed to have done. He did not mean to say that we had bought too much corn, but that we had paid too high a price for it. With regard to the complaint that we had had to pay for this corn in gold instead of in manufactures, it ought to be remembered that there were only two parts of the world from which corn could be procured, the extreme east of Russia and the United States; and it was not to be expected that in such a sudden emergency either the Cossacks and Calmucks of the one country, or the backwoodsmen of the other, could all at once increase their consumption of our manufactures. With regard to the railway speculation, there was one circumstance that had always appeared extraordinary to him—he alluded to the speech of the right hon. Baronet the Member for Tamworth on turning the first sod of the Trent Valley line. At a time of excessive speculation, it had the effect of exciting speculation still further, and directing it to one of the worst features of the railway system, the making of straight lines. At the same time, he admitted 571 that if Government had attempted to restrict the railway speculation in 1846, they would only have driven the capital of the country into foreign speculations. But he was not so clear that the same effect would have followed in 1847. The tide of speculation was then on the turn, and any check on the part of Government would have done much good. The hon. Member for Stafford had referred to the monetary system of Russia as being a paper one. But he thought there was some mistake in this; for though there no doubt was a paper circulation in Russia, yet it was notorious that it was supported on an enormous substratum of bullion, which was lying in the Government cellars of St. Petersburgh. He thought the hon. Member for Warwickshire was also mistaken in his impressions regarding the investments of the Emperor of Russia in our funds. It was notorious that the Emperor had long invested capital in English securities, and since his agent here failed, which took place two years ago, he had chosen the Bank of England as his depositary. But the idea of the withdrawal of his investments deranging the affairs of this country, was too weak to impose upon any man. With reference to the Bill of 1844, there was one circumstance which he did not think had been sufficiently alluded to—he meant the enormous check which it had imposed upon the circulation of country hanks. If they had been allowed to issue their notes without the restrictions of this Bill, the country would have been inundated with them on the security of railways. From that evil they had been preserved by the operation of this Bill. He must say he did not see the use of the appointment of a Government officer to the Bank. If there was such a necessity, he thought the Chancellor of the Exchequer himself ought to be so appointed, as no Government officer could give better advice to the Bank than the Financial Minister of the country. He agreed with the right hon. Gentleman (the Chancellor of the Exchequer) that every class of the mercantile community had been guilty of over-trading within the last few years, and he did not know what provision of legislation could correct that; but it must be left to the operation of such severe checks as they had suffered during the present season.
MR. HENRY DRUMMONDwas surprised that a person of such intelligence and ability as the right hon. Gentleman who spoke in the early part of the debate, 572 should conceive it possible that any one act or the whole of the acts of any one man, could have produced that complication of things in which they now found themselves. Truly, the right hon. Baronet the Member for Tamworth must be a most wonderful man, and his Bill a most wonderful Bill, if he or it could have done one-twentieth part of the things which had been attributed to both. It was admitted on all hands that they were in the midst of a complication of misfortunes. He did not know what the meaning of the word "panic" was if it did not mean that people were become alarmed at the consequences of their own folly. The right hon. Gentleman the Member for Coventry had showed most clearly that many things had contributed to produce that panic. Unquestionably the famine in Ireland had created a large demand for corn, and so far as that demand was extra the demand in former years, and not paid for in manufactures, it was paid for in bullion. If that gold were lying in our coffers, then it went away without affecting prices; but if it was not, but was in circulation, or had to be obtained, then of course the importation of corn contracted the currency, and caused prices to fall. With respect to the repeal of the corn laws, he was as much a dissentient from that measure as anybody; but he would oppose it in a fair stand-up fight, and not take advantage of a popular clamour to raise a cry against it that it did not deserve. He, however, did not believe that it had anything whatsoever to do with their present circumstances. With regard to railways, he confessed he considered Government was much to blame; not the present Government only, but the last Government also. Because, when they were warned by their own Board—when Lord Dalhousie had made his report upon the subject, and called their attention to the magnitude of these undertakings—unquestionably they ought to have done something to check the railway mania that was then raging in the country. But private gentlemen, as well as the Government, were to blame for sanctioning the speculations that came before them. It was evident that many of the schemes were got up by attorneys, surveyors, and engineers, merely as the means of making money. They obtained the sanction of gentlemen to those schemes, who allowed their names to be used as directors, without any inquiry into the merits of the plans proposed. This induced tradesmen and 573 men of small capital, who put confidence in those names, to subscribe to undertakings they knew nothing about. The way in which those men were injured was by their taking the money which they obtained out of the profits of their business, and which, in ordinary times, would be invested in such business, and purchasing shares in railways for the sake of a greater amount of interest. One great evil resulting from this had been, the raising the interest on mortgages throughout the country; and he did believe that it would not end until they had witnessed a great sacrifice of landed property. Railroads were a description of work which could not stop. Railroads must be finished. Supposing a manufacturer had a mill burnt down, and he spent 100,000l. in rebuilding the mill, but found that it required 20,000l. more to finish the work, this 20,000l. he must have, for the 100,000l. he had already spent, was useless until the mill was finished. The railroads were in the same condition. They must be finished. They could not make any return for the capital already expended until they were. The only difference between a mill and a railroad was, that a mill belonged to a private individual, or to a few individuals, whereas a railroad was the property equally of every interest in the country. With respect to the right hon. Baronet's Bill of 1844, he remembered that when it was first brought forward, he supposed it was to be the great precursor of a measure for putting an end to that connexion between the Government and the Bank which he thought had subsisted already too long. One provision, however, of that measure he had always considered exceedingly objectionable—he meant the weekly publication of the Bank balances. He was quite sure that no persons but the Bank Directors themselves were judges whether these balances were favourable or not. But everybody who saw the weekly publication thought they were judges, and judged accordingly, and generally judged wrong. He might observe that although he was for many years conected with a well-known banking establishment in London, yet for the last fifteen years he had ceased to have direction of it; therefore any information he might possess on this subject was no more than what any other gentleman might obtain. But it was quite obvious that the mode of conducting the business of the Bank now was quite different from what it was some years ago. The right 574 hon. Gentleman the Member for Coventry had gone into that subject; and he would not on this occasion pursue the point any further. I come now (said the hon. Gentleman) to the question of over-trading; and it is not for the sake of blaming any party, either those who have failed, or those who have stood, but it is for the sake of pointing out to the House what is the real basis of this boasted modern system of trading. In olden times, when the argosies went out from Venice and Genoa, they carried goods to exchange for bullion, or, vice versâ, they carried out bullion to pay for goods. There was no such thing as trading by means of paper, nor was that system adopted until this nation chose to discard their legitimate kings, and bring over a Dutchman. It was then that you entered upon the mischievous course which has brought you to your present pass. The individual the most judicious, most experienced, and most cautious in all matters connected with mercantile concerns, is reported to have lately made a statement which sets forth the nature of this paper system. I allude to Lord Ashburton. That noble Lord is reported to have said, that—
Capital is a connexion of capital and credit, and when some wise people talk of solid capital apart from credit, they have no knowledge of the commerce either of this country or of any other part of the world. If a man has a capital of 10,000l. or 20,000l., he may legitimately be doing business to three times that amount. All the manufactures, and the whole trade of the country, from one end to the other, are carried on upon that plan.If this be a true exposition of the system, then all I have to say is, that two-thirds of the trade of the country is perfectly rotten. I beg to ask what is credit? Credit is belief. You believe somebody. What do you believe? Do you believe that this merchant or that man has got 30,000l No, you do not, because you know that he has only got 10,000l. Do you believe that another merchant or another man has got 100,000l.? No, you do not, because you know he has only got 30,000l. It appears to me that what you call panic, or want of credit, is only a symptom that men are coming to their senses, and that they have determined no longer to give a man credit for what they know he does not possess. Your system of credit is one which can never stand long. It is utterly impossible that it can be a sound principle, or one that is based in truth. This fallacious system of trade, which, after all, is nothing more than a 575 man trying to make others believe that he is three times richer than he really is, runs through the whole system of modern society. As in trade, so in his private affairs, a man, to keep up a false reputation, lives at a rate three times beyond his means. It does not become me to read a homily to this House; but I must say, that so much respect as the possession of money commands in this country is most discreditable to the age in which we live. It is perfectly astonishing to know that a man is not esteemed so much for his moral worth as he is according to the wealth which he possesses. So long as this morbid feeling shall exist in the country, so long will this system of false credit continue. But I will turn from that subject, and consider the case of the manufactures, and the manner in which they are affected by the great mechanical skill that pervades the country. Should any mill be burnt down to-day, it will be replaced by one so far superior that the manufactured article will become much cheaper. Now, observe the consequence. Your whole system is to make things cheap; the consequence is, that a piece of goods which is sold on the 1st of December, 1847, at a certain price, will be sold on the 1st of December, 1848, at a much lower price. Is it not quite obvious, then, that any man who bought goods this year, must sell them at a much lower price next year; and that he must be a loser unless he sells the goods instantly? This process runs through every branch of manufactures. I often see handbills placarded in shops, stating that the goods are selling below prime cost. It is supposed that these bills are a mere trap to take in the unwary; but I know them to be no such things. I know the articles are selling under prime cost, for I have many times witnessed it. It has been said that there always have been seasons of depression followed by seasons of prosperity; that there has always been a succession of gloom and sunshine in the commercial world—in short, that it is in the nature of things that it should be so. But how comes it to pass that these seasons of gloom and depression increase both in frequency and intensity? It is because you have changed the whole relative condition of society. In former times land was everything, and manufactures nothing, or comparatively so. A distinction is found in your common law between that property which is real and that which is personal, because your common law is common sense. That which is 576 permanent has an advantage over and beyond that which is transitory and ephemeral. But what has been your system of late years? To cry down the real, and exalt the personal; to put down wool, and elevate cotton; to depress the land-lord, and raise up the cotton-lord. You have cheapened your goods, and taken from your customers the means of buying them. You have made the towns rule the land; and at length you have found a man fitted for the purpose—a manufacturer of consummate eloquence, prudence, and judgment, who knows how to make his words tell, and who knows how to act as well as to talk, and he has come forward and said the towns shall rule the country. The towns do rule the country; and much good may it do them! No longer shall the Chancellor of the Exchequer be able to repose on a bed of roses. You have repealed the corn laws, and now you shall witness alternations of glut and scarcity. Your new commercial system shall lead to the amassing of colossal fortunes amidst starving millions. You shall have operatives lording it over you; at one time burning mills, and at another sacking palaces. The enlightened constituencies in towns have found out that this House is precisely the place, of all others, in which Ministers have no business to be. True, you may point to London, and ask, "Have they not returned the First Lord of the Treasury?" Yes! but they have detracted somewhat from the grace of the boon by coupling him to a Jew. And the constituency par excellence—the citizens of enlightened modern Athens—found out that their modern Demosthenes was not worthy of a seat in the House, and they discarded the man most fitted to adorn this assembly, and sent in his place a Gentleman to teach us how to make paper.
§ MR. MACGREGORsaid, that he would have abstained from obtruding himself on the attention of the House, were it not that, as the representative of a great commercial constitnency, he felt called upon, when the subject of commercial distress was under consideration, to address a few observations to the House. His right hon. Friend the Chancellor of the Exchequer had stated with great ability the causes of the commercial distress which had visited the country, and although he agreed with his right hon. Friend in attributing the distress to those causes, he differed from him as to the degree to which some of the causes had operated. He conceived that 577 the deficient harvest and the loss of the potato crop was the principal cause of the distress which prevailed. With respect to railways, although Parliament had passed a much greater number of Railway Bills than he thought it was wise to do, he did not attribute much of the distress to investments in railways; for, during the period of unparalleled scarcity which had recently prevailed, he believed that the employment afforded by railways had, to a great extent, relieved the distress of the country. Nor did he attribute the distress to the Bank Charter Act of 1844, although he thought that Act was defective, and believed that it would be productive of so much inconvenience that Parliament would be obliged to remedy its defects. It was his opinion that we should never have a currency not convertible into gold; but, at the same time, he conceived that the restrictions imposed by the Bank Charter Act of 1844 constituted, particularly as regarded Scotland, a grievance, and must necessarily cause much inconvenience, and some commercial distress. It was a matter of regret to him that his right hon. Friend the Chancellor of the Exchequer referred to the Scotch banking system, or rather the joint-stock banks of that country, in terms which were calculated to create an erroneous impression respecting those establishments. He believed that to the system of Scotch banking, coupled with the economy and industry of the people, the general prosperity of that country, and the great improvements made in manufactures and agriculture, must be attributed. The best test of the merits of the Scotch banks was to be found in the small number of failures which had taken place, and also in the fact that of the establishments which had failed nearly all had paid in full their obligations to the public. He begged leave to read a passage from Mr. M'Culloch's Statistics of the British Empire, on the subject of Scotch banks:—
Owing partly to the superior stability derived from their extensive proprietary, but more perhaps to the less risk attending the business of banking in Scotland, bankruptcies have been very rare among Scotch banks. They have long enjoyed the unlimited confidence of the public, and from their receiving small sums (10l.) as deposits, and paying interest upon them at about 1 per cent below the market rate, they have contributed much to diffuse a spirit of economy, and to increase accumulation. One pound notes were issued by the Bank of Scotland in 1704, and their issue has been thence continued to the present day; the Act prohibiting their circulation in England not having been extended to Scotland. For 578 many years past very little gold coin has been seen in Scotland. The Scotch banks make their advances partly by discount of bills, and partly by what are called cash credits. The latter is a very convenient method of issue. A cash account is a credit given by the bank to an individual drawing for it, wholly or partially, as he pleases, replacing it in the same way—being charged interest only only on the portion he withdraws.A little pamphlet written in 1734 by Patrick Lindsay, then Lord Provost of Edinburgh, gives an account of the condition of Scotland previously to the establishment of banks in that country. Mr. Lindsay says—We were then strangers to trade. War was our trade, and military discipline our profession and sole study. When we had peace at home our gentlemen and persons of quality went abroad in quest of foreign adventures, and carried with them numbers of the common people as soldiers and troops for foreign service. Many of them were engaged on both sides in these wars in the Low Countries.No country had ever developed its resources so extensively and so advantageously as Scotland had since the Royal Bank was established, in 1727. No country of equal population had made greater improvements in agriculture and manufactures. It would be unjust, in referring to the progress which Scotland had made, to withhold all allusion to the excellence which she had attained in naval architecture, particularly in the department of steam vessels. The admirable steamers which run between Liverpool and Boston and New York were all built in the Clyde; and it was not going too far to assert, that better vessels than those constructed in Scotland, whether for the purpose of war or commerce, never ware launched from the dockyards of this country. All this had taken place under the Scotch system of banking; and therefore he trusted that no attempt would be made to interfere rashly with a system which had produced such beneficial results. Let it be understood that he did not wish to see a system of currency in Scotland which should not be convertible into gold; all he maintained was, that the Scotch banks were adapted to the wants of the country in which they were established, and answered every purpose which was required from them.
§ MR. SANDARSSir, nothing but a paramount sense of duty to my constituents, and to that order of British merchants to which I belong, would have induced me to have risen on the present occasion to address the House. Sir. I claim the indulgence of the House, not only as a new Member, but still more as having just 579 passed through the fiery furnace of affliction from a severe domestic bereavement. Sir, I have heard during the present debate, a variety of opinions given as to the cause of the mercantile distress, and the monetary difficulties under which we have been and still are suffering; also almost as many remedies proposed as there are hon. Gentlemen who have spoken on the subject; and perhaps, Sir, before I sit down, I may add another to that number. The right hon. Gentleman the Member for Coventry attributed much of the distress to the transition state through which we were passing, from protection to free trade, aggravated by railways and the Currency Bill of 1844. The hon. Member for Stafford attributed it entirely to the Currency Bill of 1844; whilst my hon. Friend the Mover of the Address laid nearly all the blame on railway expenditure. The right hon. Baronet the Chancellor of the Exchequer, though he did not go quite so far, yet he attributed much of our monetary difficulties to the same cause; other hon. Gentlemen had blamed free trade exclusively for all our disasters. Sir, I differ from all these opinions, and will shortly give my reasons. I shall first take the negative side of the question, and state to the House what I believe are not the causes of this distress. The right hon. Baronet the Chancellor of the Exchequer enumerates in the last seven years some 110,000,000l. which have been expended in railways, leaving some 130,000,000l. to be raised the next three years. Sir, I do not attempt to justify Parliament in granting so many railways in three years. I think hon. Members who passed these Bills have incurred a deep responsibility in granting powers to make lines in some five years, which ought to have extended over at least twenty years—and in turning a deaf ear to the able reports and judicious advice of the Board of Trade. But, Sir, what I wish to show is this—that railways are not the chief cause, but a mere rivulet in comparison with the mighty stream of commercial embarrassment which has well nigh overwhelmed us. I wish also to show, Sir, that railways do not impoverish the country—they do not take gold out of the country—they do not force the exchanges against us, nor do they make "floating capital fixed," nationally speaking, though they may individually. For instance, suppose I sink 50,000l. in constructing railways, one portion of that goes for land; another for iron; another, and by no means a small 580 sum, to the lawyers and Parliament for procuring the Bill; and a still larger sum to the contractor, who deals it out again to the labourer, or for the purchase of materials for the line. So there is only that portion of it goes out of the country, and becomes lost as it were to the country, which is paid as extra wages to the labourer over what he would otherwise procure. For instance, supposing that there are 250,000 "navvies" employed at 20s. per week, these men, had they not been so employed, would have had to live. Suppose their wages would have been 12s. per week, then, Sir, the difference would be about five millions; and presuming they spent half their extra wages in food which had to be imported, that would make two and a half millions as a drain on the country: the rest circulates through our commercial system in like manner as the blood does through the human body, revivifying the whole. But, Sir, there is one important feature connected with railways, and which, I believe, no hon. Gentleman has yet alluded to, and that is the large sums sent from this country to be invested in foreign railways. I know not the amount, but this I do know, the sum is considerable, and has far more influence on our money matters than all the English railways put together; and it is a subject for grave consideration, if we suspend railways in this country, whether we shall not drive our capitalists abroad, to invest in foreign railways; which will be a real subtraction of capital from the country. Sir, some hon. Members have attributed our distress to the Monetary Bill of 1844. I am not going to defend that measure. My opinion of it is not recently formed. I always said, in good times and times of prosperity it was an inoperative or useless measure; and that in times of difficulty it would not work; that it would prove too stringent in its nature, and would produce ruin and destruction if fully acted upon. Sir, this I need not attempt to prove; the fact is too visible to us all, and the integrity of that measure cannot now be maintained. I am not going to censure the Government for their letter of October 25th, only that I think they delayed it too long; had they interfered a month earlier, much mischief and ruin would have been prevented; but I do blame them for fixing the minimum rate of interest at 8 per cent. It has inflicted a severe blow on the mercantile interests of the country. Previous to this 581 notice, discounts were to be had in the country for 5 or 6 per cent; even in Yorkshire 6 per cent was the current rate; but afterwards the rate was generally raised to 8 per cent. The relief came at a time when it was least needed—when the panic was subsiding, when the exchanges were turning in our favour, and every week gold was flowing back to the country. Being satisfied that the Bill of 1844 cannot be allowed to remain, I am disposed to join in the appointment of a Committee to examine into the cause of our commercial distress, particularly as respects the Bill of 1844. The only objection I have is as regards the time. I fear the labours of the Committee, for so comprehensive an object as the Motion of the right hon. Baronet the Chancellor of the Exchequer, will not be terminated during the present Session. If so, Parliament ought not to separate without passing a temporary measure investing the Government and the Bank with a relaxing power in case of need. Sir, the next cause of the distress is, according to the opinions of some hon. Gentlemen on this side of the House, the free-trade policy of the Government. Sir, in this opinion I must beg to differ from them; and, in doing so, let me tell the House I was never an advocate of the principles of the free-trade policy of the Anti-Corn-law League. I happened to be a director of the Manchester Chamber of Commerce at the period when the hon. Member for the West Riding of Yorkshire and the hon. Member for Stirling Burghs were directors; and when they first brought forward their plans for a total repeal of the corn laws, I, Sir, did my utmost to oppose what I considered was most hazardous and dangerous policy. But, Sir, I and those with whom I acted were defeated; they triumphed in that Chamber—they have since triumphed in this House. We as a country are committed to free trade, or what they call free trade; and, as far as I am concerned, it shall have a full and a fair trial; and I sincerely hope, for the good of the country, they may prove right and I may prove wrong. At any rate, as yet it has had no trial. We should have had free trade in corn, at least 1s. duty, under the old law; and though under that law the imports might have been less, yet, I contend, and am prepared to prove, we have not imported one bushel of grain too much. It is not fair to attribute our present difficulties to free trade, though no doubt as regards sugar, and various provi- 582 sions, the free-trade measures have increased our difficulties. I now come, Sir, to the point, to the chief and great cause of our commercial and manufacturing distress. It is, Sir, owing to the large imports of grain consequent upon the deficient harvests of 1845 and 1846, particularly as regards the potato disease in the sister country, depriving some six millions of people of their accustomed food. The right hon. Baronet the Chancellor of the Exchequer has told you that from June, 1846, to January, 1847, 5,000,000l. were paid for foreign corn; from January to July, 14,000,000l. more; and in the three next months, from July to October, a further 14,000,000l..; making in all the enormous sum of 33,000,000l. of dead loss to the country. Pray, Sir, is not this sufficient to account for our difficulties, leaving railways out of the question? How has this large sum been met, when only some seven millions of gold have left the country? Why, Sir, by withdrawing all foreign balances due to this country; by the sale of foreign securities held in this country; by the forcing off our manufactures at any price, regardless of the cost; and by keeping low stocks of the raw article. Sir, I consider this the base of the pyramid of our difficulties, railways the column, and the Currency Bill of 1844 the apex. Sir, having found fault with the Currency Bill of 1844, it is but fair that I should state more fully my views as a remedy for that evil. If the sum of fourteen millions issued on securities were extended, it would be a great improvement. Still, Sir, in times of pressure and dearness, the currency might be inadequate. When wheat is ruling at 5l. per quarter, it stands to common sense that the circulation of the country banks should be greater than when wheat is at 50s. per quarter. The Bill of 1844 restricts this, and confines the circulation to the average of the five preceding years. Sir, I would allow the country banks to issue any amount of paper they required, giving ample security to the Government for such issue. Self-interest would be a sufficient protection against the abuse of this power. I would also, Sir, issue at once fourteen millions of Government notes, and pay off the Bank's debt; these, Sir, to be inconvertible as regards the public so long as the Bank Charter lasts. And further, to allow the Bank to issue what further amount of notes they may deem prudent for the wants of the country. We should thus get rid of the 583 dreadful screw which inflicts so much ruin and disorder on the trading community. Sir, before I sit down, I shall, with the permission of the House, allude to a subject personal to myself as a corn merchant and an importer of grain. When I had not the honour of a seat in this House, I well remember the charges brought against the importers of grain. A noble Lord designated them as "gambling speculators, regrators, and forestallers." Sir, I stand here to deny these charges, and to state to the House and the country there is not in the kingdom a more honourable class of merchants than the corn merchants, and those engaged in importing foreign grain. Sir, if any justification of their proceedings were necessary, we have the fact of the noble Lord at the head of Her Majesty's Government coming down to this House in January last, asking for a suspension of the corn and navigation laws, to encourage the importation of grain; and again in July, repeating that application, and stating to this House it was necessary for the wants of the country to encourage the bringing in of every bushel of grain that could be procured. I think, Sir, these facts, to say nothing of the daily publication in the leading newspapers of the alarming accounts of want and famine in prospective, were a sufficient justification for the exertions made by the corn importers to bring it to our shores from all parts of the world. Sir, these large imports, together with the fine weather, did bring prices down in the months of July and August, from 110s. per quarter for wheat to 55s.; from 50s. per barrel for flour to 25s. and even less. Sir, was this no boon to the country? Was this no relief to our labouring population? Sir, the corn importers deserve rather the thanks of Parliament and the country than their censure. They entered into those speculations at the suggestion of the Government, yet, no doubt, with a view to their own profit, as all mercantile business is based on profit. The speculation failed. It proved their ruin, but was the salvation of the country. Sir, I am prepared to prove that had it not been for the favourable weather in the three months preceding and during harvest, prices would still have advanced, and that we should not have imported enough for our wants, and the corn merchants would not have been ruined. As it is, Sir, not one bushel of grain or one barrel of flour have been imported more than the wants of the country re- 584 quire. What has become of the immense importation of grain, 10,000,000 quarters, from January to November 10 this year? Where are the stocks? Why, Sir, in Liverpool, where the imports of flour have been 2,400,000 barrels for the year ending September 30, it is calculated not more than 200,000 barrels are left, and this includes sour and above one-half that which is unfit for human food. Sir, I do not wish to be a prognosticator of evil; but I would warn the House against that tone of confidence assumed by the right hon. Baronet the Chancellor of the Exchequer, of returning prosperity. I tell the House it is probable a further import of corn, to the extent of probably some eight millions of value, will be required to carry us on to another harvest. And, Sir, I ask the right hon. Baronet what position we are in to meet this drain—no surplus of gold, of stocks of goods, or securities—foreign balances all withdrawn. I fear, therefore, Sir, we must look forward yet to great difficulties; perhaps during the next year as great or even greater than we have already passed through. I have, Sir, endeavoured to prove that our commercial distress is not owing to railways, to the Currency Bill, or to free trade. All, no doubt, have aggravated our difficulties; but the one great cause which has led to our difficulties is the deficiency of the harvests of 1845 and 1846, particularly as regards the potato crop in Ireland.
§ SIR W. CLAYconcurred in the feeling which he thought was general in the House, to assent to the Motion of the right hon. Gentleman, although he could have wished that the instruction to the Commitee had been somewhat less large. Assuming, therefore, that the good sense of the Members of the Committee, if not the instruction itself, would induce them to limit their inquiries within a manageable compass, he was satisfied that great good was likely to result from the appointment of the Committee. There could be no doubt that, in the important subject to which their inquiries would be mainly directed, great diversity of opinion might exist: and it would be satisfactory, therefore, to the House and to the country, that the facts and reasonings of the question that would be submitted to the Committee should be fairly elucidated; and that if there should be any fresh measures, those measures should be grounded on the experience of the last twelve months, and the judgment of those best competent to turn that expe- 585 rience to account. In assenting to the appointment of the Committee, he wished to guard himself against being supposed to expect much as the immediate result of their labours. The utmost that legislation could effect with reference to the monetary condition of the country, rather consisted in averting evil than in originating good. When, therefore, he heard a Gentleman so well entitled to respectful attention as the hon. Member for Huntingdon use the language he did, he wished to guard himself against being supposed to participate in such expectations, or to acknowledge any such power to exist. The rate of interest, and the cheapness of money, must depend upon the supply and demand of capital. It seemed to him that it was utterly beyond the power of the Legislature to add one single pound to the capital of the country. The utmost that it could do was to take care that the circulation, consisting partly of money and partly of paper, should not exceed the proper amount. The currency of this, as of every country, meant the convertibility of its paper into money; but experience had shown that where the issue of paper money had been entrusted to those who profited by the issue, they issued to a greater extent than the metallic money. To obviate these evils was the sole object of the Act of 1844. It had been said that the immediate authors of that Act claimed for it a much higher power—that it would render a monetary crisis impossible. He certainly did not himself recollect that the right hon. Member for Tamworth used any such language. Although an humble and zealous supporter of the Bill of 1844, he never indulged in any such anticipations. The only question worth the consideration of the House was whether the object of the Act of 1844 was desirable, and whether that object was obtained. The object of the Act of 1844 was, as he had stated, to secure that our paper currency should fluctuate only as metallic currency, and thereby secure at all times the convertibility of our paper. This object was of incalculable importance, and under circumstances of the greatest difficulty had been fully and completely attained. He would not advert to those circumstances: they had been fully and ably stated by the Chancellor of the Exchequer; but there could be no doubt that those circumstances had a tendency to press on the resources of the country, and to create a monetary disturbance to an extent without a parallel in 586 the history of this or perhaps of any other country. Was the country better prepared by the Act of 1844 to meet the coming storm? What were the facts? On all previous occasions of a drain of gold, the limitation of banking accommodation was much longer delayed than during this last panic. It was on record that there had been no limitation of the issue of country bank notes, or of notes of the Bank of England. To what did we owe our present safety? To what did we owe that we were in a better condition now, than we were six weeks back? Was it owing to the letter of the Chancellor of the Exchequer and of the noble Lord? The noble Lord and his right hon. Friend would be the very last to make that assertion—they would admit that it was not owing to the effect of relaxation, but to the operation of the Act of 1844 that we owed the influx of bullion. It was not without considerable hesitation that he expressed an opinion on the policy of the letter of the 25th of October: but he believed that his right hon. Friend would not hesitate to avow that the relief which alone could have been afforded by the relaxation, would have been contrary to sound principles, and pregnant with dangerous consequences. Although his right hon. Friend had failed to convince him that the step taken by the Government was inevitable, yet he was bound to say that he hesitated before he ventured to condemn the step then taken by the Government, or to pronounce that the responsible advisers of the Crown were not justified, under the circumstances, in acting as they had done. Of this he was certain, that the right hon. Gentleman and the noble Lord deplored as much as he could the necessity for the step they felt themselves compelled to take. He believed also they were aware of the unjust consequences to which that step might by possibility lead. This also he was bound to add, that if the step was inevitable, in his opinion it was judiciously taken at the right time. The hon. Gentleman who had just sat down had deplored the step not being taken earlier. In his opinion the best justification of its being taken at all was, that it was taken so late. If the letter had been written whilst the exchanges were adverse, he believed the result must have been most distressing to the country. He believed the result would have been, that seven millions of paper would have been issued by the Bank; that the exchanges would have been more and 587 more adverse; and to remedy that state of affairs, the Bank would have resorted to more stringent measures, or, if not, we should have had to witness a suspension of cash payments. It was only on such occasions that the interference of Government could be justifiable. But there could be no doubt that this measure of the responsible Minister of the Crown did, in point of fact, raise the question whether the Act of 1844 could be permitted to remain in its present state. He remembered that at the time of the passing of the Act, it was a question whether the power possessed by the Government should have been vested by the Queen in Council. He could only hope, that if in the Committee it were necessary to adopt any such proposition, that the Act would be rigidly and firmly maintained. The events of the last three years tested the value of the measure; and he was satisfied that in that measure a large proportion of those most competent to judge concurred. He utterly denied that the Act of 1844 was restrictive of the currency of the country. Under that Act the currency was made to expand to its utmost extent. All that was done was to prevent an unhealthy and fictitious expansion. It was perfectly idle to think of excluding the consideration of the contract with the Bank of England from any discussion upon the working of the Act of 1844; and he would remind the House of the vast powers wielded by that establishment. The Bank of England was, first, the Bank of the State; next, it had the exclusive issue of notes in the metropolis, and within a radius of sixty miles. The Bank of England issued more than one-half of the entire paper currency of the country. In its private province its capital for banking purposes was between thirty and forty millions. With these facts before the House, it was idle to think of stopping discussion upon the contract of the Bank with the public, especially as the results of its working for the last twelve months, showed that some interference was necessary. He was of opinion that much of that period of difficulty was attributable to the mismanagement of the resources of the Bank of England. He gave the Directors full credit for the best intentions; but they had made considerable mistakes in their management; and in his opinion, first between January and April, and next between August and October, they had highly aggravated, if not wholly produced the pressure of those 588 periods. He implored, however, individual Members of that House not to encourage by unguarded language hopes and expectations on the part of the public which could never be fulfilled. To do so, would have a tendency to induce a belief among the mercantile and manufacturing classes that it was in the power of the House to add to the available capital of the country, whilst it was only by the exercise of industry and care that it could be obtained. In conclusion, he had only to say, it was impossible to avoid thinking that the monetary system of the country must be unsound in some essential particulars, when it permitted the continued existence of houses which for years had not been in a solvent condition.
§ MR. MASTERMANsaid, it was not his intention to occupy time by entering into the various details which might be given of the existence of commercial distress. Many reasons might be stated, which in some measure had contributed to that distress; but as it would be the duty of the Committee to take that subject into consideration, the proper time for discussing it would be when the Committee had made their report. He should not, indeed, have risen, if he had not noticed with considerable regret the remarks which had fallen from the hon. Baronet the Member for the Tower Hamlets, who had so underrated the act of the Government in their letter of the 25th of October, that he was anxious to bear his testimony to the credit the Government deserved for interfering at that moment to prevent the fatal calamities which must otherwise have occurred. He believed the country never was in a more painful position than it was previously to that letter. It was his duty, along with some other Gentlemen, to have an interview with the noble Lord at the head of the Government, and they recommended strongly—he hoped properly too—to the consideration of the Government the situation of the Bank. There was an apprehension that no money was to be found there, yet that the panic existed without a real cause. There was plenty of money out from the Bank, and the noble Lord at the head of the Government put this question—"Have you not a large amount of notes out in circulation?" His answer was, that there was a large amount of notes out, but they were not in useful circulation; that the panic was such, that notes were locked up in all directions, not available to those who required them. He as- 589 sured the House, that in advocating the expansion of the Bill of 1844, he had no desire or intention to encourage speculation, or to support those houses which had no right to support; but because it had been his lot to observe with deep regret so many men having securities, upon which at any other time they could command money, completely paralysed. After what had fallen from the hon. Member for the Tower Hamlets, he felt anxious to pay his tribute of respect and thanks to the Government for the manner in which they had acted on that consideration. He would say but little more, though he was not giving his reasons for the present commercial distress, except that it was pretty well known he had never been in favour of the Bill of 1844. The Bill might be very good, or it might not; of that he was no judge: whether it was sufficient or not, he was not able to say; but he was certain no man was bold enough to say that fourteen millions was the exact amount required for the circulation of this country. He would ask his right hon. Friend the Member for Tamworth, whether he would not be inclined now to support an expansion of the Act of 1844 in case of necessity? Let the Bank have power to issue a greater sum than fourteen millions with the sanction of Her Majesty's Government. He had ever maintained that opinion, and he was convinced that the Bill could no longer work of itself. The alarm in the public mind had been allayed to a considerable degree by the letter of the 25th of October; that letter was now withdrawn, and a Committee of Inquiry was to be appointed. No person could tell how long that Committee would sit; therefore he hoped that in the meantime some resolution would be adopted by the House, whereby the public would know that the Bank might issue more notes, provided they had the sanction of the Government.
§ MR. BLEWITTsaid, he had given a notice with a view to introduce such an Amendment, and he hoped that the hon. Member for the city of London would support it. With regard to the discussion before the House, he considered himself entitled to offer an opinion, as he had considerable experience in commercial matters; and he believed it to be one of the most wicked and mischievous Acts that had ever passed that House. It was a piece of banking mechanism, invented by Mr. Jones Loyd, which adjusted itself, and which might be called a money-meter. Never did so pom- 590 pous a scheme end in so miserable a failure. This wonderful invention had produced such dreadful effects, that he might with great truth call it the infernal machine, which, by its explosion, had mangled trade, prostrated commerce, annihilated credit, and spread through the length and breadth of the land universal terror, misery, and confusion. He wished to call attention to a speech delivered in 1819 by the right hon. Member for Tamworth, which bore materially on the question before the House. The right hon. Baronet, in introducing the resolutions which were the foundation of his Bill in 1819, said—
It is impossible to prescribe any limitation to the issue to be brought into operation at any period, however remote. The quantity of circulation varies so materially in periods of depression and of prosperity, that the House must be aware of the impossibility of fixing on any prescribed limits.Now, this reasoning appeared to him (Mr. Blewitt) quite as conclusive in 1844 as in 1819; yet, in 1844, the right hon. Baronet introduced a limitation at variance with the arguments, so consistent with reason and common sense, that he used in 1819. In 1844, the right hon. Baronet assumed as an admitted principle that the Bank regulated its issues by the price of gold and the rate of foreign exchanges—an idea which, it was stated before the Bullion Committee in 1810, had never been heard of, and which excited general astonishment among the witnesses when the question was proposed to them. The Bank then acted on a principle which had been handed down from their predecessors for more than a century—a principle under which legitimate commercial bills, drawn on the merchants of London, were always discounted, and which they never dreamt of refusing because foreign exchanges were adverse or the price of gold was high. This foreign exchange principle, on which the right hon. Member for Tamworth founded his Bill of 1844, was never heard of before it was introduced in 1810 by Mr. Horner. The merchants of the city of London were happy under the paternal fostering influences of the Bank of England; but since the Bank had fallen under the management of the right hon. Baronet the Member for Tamworth and that House, he could only say—Fortunati nimium sua si bona norint.He could not conceal the disgust he felt at seeing the Bank compelled to rule its con- 591 duct by such a principle. The hon. Member read extracts from the evidence taken in 1841, by which scarcity of money, scarcity of food, commercial failures, merchants and manufacturers being compelled to reduce their transactions, workmen out of employ, were attributable to the effects of the Jones Loyd system. Did they want to know more than that? Was not that proof positive that the present commercial distress was the result of the Bank Charter Act? Indeed, it was the object of the Act to produce it. It was quite clear that, from whatever causes it might be produced, the panic was considerably increased by the refusal of the Bank to discount legitimate commercial bills; and that it was afterwards allayed by a letter written by the Chancellor of the Exchequer to the Governors of the Bank. When that letter was written, had the potatoes emerged from their rottenness to supply the deficiency of that article of food in 1845 and 1846? Had the money expended on railroads unfixed itself, and returned into the ordinary channels of floating capital? Had the mercantile houses which had failed arisen from their ashes, and were proceeding as if nothing had happened to their credit? Had the 33,000,000l. exported for corn come tripping back to the magic dictation of Wood the Enchanter? No; nothing of the kind had taken place. The Act was suspended, and from that moment confidence was restored; and if all did not now go "merry as a marriage bell," the bell of commerce had at all events ceased to toll its funereal note. He had intended to go into other parts of the question; but he really felt that he had no right to trespass further on their attention, unpretending as he was in talent, and unaccustomed as he was to speaking in that House. [Interruption.] He did feel that he was trespassing on their attention at too much length, and he therefore had better—["Go on, go on!"] He had intended stating to them what were his views with regard to convertibility—and he was afraid that if he attempted to do so, then he should require more time than they might be disposed to grant to him. He apprehended that by the ancient common law of this realm every man who contracted an obligation was bound to pay the obligation in the legal coin of the realm. A Bank of England note was of course such an obligation, and the meaning of "convertibility" was, he apprehended, the payment of such a note or obligation according to the re- 592 quirements of the law. When the Bank of England was established in 1694, it issued notes for 20l., which at that day represented four hundred shillings. In 1715, the guinea coin in gold, which represented twenty-one shillings, was issued. In 1744, a law was passed, which legalized the payment of an obligation in silver. In 1817, the sovereign was issued, and declared to be a legal representative of twenty shillings. It would be seen by this short history of the matter, that the system for which the right hon. Member for Tamworth took so much credit, had been in operation for the last 150 years. The right hon. Baronet had no ground for saying that his Bill of 1819 restored the ancient value of the standard; for it appeared clear that up to 1774 all the obligations of the kingdom, including Bank of England notes, could have been paid either in gold or silver. From 1774 to 1797, any obligations which did not exceed 25l. might be paid in silver; and it was not until 1819 that gold became the exclusive standard. Many writers on political economy—Locke, he believed, particularly—recommended that gold pieces should be issued of a certain weight and fineness, and that those pieces should be allowed to find their level in the money market. Now, he believed that that was a system which had been adopted in several countries on the Continent, and that it had been found to answer remarkably well. In this country we talked very much about gold; but, for his own part, he did not see why silver should not be as good as gold; at all events, he did not see why silver, which was a metal more easily procured than gold, should not be our standard of value, leaving gold to find its level in the market. However, he did not suppose that it was possible by anything that the most eloquent man could say in that House, to convince a large portion of its Members that any alteration ought to be made in what they called the gold standard. It appeared from the Bill of 1819, that the right hon. Baronet not only would not accept silver as a standard, but that he had positively an aversion to it. He would not have it at any price. The right hon. Baronet had laid that down as a principle; he said that the Bank of England should not hold more than one-fourth part of its reserve bullion in silver. Supposing the gold in the Bank of England in the first instance to be 10,000,000l., and supposing that afterwards to be reduced to 5,000,000l. 2,500,000l. was the fourth of 10,000,000l., 593 and that would be in silver. Well, now, he would rather have silver for his notes than have a return of nulla bona. But there was another very remarkable provision in this Act of 1844—this very perfect measure of the Legislature. It stated that all persons should be entitled to demand from the issue department of the Bank of England Bank of England notes in exchange for gold bullion at the rate of 3l. 17s.. 10½d per ounce standard gold. Now, he could conceive no reason for that. Why should it be compelled to purchase gold bullion to carry on the speculations of a bullion broker? They had been told that night, he believed, by the hon. Member for Bridport, of the immense amount of gold bullion belonging to the Emperor of Russia. Now, supposing the Emperor of Russia should take away his bullion, and exchange it for iron rails, or any other article produced in this country, he did not know of what service the gold bullion would be in the vaults of the Bank of England, except to minister to the diseased fancies of the bullionist. He could not conceive, for the life of him, whence arose that extraordinary dread and alarm that existed in this country with regard to the exportation of gold. They all knew that gold must be bought before it could be sold; it must be imported before it could be exported; and he imagined that, in the ordinary course of commerce, there was as much profit in purchasing and selling gold, as there was in any other commodity, and that the nation would be just as much enriched by purchasing gold as by any other commodity. He could not, therefore, understand the cause of the public alarm on that point. Certainly a bad harvest was a serious calamity; and the deficiency in the food must be restored by a diminished expenditure and increased industry. A bad harvest caused so much to be taken from our previously accumulated wealth as was required to purchase the deficiency in the crops. That, of course, was a subject of regret; but what was the course which they should pursue in order to regain their former position? By bewailing their condition, and crippling their industry? No: on the contrary, they should immediately set about repairing the loss, and giving as much encouragement as possible to the industry of the country. He believed that that was the true principle to act upon, and that the man who departed from it was guilty of egregious folly. When they considered what convertibility was, it turned 594 out that it implied the ability of the Bank of England at all times to pay coin for its notes on demand. And what did that amount to? Why, the Bank of England was told to put into their banking department a sufficient reserve of coin to meet all their liabilities, to the amount of 38,000,000l. And what did they do? Why, they put by 858,000l., and that had been found amply sufficient to meet every obligation. They never wanted any more; and he believed that, on the average, during the last few years, they did not keep more than 617,000l. in their coffers. He wished a provision to be introduced into a Bill which might be introduced hereafter on this subject, which should authorise the Bank to increase its issues on securities deposited at the Bank. He sincerely trusted that the House would sanction such a provision. He was sure that it would be satisfactory to every person out of doors; and as regarded the proceedings of the Committee, he could only hope that they would suggest such alterations in the banking laws as should enable the merchants and manufacturers of this country to enjoy the credit which they had hitherto been accustomed to enjoy, and which had, in such an eminent degree, made Great Britain the emporium of the commercial world.
§ Debate adjourned.
§ House adjourned at Twelve o'clock.