§ House in Committee on the Loan Acts.
§ The CHANCELLOR OF THE EXCHEQUER
Sir, I am not aware that I need add much to what I stated to the House on Friday night, as to the intentions of the Government with respect to the course they intend to adopt in the present state of the money market. I stated on Friday that I should propose in the Committee tonight a resolution enabling Government to allow interest by way of discount upon all sums of money paid up by the contractors for the loan in anticipation of the instalments due on a future day. That, Sir, is the resolution I am about to put into your hands. I have already said that it is not necessary that I should state much in addition to what I addressed to the House on Friday night, because I then put the House in possession of the views of the Government on the subject, with the exception of the precise amount of the discount which it was our intention to propose. But it may be as well that I should make some additional statement to what I then advanced, and I will do so very shortly. We do not suppose, as has been represented, that this measure will be sufficient to put an end to all panic and pressure on the money market, which would be anticipating from it consequences utterly disproportioned to what it is calculated to produce, and disproportioned to what any Government could possibly effect in such a state of things as the present. Every one who considers the present high price of corn, and the pressure which it occasions among the manufacturing classes of the community, as well as the high price of cotton and other articles—chiefly those of general consumption—must be conscious of the pressure and suffering which are felt among various classes. To relieve that to the full extent, is, I am persuaded, beyond the power of any Government. While, therefore, I do not anticipate that any complete relief can be given by the measure I now propose, I may be permitted to make a statement of what I do anticipate from the measures which the Government are about to adopt. I am aware that by the proposals we make, an additional burden will be placed upon 600 the public; but I think it would be bad economy if this burden were not submitted to, and this course not adopted. I think the House will be of opinion, that it may be well worth while to pay an additional sum at present, for the advantage of keeping up the price of Government securities of any and every description. The House is aware of the high rate of interest on money at the present moment; of the high price which all are obliged to pay who want it; and that the rate of interest upon Exchequer-bills is much below that of those other securities which come into competition with them. Exchequer-bills have, in consequence, if saleable at all, been selling at a discount, and great loss has been sustained by those who held them. I think it right, therefore, and good economy, to raise the rate of interest on them, so as to bring them to a level with other competing securities. I also believe it will be advantageous, and will tend to relieve the pressure on the money market, if we allow, as I propose, a discount on prepayment of the loan. I believe that the two measures we propose, of raising the rate of interest on Exchequer-bills, and of allowing discount on advances upon the loan, are indispensably necessary for the sake of the credit of the Government, and to keep up the price of its securities; and, moreover, that they will facilitate the operations of the money market, partly by letting loose a quantity of money which has been held in consequence of the alarm, and still more by removing that want of confidence which has pervaded all classes of the mercantile community. The representations which have reached us have been, that the merchants and manufacturers have not been able to carry on their operations because they could not get their bills discounted, and that the country bankers could not discount their bills because they in turn could not get their bills re-discounted in London, as they had been accustomed to do. I have also been informed, from authorities on which I can rely, that the large sum of money which has been advanced on railroad shares, has affected, to a considerable extent, the amount of available capital which would otherwise have been employed in discounting bills. I find also that a system which formerly prevailed, to a small extent, has recently been extensively adopted; and that monied men in London, instead of investing their money in securities, have been in the habit of placing it at call with the bill brokers. 601 The amount, therefore, placed with the bill brokers induced them to look far and wide for bills to discount, and this tended very much to increase the amount of bills discounted and re-discounted in the country. When the alarm came, then the bill brokers were obliged to return the money which had been thus deposited with them; and this increased, to a great degree, the pressure on the money market. From the unsaleability of Exchequer-bills, the parties who held them, having been unable to realize money upon them, were under the strongest necessity of calling on the bill brokers to return the money which had been deposited with them. The consequence of raising the rate of interest will be, that a premium on Exchequer-bills will enable these parties to dispense with the necessity of calling upon the bill brokers, and thus contracting the means of discount. I believe, therefore, that an advance in the interest on Exchequer-bills will have a considerable effect in alleviating the pressure on the money market; and I confidently hope, from what I hear, that the effect of the measure will be to put a good deal of money again into circulation. I am not prepared to say that it would have been possible for the Bank of England to have done this, except for the last power which I propose to give by the resolution of the Committee, enabling the contractors for the loan to pay up their contributions upon receiving interest by way of discount upon their instalments. The object of the Government was to put themselves in funds, without its being necessary for them to make demands on the Bank for assistance. The statements that are abroad of the demand made by the Government on the Bank during the last quarter, have been exceedingly exaggerated. I had forewarned the Bank early in the quarter of what the probable amount would be; and, therefore, I made neither an extraordinary nor an unexpected demand on the Bank. But I was told that something like an assurance or pledge was given when the Bank charter was passed, that no such assistance would be required. I never entertained such an expectation; but I did expect that in consequence of another measure—that for the equalization of the payment of the dividends in the four quarters of the year—there would be less occasion for assistance from the Bank in two of those quarters, because, as there was a larger amount of dividends due in January and July than in April and October, 602 the necessity for extraordinary aid was greater in the two first-mentioned quarters. I, therefore, thought that it was an exceedingly wise measure, in reducing the 3½ per cent Annuities, to make the dividends payable in April and October, instead of in January and July: but the inevitable consequence was, that so far as the April and October quarters are concerned, the probability of a demand for assistance from the Bank was increased and not diminished. Now, with respect to the practice of requiring advances from the Bank at the periods of payment of the dividends, generally, if I may be permitted, I will read an extract from what I said in 1844, for the purpose of justifying myself against the supposition of having anticipated that the Bank would not be required to give the usual advances on Exchequer-bills, and which it is perfectly safe and proper for them to do. On the 20th of May, 1844, I said—With these powers, I apprehend that the Bank of England will continue to perform all the functions which she has hitherto discharged with so much advantage and convenience to the public; as, for instance, making the quarterly advances at the payment of the dividends. There will be no less need of this than before. I am glad to take this opportunity of expressing my approval of the course which the Government took in reducing the 3½ per cents, of transferring the payment of the dividends on the new stock to the spring and autumn quarters. This will have the effect of equalizing the payment of the dividends in the four quarters, and is a very judicious measure. In the same way, the Bank will, I conceive, as heretofore, make advances on deficiency bills, and for rendering assistance to the trade of the country in periods of difficulty. There is no reason why this should not be done out of the capital of the Bank; and, with proper caution and prudence, I believe no difficulty need arise. The only mistake which has been to be deprecated is, when the Bank made the fatal mistake of substituting for advances of capital, increased issues of notes.No other person but myself adverted to the subject during those discussions. The probable demand in future quarters of this assistance was thus foreseen, and no expectations were held out that it would not be made; though, by equalizing the payment of the dividends, the probability was, that no excessive amount would be required. The time of requiring these advances may always be foreseen, and the Bank has ample time to make provision for them beforehand. I am ready to admit that it is very desirable to avoid making similar demands as much as possible, and that we should pay the dividends without requiring the aid of the Bank. With that view, I think it desirable 603 to hold out inducements to the contractors of the last loan, in order that by the instalments being paid up, the balances in the Exchequer may be such as to enable us to dispense with the assistance of the Bank. I believe that it will be good policy and good economy to ease the money market in any way we can. I shall always be glad to afford any reasonable facilities to the gentlemen who contracted the last loan. In consequence of circumstances which neither they nor the Government could foresee, it has not been a very good bargain for them. I believe it is no advantage to a Government in any of its departments to drive a hard bargain, for if it attempt that it is sure to pay for it in the end; and I believe it is equally opposed to the interest of both parties. Neither do I agree that this need necessarily entail any considerable loss upon the public. It is quite certain, that if trade comes to a stand-still, the revenue must inevitably suffer. Within the fortnight during which the panic prevailed, the receipts in the Customs and other branches of the revenue fell off; but matters have since resumed their usual course, and I am glad to hear to-day that they are in a much better condition—that the power which many persons have felt they had of obtaining loans on Exchequer-bills, has to a great extent obviated the necessity of making those loans; and that the demand upon the Bank for loans, even at the rate of 5 per cent, has been to a very much less amount than was anticipated at the time the announcement was made. I stated, on Friday, the amount which had been advanced by the Bank on that day; on Saturday and today no very great amount has been asked for, and in all respects the money market is easier. The price of stocks has to a small extent declined; but that has been partly owing to the rise of price of Exchequer-bills, compared with which they are rather lower then they otherwise would have been. The report I have to-day received from the Governor of the Bank of England is, that, upon the whole, things have been easier to-day; that there has been a very moderate demand for loans on Exchequer-bills; that there has been a further influx of gold from Holland, to the amount of 29,000l.; and that late news from America brings such advices with regard to the exchanges as to render the further export of gold from this country exceedingly improbable. I should be much more confident as to our future prospects 604 but for the one circumstance of the rise in the price of corn. So far as the mere monetary pressure goes in London, I hope it is to a certain extent passing away; and I trust that, with renewed confidence in the City, confidence may be restored in the provinces, and that the check to trade which has been anticipated may not take place. It is, however, impossible to deny that the price of corn does constitute a most material cause of anxiety. It is right the House should know that the importation of corn goes on to an extent, I should have thought, perfectly sufficient to check any rise of price. A certain quantity of corn has been exported from this country: about 132,000 quarters were exported in the course of the last month; but in the same period we imported 432,000 quarters. In the week ending the 28th of April, the quantity of wheat and wheat flour, Indian corn and Indian corn meal, entered for home consumption was 200,034 quarters; and the entries of all descriptions of grain, amounted to 333,273 quarters; being equal to the food of 17,000,000 persons for a week. These importations are so considerable, that it might have been thought they would have checked the rise of prices. [Lord G. BENTINCK: Are these the actual importations?] No; but the entries for home consumption. [An Hon. MEMBER: What were the imports?] I cannot give you the imports of the different kinds of grain, but I can state that the imports of breadstuffs were about 196,000 quarters, and the diminution of the quantity in the warehouses during the week had been about 3,000 quarters. I do not know that I need state anything further on this subject. I will only add, that, since Friday night, I have determined to make a slight alteration in the terms of the payment of discount. I have this morning seen the contractors for the loan, and they represented to me that if they were forced to pay up their instalments within the time I named on Friday, it might have the effect of considerably depressing the price of stock, and would, of course deprive them of one of their great inducements to pay up the instalments; and they suggested that a further time should be afforded. I propose, therefore, to give them an inducement to pay up a portion of the loan before the 18th of June, and also a further inducement—but not at so high a rate of interest—to pay up the remainder of the loan before the October dividends become due. The right hon. 605 Baronet concluded by moving the following Resolution:—That every contributor towards the Loan of eight millions made in this present year, who shall pay into the Bank of England any sum of money on account of any future instalment of his contribution, on or before the eighteenth day of June next, shall be allowed an interest by way of discount, after the rate of five pounds per centum per annum; and every contributor who shall in like manner pay up any sum of money after the eighteenth day of June, on or before the tenth day of September next, shall be allowed an interest by way of discount, after the rate of four pounds per centum per annum, on the sum so advanced on account of any such instalment, to be computed from the day on which such payment shall be made, to the day on which such instalment would be due, in pursuance of the contract entered into for raising the said Loan.
§ MR. HUME
considered that the right hon. Gentleman who had just addressed the House had given no satisfactory reason for the course he was pursuing. The right hon. Gentleman seemed to think that the course taken by capitalists, in placing their money in the hands of individuals, from whom they might have it at their call, was one of the circumstances which had produced the present pressure. Why, he had always supposed that one of the great advantages of banking would be to place disposable capital where it would be ready at command, and thus prevent the embarrassment that might result from fixed investments. The hon. Baronet had also attributed the pressure to the system of discount and re-discount; but he (Mr. Hume) wished to know what that had to do with the currency of the country? He certainly expected that the Chancellor of the Exchequer would have taken a review of the changes made in 1844 and subsequently; that he would have considered whether the anticipations then held out had been realized; and that, if they had not been realized, he would—as he possessed better means of obtaining information on the subject than any Member of that House—have given some explanation of the extraordinary pressure which had taken place. The right hon. Gentleman, however, had not taken this course, but had read a quotation from one of his own speeches, which certainly did not agree with his recollection; for he remembered that the right hon. Baronet opposite (Sir R. Peel) stated that the arrangements he had made for separating the bank of issue from the bank of deposit would place the currency of the country in quite a different situation from that in which it had 606 previously been. He (Mr. Hume) considered that it was most wise and prudent to separate those two departments; but the great change which took place at the time he referred to was the fixing of the amount which the bank of issue should be at liberty to issue. Another great change then made was that which placed the Bank of England, with all its resources, exactly in the same situation in many respects with all other banks in any part of the country. The managers of the Bank of England had the full discretion of discounting of not, as they chose; and, whatever opinion might have been formed of the proceedings of the Bank within the last two or three months, he (Mr. Hume) could only say that its managers were bound, in conducting their business, to pay regard to the customers they had to deal with, and to the deposits placed in their hands; and they alone could be the judges of the extent to which they should go in discounting. On this ground, he (Mr. Hume) was not disposed to criticise the conduct of the Bank of England with regard to these transactions, because, unless they were conversant with the affairs of the Bank, and with the nature of its securities, it was utterly impossible for any individuals to form a correct opinion on the subject. He believed that the right hon. Baronet opposite (Sir R. Peel) never contemplated the dependence of the Government upon the Bank for advances; and when that right hon. Gentleman was in office he believed there was money enough in the Treasury, at any time for the payment of the dividends. He had always contended that the Bank of England ought not to be allowed to pay in notes, while other bankers were compelled to pay in bullion; and he had also objected to any connexion between the Government and the Bank of England. He considered that one of the first and most important duties of a Chancellor of the Exchequer was to see that the Government was able to pay the regular demands made upon it, without being obliged to apply to any man, or anybody of men, for assistance. If this course had been pursued, he believed that the alarm and pressure which were now experienced would never have existed. He thought, therefore, that the Government ought not to be allowed to depend upon the Bank for advances to assist in the payment of the dividends. He thought that freedom ought to be allowed to any body of men to issue notes as they pleased, so long as they paid them in 607 gold; for his observations must be always understood as having reference to a bullion standard. If the right hon. Baronet the Member for Tamworth could not give a better explanation than had been given by the Chancellor of the Exchequer, of the present pressure, then that House had better consider whether a wrong course had not been entered upon, and whether it would not be advisable to retrace their steps. The question ought not to be allowed to remain in the present vague and unexplained state.
§ MR. MASTERMAN
did not rise to object to the proposition made by the right hon. the Chancellor of the Exchequer; but he could not anticipate that it would afford such a relief from the existing pressure as the right hon. Gentleman seemed to expect, or do anything to alleviate the uncomfortable feeling in the money market. It was well known in that House that he (Mr. Masterman) was one of the few who predicted that the right hon. Baronet the Member for Tamworth would find his Bill not available at all periods. The alarm which had been recently created, had, he was satisfied, arisen from the improper arrangement made by the Chancellor of the Exchequer. But he was of opinion that it was impossible for the Bank of England, under the existing Act, to come forward at those quarterly periods to advance two millions or three millions on deficiency bills, and at the same time do justice to the commercial community. He was satisfied that any assurance held out to the public that such demands would not be made on them in future, would do more to alleviate the existing pressure than anything else besides. He should therefore like to make a small addition to the Motion of the Chancellor of the Exchequer, because he wished an announcement to go forth from that House assuring the country that, if the Government wanted any assistance for the payment of the next quarterly dividends, it should be provided for in a different manner from that in which it had hitherto been provided. He would now read the proposal, which he desired to move by way of addition to the resolution of the Chancellor of the Exchequer, and he really thought that it would do more to relieve all present inconvenience than anything else. His proposed addition was to the following effect:—The Committee, however, are of opinion that nothing would tend so much to relieve the present pressure upon the money market as an assurance 608 from the Chancellor of the Exchequer that he would apply to Parliament for powers to enable the Bank of England to make such advances as he may require for the payment of the July dividends out of the issue department of the Bank, instead of the banking department; such advances, of course, to be repaid out of the growing revenue, and the same regulation to apply to all future advances for the payment of dividends.
intimated that it was not competent for the hon. Gentleman to move the proposed addition, because it did not apply to the matter referred to the Committee, which related to a proposed allowance, by way of discount, on the prompt payment of instalments of the loan.
§ MR. BROWN
said that, considering the constituency which he had the honour to represent, he could not let this opportunity pass over without laying before the House the total prostration of credit that now existed in Lancashire, which had brought the business of that section of the nation to nearly a dead lock. Hon. Gentlemen were probably aware, that when houses in Liverpool, London, or Glasgow, received imports from abroad, they were either drawn on by the houses shipping the produce, or by houses in Manchester or elsewhere, who had orders for British manufactures, in payment for them. At present the alarm and want of confidence were such, that orders for human food to the United States and other countries were, in many cases, countermanded, prudent houses not choosing to risk their credit by being drawn upon until they should see what steps Government might take to restore the healthy action of trade. Houses, also, in the manufacturing towns, found that bills on London or Liverpool, however good, could not in many cases be turned into money to pay their workmen. This very much decreased the exports and the means of bringing the exchanges in our favour; and it therefore followed that, placed in the situation we were in, we must either export gold or increase the distress that already existed in the country for want of food. It was a fallacy to say, as the Bank of England had 20,000,000l. out, the circulation was ample, when it was hoarded up, and not available for the healthy circulation of commercial enterprise: and he totally dissented from what had been stated, that there was more commercial paper offering for discount than usual. He believed there 609 was less, and, in its general character, for strictly legitimate commercial objects. It had been his duty to call on Ministers, the Bank of England, and the right hon. Baronet, Sir Robert Peel, frequently, in the course of the last ten days, with deputations, on this subject: they were always received with the utmost courtesy, but asked what remedy they had to suggest. They, however, considered it was the duty of the Government to provide a remedy, their object being to point out the state of the country, the number of mills that had stopped, the hands that were out of work, and the distress which the advance of provisions was increasing. The alarm, he had no doubt, arose from the famine and high price of food, the absorption of capital by the railways, the high price of cotton, and the Bill of the right hon. Baronet. Without discussing its merits, he thought there was the means of getting great relief without infringing its principles. There was believed to be from 30,000,000 to 40,000,000 of sovereigns in circulation; these he would replace by 1l. notes, putting a certain amount of them in the deposit bank, and investing the rest in Government securities. This latter portion could be made available for exportation and the purchase of food until the tide turned, when they could be called in, and the gold again be thrown into circulation. He did not suggest this on slight authority, as the late Mr. Huskisson stated to a friend of his (Mr. Brown's), now in London, that it was his desire to get sovereigns into use in place of 1l. notes, in order that if ever such a state came as that with which we were now afflicted, they might be the means of relieving us from embarrassment and difficulty. He seemed to have an intuitive foreknowledge of the very calamity that had occurred. He was much pleased to hear the right hon. Chancellor of the Exchequer say, he was willing to adopt any plan that would relieve the country from its difficulties. He did not mean to propose anything at present; but, as these discussions could not rest here, he hoped the right hon. Baronet would think of what he had suggested.
§ MR. NEWDEGATE
said, he wished to say a few words, because in 1844 he had protested against the measure proposed by the right hon. Baronet (Sir R. Peel), and had predicted its failure—a prediction which, unhappily, had too soon been verified, for on its very first real trial the measure had failed. It was perfectly clear 610 that it was quite unfit for periods of difficulty like this; and, among practical and experienced men, it was considered, as it had been termed in 1844, only a "fair-weather boat." He hoped that if any such plan as that suggested by the hon. Member who spoke last were ever adopted, that there would be no tampering with the system—no temporary issue of 1l. notes, without an ascertained and definite basis, as in 1823, to be followed, as in 1825, by a disastrous panic. Let anything that was determined upon, be done upon a sound basis, with the object of maintaining a circulation, not merely of staving off a difficulty. The right hon. Baronet (Sir R. Peel) had determined to prevent the Bank issuing upon its securities beyond the 14,000,000l. he had prescribed for it; but that was a limit purely arbitrary, and for which it would be difficult to assign an intelligible reason. The plain fact was, that a currency based only upon bullion could not possibly with the present standard be upheld. He (Mr. Newdegate) had no objection to the principle of the currency convertible into bullion; but he was satisfied that, with the present distribution of the bullion as apportioned by the standard, it was not possible to secure perfect convertibility. The right hon. Baronet always talked of convertibility being satisfactorily established by the Bill of 1819, whereas by the standard then enforced he had rendered perfect convertibility impossible. He supposed he should be asked his definition of a pound sterling. He had no difficulty in accepting the definition of the right hon. Baronet, and to say that it was a certain portion of the precious metals, with a mark upon it to denote the amount of that metal and its fineness. But that one word "certain," caused the real ambiguity of the definition; for the possibility of a truly metallic circulation turned upon this, namely, into what certain portions must the bullion be distributed, so as to secure a metallic circulation adequate to the wants of the community? Now he maintained that by the exclusion of silver, and the apportionment of gold into too large pieces, the right hon. Baronet the Member for Tamworth had rendered perfect convertibility impossible; and this was proved by the necessity of so large an issue on securities. How did the issues of the United Kingdom stand in this respect? The paper issues of the Bank of England, and the other banks of the three countries were, by the last accounts, 611 40,000,000l., whereas the gold scarcely reached 16,000,000l., proving they were not within 150 per cent of a truly metallic currency. The right hon. Baronet was fond of casting contumely on the opinions of those who differed with him on this subject; but there was great reason in their statement of the case, and there was this fundamental fallacy in the argument of the right hon. Baronet—he assumed the gold standard to be the ancient standard of the reign of Elizabeth; which was not the fact, for the standard of Elizabeth was silver. The Act of 1819 was based upon the principle of the ridiculous resolution proposed by Mr. Vansittart, that a 1l. note and 1s. were equal to a guinea; whereas it was well known they were 5s. or 6s. less in value. And the practical effect of the measure was, that pecuniary engagements contracted in a depreciated currency were rendered payable in a currency 20 or 25 per cent higher in value. The consequence was, that the pressure of every private and of the public debt was enhanced proportionally; and taking this additional pressure at only 10 per cent, this boasted Act of 1819, by its effect upon the national debt alone, imposed upon the people of this country an additional burden of 80,000,0001.; in fact, however, the increase had been much more than 10 per cent. The gold standard (as had been well shown by Lord Ashburton in his speech of 1844) was a new invention, not older than 1798. Previously to the Act of that year, a man could have paid 100l. in silver or gold; and if paid in silver, the value of which in 1844 was 5s. 2d. per ounce, the 100l. would have been, at that rate, paid by 95l. 6s. 8d. The Acts of 1798 and 1819, however, obliged a man to pay his debts in gold, which alone taxed the debtor to the extent of 4l. 13s. 4d. per cent beyond the debt he had contracted, owing to the different value of the precious metals, gold being in that proportion dearer than silver. The imposing of an enhanced standard upon the people of this country, forcing the people to deal in dear money, entered into the cost of production and added to it, thereby detracting from the profits of the agriculturist and of the manufacturer, and the earnings of the labourer. He had urged this question in that House and out of it, in private and in public. When he saw the right hon. Baronet the Member for Tamworth bring forward his great free-trade measure of last year, he told him that he 612 maintained a monetary system adverse to that recommended by the greatest authorities on the question of free trade. The right hon. Baronet seemed determined to subject the producers of this country to a degree of competition greater than Adam Smith or Ricardo contemplated, knowing well that he had burdened them with a currency far more expensive and costly than those authorities ever contemplated. It had been said that the Act of 1819 might have been an injustice, but that those who suffered from it were dead—that their broken hearts had ceased to beat— that their children had sunk into a lower rank of life, and were content; but he knew that it was a fallacy to restrict the effects of that Act within so narrow a compass; and for these reasons, he (Mr. Newdegate) would maintain it was an axiom, that any measure which went to alter the value and the quantity of money in any country, could neither be partial nor temporary in its effect. It could not be partial, because money was the universal medium of exchange; and it could not be temporary, because money was the token of account. He would repeat, that the effect of any measure which permanently altered the currency, could neither be partial nor temporary in its effects; and if the House were told, as they had been by the right hon. Baronet himself, that the Bill of 1844 must be considered as the necessary complement of the measure of 1819; and if the result of that measure were, as had been stated by the hon. Member for Lancashire (Mr. Brown), that we must either modify the system, or starve the population, he trusted that when the House entered upon the consideration of the question, the inquiry would not be a partial one, but that there would be an efficient and a searching inquiry. The right hon. Baronet argued the other day that the amount of the standard of value could not determine the exchanges, and that it could not alter the effect of a drain of bullion; but from this opinion he (Mr. Newdegate) begged to differ, his conviction being, that if the currency were more diffused—if it were more ample—although it might still be based on a lower metallic standard, that any contraction which might occur would not be so severely felt by the producers in this country. Why, was it not clear, that if a convertible currency were ample, as ours might be rendered, that an abstraction of any proportion of it would be less felt than if it were, as it was, insuffi- 613 cient. Was it not easier to give from or to lose from their abundance than from their poverty, even if their gift or loss bore the same proportion to their all in the one case, and in the other? The real question, however, which had been raised that evening was, whether the Bank of England should be allowed to advance further on securities. The point seemed now to be, whether the sum of 14,000,000l., which was allowed under the present system to be issued on securities, was sufficient; and he trusted, that if the result of inquiry should be to show that a further issue upon securities could be allowed, he hoped it would be a permanent increase of the power to issue on securities—a permanent relaxation of the currency. There was one subject raised during the discussion, which deserved to be seriously considered. The right hon. Baronet the Member for Tamworth—and he must refer to him because he was the author of these measures—had repeated over and over again the other evening, that the present pressure would not have occurred had the Directors of the Bank of England acted according to the spirit of the Act of 1844. Now, what was the spirit of that Act? Was it contained in the measure itself? The right hon. Baronet had assigned a definite principle for the issue department, which was to work according to a certain rule; but, to use the right hon. Baronet's words of 1844, "With respect to the banking business of the Bank, I propose that it should be governed on precisely the same principles as would regulate any other body dealing with Bank of England notes." Whence then did this spirit emanate? How was it to be defined? It was not in the Act of 1844, for that did not regulate the banking department; on the contrary, the banking department was told to mind its own business, and to look solely to its own interest, and yet it was of the non-observance of some principle by the banking department, of which the right hon. Baronet complained. He supposed that this spirit was the right hon. Baromet himself, and that it was he who was intended to rule the banking department: he (Mr. Newdegate) held that nothing could be more dangerous. Lord Monteagle, when speaking of the Act of 1844 in the House of Lords, had spoken most ably upon that point, and had called upon their Lordships never to consent, under any circumstances, to allow any Government or any Minister to have the management of the 614 affairs of the Bank, either directly or indirectly; and he trusted that the warning then given by the noble Lord would have its effect. To subject the power of the Bank to any Government or any one individual, was to place the property of millions under his feet, subject to his caprice or his political bias. He must say he was not prepared the other evening to hear the right hon. Baronet declare that he expected the Bank directors to conform their practice to the wants of the country. Why, they had no alternative but to act as they had done; for in 1844 the right hon. Baronet stated that he expected the banking department should be governed on precisely the same principles as regulated any other body dealing with Bank of England notes. If the Bank directors understood what the spirit of the Bank Act was, he (Mr. Newdegate) was satisfied that they knew a great deal more than the House of Commons did. But it appeared from the right hon. Baronet's remark, that the Bank directors had not found it out yet. Well, now the right hon. Baronet declared he expected the directors to regulate their business with a view to the convenience of the country: this was contrary to what he had stated, both in 1844 and 1819. Sir Robert Peel declared in 1819, that "they, as a public body, must not be surprised to have their official conduct questioned; and that the House of Commons should, at least, doubt whether that was the institution, to the discretion of whose directors were or ought to be confided the pecuniary and commercial interests of the British community." "Whatever were their opinions, it was now the proper moment to relieve them (the directors) from the duty of attending to such concerns." Lord Grenville, in the House of Lords, spoke of the Bank directors as a body of individuals who took upon themselves, forsooth, the guardianship of the interests of the country; contemptuously remarking "that he wanted no such guardianship." If, after having for thirty years attempted to establish a self-acting principle which should relieve the Bank directors from the exercise of any discretionary power, the admission was now made that the Bank directors ought to have exercised a control through the banking department, with a view to the public safety, then he would assert that the object of the Acts of 1819 and of 1844 had failed, and that the self-acting principle upon which the right hon. Baronet's currency 615 system rested had proved futile. He did not think that that was the position in which the affairs of this great country should he placed; for existing circumstances proved that an Act like that of 1844 was not adapted to circumstances of difficulty. When the country found itself reduced to the alternative, as he believed it was at present, of reducing the circulation, which would cripple employment, in order to provide means of payment for imported corn, or of starving the population outright by ceasing to import; might he not express a hope that the noble Lord at the head of Her Majesty's Ministers would consider the subject with the anxious attention which its importance demanded? That noble Lord might be, to some extent, compromised himself; he might he still more so by his Colleagues; but he had the opportunity at his command of striking at the root of an evil, deeper and more ruinous in its tendency than any grievance which had been the subject of legislation for many years past; and if the noble Lord really loved his country, he would apply his mind to it. He (Mr. Newdegate) believed that the noble Lord upon due inquiry would find that the present monetary system lay at the root of the unequal distribution of property which was going on, and which was so generally complained of, and also that it was the fruitful cause of pauperism. And let him (Mr. Newdegate) ask the right hon. Baronet the Member for Tamworth, that if one of the main objects of his measure of 1844 was not to check speculation—let him ask him if speculation had not been as general, and carried to as great an extent, under the Act of 1844, as it had at any previous period? How could the right hon. Baronet say the measure had been successful? He would show what the state of the country was during the existence of a different system; and he thought he could not refer to a higher authority than the right hon. Baronet himself. When introducing his Bill of 1819, the right hon. Baronet used these words—and he (Mr. Newdegate) believed they conveyed a true representation:—The House should recollect, that in all the efforts which she had been called upon to make, England had preserved her faith inviolate. This feeling it was that prevented her from taxing the funded property of foreigners. This upright conduct it was that cheered the country in the hour of danger, and caused her to exult in the hour of victory, from a feeling that her dangers had been surmounted, and her victories gained without the 616 slightest violation of her honour. This feeling it was that supported the country in that dark and dismal voyage through which she had gone; and now that they had reached the other shore in safety, let them not abandon the great principle which had been instrumental to their safety—let them not discard the guide by which they were led and protected. Let them adhere to that good faith in time of peace, and towards the public creditor, which they had practised in war, and towards the foreigners whose country was at war with them.The right hon. Baronet had a right to say this. He had a right to say that this country had maintained her faith; and he might have added, that she had preserved the liberties of the world under a monetary system very different from the one about to be introduced during a period of unparalleled difficulty. Under the system which was then to be supplanted, there had been no succession of monetary difficulties; vast and successful exertions had been made to avert the danger which threatened the existence of the empire. Well, after thirty years' experience of the new system, the right hon. Baronet told the House, in 1844, when introducing his Banking Bill—But my gratification will be of a much higher and purer description than any satisfaction of a merely personal kind, if I should be fortunate enough to have contributed in any material degree to prevent a recurrence of those calamities which, at different intervals, have marked the last twenty years—such as the panics which occurred in 1826, 1834, and 1839. When I see the danger arising from the Bank of England having recourse to foreign establishments; when I look at the fluctuations which have taken place in our currency, defeating; all the calculations upon which commercial enterprise could rest; when I look at the failures of joint-stock banks; when I remember the amount of the dividends paid; and when I know that the amount is no test of sufferings and anxieties of the humbler classes who have been connected v pith them; when I see joint-stock banks paying their dividends after long and tedious processes; when I remember the number of 10l. and 20l. shareholders; when I recollect the ruin they have occasioned—into the details of which I will not now enter; my gratification will be of the highest and purest kind, if I prevail on the House to adopt a measure that will give steadiness to the character of our resources, will inspire confidence in the circulating medium, diminish all inducements to fraudulent speculation and gambling, and insure its just reward to commercial enterprise, conducted with honesty and secured by prudence.Now, could there be a stronger contrast than the description of the state of the country given by the right hon. Baronet in 1819, when supplanting Pitt's system,' and that given in 1844, when remodelling his own system? Could there be a contrast more unfavourable to the system of 1819, or more to the credit of the ancient system 617 which preceded it? And now the right hon. Baronet, after telling us that the Act of 1844 was the necessary complement and inevitable consequence of the Act of 1819, tells us, that, come what may, we must adhere rigidly to this Act of 1844— an Act which had obliged the Chancellor of the Exchequer to discount his own loan that he might be enabled to keep faith with the public creditor—which had caused mills to stand still, not for want of orders, but for want of money—with the population on the verge of famine, and commercial engagements in so dead a lock that it seemed doubtful whether we could procure corn from abroad to feed our starving thousands. He would not longer detain the House; but he could not help saying, that he did feel a deep and sincere conviction that the period had arrived, when the monetary system must undergo a decided change. Could the House forget what occurred in 1823 and 1825, when the system of 1819 gave way, and 1l. notes were issued, when the Bank was on the verge of stopping payment, and the bullion was reduced to 600,000l. value in gold, and 420,000l. in silver; and when the Bank was obliged to go to a great private capitalist—Mr. Rothschild—to get the silver exchanged for gold? By that transaction alone, according to the evidence given by Mr. Ward, Mr. Rothschild gained 100,000l. Could it be forgotten that, in 1839, that had it not been for the assistance of the Bank of France, the Bank of England would have been obliged to stop payment? Could it be forgotten, also, that under an amendment of the Act of 1819, or under its complement, as it was called by its author, the aid of Russia had been required by the Bank, and that the people were actually on the verge of starvation, while nine millions of bullion were in the Bank coffers? He (Mr. Newdegate) would conclude by expressing his fervent hope, that whatever remedy might be applied, would not be of a temporary but of a permanent character.
§ MR. FORBES
said, that his constituents had all expressed their wish to be relieved from the cruel oppression caused by the present monetary system. Since the Bill of 1819, the country had been suffering, and was still suffering, the greatest evils in connexion with it. He hoped, therefore, that Her Majesty's Government would see fit to interfere in the matter, and not bind themselves to the Act of the right hon. Baronet. He could not see why the Legis- 618 lature should not interfere with the currency when their interference was needed, as well as they did with the corn law, when no such necessity existed. The pressure in Scotland at this moment was quite dreadful, and all practical men were satisfied that it would still continue for a long period. He therefore asked the House whether, having so completely introduced the principle of free trade in. everything else, they should not also introduce it in money? And whether, having altered the Act of 1842, without repugnance, they should hesitate to alter that of 1844, if necessary?
§ MR. FINCH
considered that the best currency would be paper, if there was never a balance of trade against this country; but its disadvantages were, that when such a state of things took place, they were obliged to put on the screw to get back the gold. It was from that circumstance that the periodical confiscations of property which were so frequently witnessed had taken place. The country was occasionally subject to a short harvest; and when that occurred the gold went out, and the screw had to be applied to get it back. Under the present system, trade was paralysed every year till they knew what the harvest was to be. The Currency Bill failed, therefore, in its great object, which was to facilitate the interchange of commodities. At the present moment we were threatened with starvation, because speculators dared not send for foreign corn. The manufacturers also were subjected to great inconvenience. A few days ago they were paying from 20 to 30 per cent for accommodation; and the first time there was a failure in the harvest this must occur again. The pressure was excessive. There was no chance of the price of corn falling, and it was the general impression out of doors that it would yet be higher. He hoped, therefore, the Government would take the matter into their most serious consideration.
§ LORD G. BENTINCK
spoke as follows: Sir, I speak with great hesitation, in the presence of those who are far more able to speak on such a subject than myself, upon the question now before the House. My right hon. Friend the Chancellor of the Exchequer has said that he thought it good policy to ease the money market by any means in his power; but I confess that it seems to me that the propositions which he has laid before us with the view of easing the money market, are, at most, but very 619 helpless efforts towards such an object. The whole of his measures will go no further than merely to save himself, and will not give that ease to the trading and commercial interests of the country which they so much require. My right hon. Friend has told us that it is also good policy to place an additional burden on the country, rather than to bear severely on the trade and commerce of the nation. But, Sir, when he proposes to discount his own loans —when he tells us that he intends to discount the instalments that may be paid by the 18th of June at 5 per cent, he does not tell us that he has any substantial reason for assuming that the contractors for the loans will agree to discount at that price; and when we all know that not less than 7 or 8 per cent has been paid in the city of London, in Manchester, and in Liverpool for the best paper having no more than sixty days to run, I confess, for my own part, that I do not feel very sanguine that this temporizing method of my right hon. Friend will be successful, and that, after all, he may not again have to call upon the Bank of England to assist him in the payment of the next dividends. I must say, Sir, that I had hoped to have heard from ray right hon. Friend that the Government had in contemplation some more substantial and efficient measure to ease the trade and commerce of the country. My right hon. Friend has said that things are easier in the money market than they were. Sir, I remember that my right hon. Friend told us on a former occasion that the worst had passed over; but, at present, I own I cannot see any very great improvement. True it may be that the repayment of the loan by France —true it may be that the payment for some of that corn which we have exported —may have brought back some of our gold into the coffers of the Bank of England; but when the price of corn is at its present amount—wheat having sold at 120s. a quarter this day—when the stocks in the hands of all parties are very low; when we consider that the exports last year fell off, as compared with the previous year, to the extent of 10,000,000l. sterling; that as measured by the official standard of value, lue, they fell off from 83,000,000l. to 73,000,000l.; whilst, at the same time, the imports of food were greater than on any former occasion—I, for one, do not see whence the confidence arises that in the natural course of trade, unassisted by legislative interference, you are to rely in a 620 reasonable time for the return of bullion to this country. And now, with regard to cotton, it appears by the official returns that the importation of last year, as compared with that of the year before, was only 13,000,000l. sterling, against 23,000,000l. Here is, then, a falling-off of more than one third in the importation of cotton; and yet whilst this falling-off shows that the stock of cotton is reduced by one-third, we have it on the assurance of writers in America — indeed, the price itself would tell us— that the sum of money paid for that reduced quantity of cotton, exceeds the sum paid for the larger quantities which were imported in the years 1844 and 1845 respectively. It therefore, Sir, appears to me, that whilst the price of wheat indicates that we import large quantities of corn, for which we pay a great price, we have no opportunity now, as we had before—as we had, for instance, in the years 1824, 1825, and 1826—we have no opportunity now, by selling, even at a depreciated rate, our large stocks of imports to bring back our gold into this country. No; your only chance is, under the present law, by continuing on that which is called the Bank screw. The first effect of raising the price of money and of refusing to discount bills will be, that orders for grain and provisions and cotton must be curtailed; and I must say, in the present state of the corn market, with the prospect of a late harvest, whilst, too, the greater portion of our granaries are empty, that it is a serious consideration whether it is safe for this country, in reference to its supply of food, that you should continue to adopt these measures of bringing back your gold by raising the rate of discount, especially if the necessary consequence must be to diminish your chances of a sufficient supply of corn. My right hon. Friend has said that the noble Lord at the head of the Government has adopted the most efficient course he could adopt, by giving notice of his intention to continue his temporary measures for the suspension of the duties on corn, and of the navigation laws. Why, Sir, under the old law, there would have been at present no duty at all. But my right hon. Friend says, that things have come better from America. It is true, that the exchange is 105½, while the par of exchange is between 108 and 109—it is true that the exchange is less against us than it was; but the reason, I apprehend, is this, that the late period at which the winter has 621 broken up in the United States has kept the inland navigation closed, so that the corn of the country will not arrive at the seaboard until the middle of this present month; and I hear to-day from Liverpool, that so overwhelmed is the freight market waiting for cargoes that it is hardly possible to charter a ship, whilst the freight has fallen at New York to 4s. 6d. per barrel, and fresh ships are in sight, coming into the bay. But the reason why freights fall is, that all the corn at the seaboard is exhausted, and there will be, for a time, a consequent cessation of payment for corn in this country; but, in proportion as the time of payment is postponed, the price will rise, and the result of this will be that a still larger amount of bullion will be required than was before expected, although it may be at a later period of the year. And the same argument applies to all other provisions. I fear that among the many disasters which have befallen Ireland, it is not one of the least that, in the course of the past calamitous winter, the Irish people have killed a great portion of their store of pigs and poultry. I saw a return the other day which stated that in Cork market during the last season, i. e., I believe, in October and November last, no fewer than 15,000 dead pigs were sold against 3,000 in 1845, and 2,700 in 1844; and from this I gather that the prospect of a supply of provisions from Ireland is but a very poor one—that the supply is nearly exhausted —and that we shall, in this respect, also, require larger supplies from abroad. But, looking at all stocks of every description, I feel that justice is only done to the manufacturers of this country when we are told that trade is in a sound state. It is not the fault of the merchants—they cannot be told that it is owing to over-speculation; for, with the exception perhaps of tea, and, to a very small extent, of sugar, the stocks of all sorts of produce, foreign or colonial, are low in this country. Neither can the manufacturers be charged, on the other hand, with having worked their mills full time; for, in Lancashire, out of 1,061 mills, there are short time, or wholly closed, 728; and out of 226,000 workmen, upwards of 100,000 are working short time, while 23,000 are wholly out of employment. Unless, then, you do something to ease the money market, you must have great distress arising from want of employment on the part of the operatives in the manufacturing districts. The market has no produce here by the sale of which 622 it would be possible to induce the gold to come back, whilst I apprehend such does not apply to the stocks of British manufacturers abroad. Therefore, I see no prospect of any early return of our gold to this country. Well, then, if that be so, is it not trifling to come down with these temporising measures, and offer no relief to the money market and trade of the country? We have at the present time all the manufacturers suffering; and all the railway companies also, if money continue at 8 per cent, will curtail their operations, and stop all the contracts they can—and then you will have, in addition to the manufacturing operatives, the railway labourers out of employment; and after them will come the miners of Staffordshire and Wales. What, then, is the state of the case? The difficulty is not that the Bank of England has been overtrading any more than the merchants. When the Bank Charter Act passed—for which I voted—it was contemplated that the Bank should issue notes to the full amount of its bullion; and the right hon. Baronet (Sir R. Peel) himself contemplated that the circulation of the Bank of England notes might rise to 28,000,000l. or 30,000,000l., whilst all the promoters of the measure intimated their opinion that its ordinary circulation, in prosperous times, would amount to 24,000,000l. But it has never exceeded 21,400,000l. in the amount of its issues; and it is unfair to charge on the Bank of England any conduct different from that which the promoters of the measure themselves intimated to the directors of the Bank they should pursue. In what position, then, are we now? It is this—that whilst the Bank coffers are crammed with gold and silver, the Bank itself has been—under the restriction of this Act—very nearly stopping payment—and that a house of highest credit—men that could pay 80s. or 90s. in the pound—is in this position, that unless something be done to set credit and money free, four weeks will not elapse before it may stop payment. Such, indeed, is the position of affairs, that, with an unmixed standard of gold, I am assured that a great house in this city, with 60,000l. of silver bullion in its possession, has been unable to raise money upon it. Can anything, then, be more monstrous than that a man should not be able to pay his way with 60,000l. of that metal in his possession, which is the money of all the world except England, and, I believe, Portugal? I assure the House I have heard 623 this on such authority that I cannot doubt the statement. Well, then, Sir, we are in this position, that all the trade of the country, whether export or import, is, as has been stated by the hon. Gentleman the Member for Lancashire this night, brought to a dead lock for want of money; and this whilst the credit of the mercantile and manufacturing community is good, whilst the credit of the Bank is good, and whilst her coffers are full of bullion, but of bullion which your Bank Charter Act forbids her to touch. Does not then the common-sense way to get out of this difficulty appear to be this—to remove this restriction on credit, that is starving and destroying the trade of this country — and that will soon starve the people of this country? For if my argument be worth anything, that the contraction of credit will make it necessary to withdraw orders for provisions from America, I am only speaking literally, when I say that the effect of this will be that three months may not elapse without the country not finding a sufficiency of food for the population. There is food enough in the world if credit were set free; but we shall be in the position of starving the bellies of the people, in order that we may feed with gold this idol of yours, the Bank Charter Act. If, then, that be the obstacle in the way of your trade, and if it is clear that free trade and a restrictive currency cannot work together, for God's sake, and for the sake of humanity, let us be quick in repealing these obnoxious measures. I well remember that Mr. O'Connell said, not long since, when speaking of supplies for the people of Ireland, that "rapidity of action was the essence of humanity and of political sagacity. I agreed with him in that opinion. You have seen the fatal effects of leaving the people of Ireland to supply themselves. Take warning by the fatal consequences that have followed your course in Ireland, and now have recourse, not to temporising measures, but to "rapidity of action," and believe that in such "rapidity of action" now will be found the "essence of humanity and political sagacity." Let but the trade of this country once receive a fatal check, and you know not where it may stop. It is apprehension, it is true, just now; but this apprehension may, in the course of a few weeks more, be turned to reality. I am told that there is in Lancashire one great house, whose solvency is above all question, and yet which, unless 624 something be done to bring credit into operation, will be in the situation of stopping payment; and I understand that if that house stop payment, with it will fall no less than thirty other firms. Let bankruptcies once begin, and the whole credit and commerce of the country will go down like a pack of cards; and therefore it is that I call upon my right hon. Friend the Chancellor of the Exchequer and upon the noble Lord (Lord J. Russell) to look to the great interests of the trade of the country; to remember that the present difficulty is not limited to cotton speculators—that it is not limited to railway proprietors; but that those who are walking in the steadiest manner, in the legitimate course of trade, whether it be with the East Indies or with the United States, or with the West Indies, or elsewhere, will be immersed in one common ruin. You have tried this measure — you see you cannot have free trade—and that you cannot encourage unusual importations, not only of corn and provisions, but of foreign sugar or foreign manufactures, without paying for them in gold. You promised that foreign countries would take your manufactures in return for what they sent you—and God grant it may be so!—but the time has not yet come when any very strong indication of it is perceptible. I fear, indeed, that the only indication we have is, that the late elections in the United States induce us to believe that the tariff from which the Americans raise the greater portion of their revenue, is not so likely to be relaxed as to be restricted; and that, as America is receiving more gold for the reduced amount of cotton with which she has supplied us, than she formerly received for the larger quantity she furnished, and receiving English gold wherewith to carry on her Mexican war, she will not relax that system which has contributed to bring this country to such a crisis. And as regards Russia again—Russia, of whom it was said she could not go to war for want of money, and without the aid of the Barings and the Rothschilds—why, she is herself obliged to come to the help of Western Europe, and I do not think there is much prospect that Russia will speedily change her policy or reduce her tariff; whilst Prussia—that country of which last year it was said, she was already "shaken," has actually raised her tariff on all our manufactures. It seems to me, therefore, that any expectation on our part that we can recover our gold by any early change in the commer- 625 cial policy of these countries from which we take their produce, is but a very faint and slender expectation; and I do trust, then, that, under these circumstances, her Majesty's Government will condescend to copy the example of great Ministers that have preceded them; and that when they find the trade and commerce of the country unable to move in consequence of your monetary regulations, they will come forward, as Mr. Pitt and Lord Liverpool did before them, not only to take off this mischievous restriction on the operations of the Bank; but also, with advances of Exchequer Bills, to set the trade of the country at liberty. You have tried this Bank Charter Bill, and it was harmless so long as it came not into operation; and yet it is a measure of a description which involves great danger, if, under certain circumstances, such as the present, you persevere in maintaining it. The right hon. Baronet said, and I was delighted to hear him say so, "that he had no parental affection for that measure which would induce him to maintain it after he should be persuaded it was not for the benefit of the country." I think he must see that it was not successful in preventing great speculation in this country. Happily that speculation was of a nature which led to the employment of money and labour at home; but, so far as speculation is concerned, it never run riot more uncontrollably than in the year 1845. And now that another change has come—now that we have had bad harvests and short cotton and hemp crops, and limited supplies of tallow and such like productions have succeeded—it is perfectly clear the Bill will have a most disastrous operation. And when it is recollected that, amongst other operations of the Bill, every sovereign drawn from the country not only withdraws a bank-note at its back, but also that we are getting near that verge when silver under the Bank Charter Act will not be sufficient to represent notes, I think that it is high time to consider whether we had better not suspend that Bank Charter Act. I think I am correct in stating, that while silver is not the legal standard of this realm above 40s., the Bank is entitled to count it as part of their bullion, but only to the extent of one-fourth of the gold in its coffers. We are not told what the proportions of gold and silver coin are in the returns of bullion; but, referring to the issue department, we find that there is of gold 7,120,000l., and of silver 1,429,134l. 626 We may therefore calculate that there is only a margin of 356,867l. of gold over and above that amount which can be represented by silver; that is to say, that after 350,000l. more is drained from this country, then not only the bank notes must be withdrawn, but silver must cease to count as a basis of note circulation. Well, then, supposing there should be a drain to the amount of 716,536l. of gold, the effect would be that it would neutralise 179,134l. of silver, on which the Bank, so long as it has gold to the amount of four times its silver, would be entitled to issue notes. If the drain continues, and the amount of gold is reduced to 4,000,000l., out of that 4,000,000l. there would be 1,000,000l. only which would he available for the issue of notes; so that we are getting very near the verge, when the Bank Charter Bill will be more restrictive in its operation than it is at present—when silver, not being the legal standard, will be not available for any purposes further than those of commerce. We saw in former times, in 1793, when the trade of the country was in difficulties, Mr. Pitt issued 5,000,000l. of Exchequer-bills, and that pressure was at once relieved; and so, at various times in the course of the French war, the same process was resorted to. In 1816, when I think there were no less than 2,000 bankruptcies, the Government of that day came forward and postponed the hour of a return to cash payments, and instantly prosperity was restored. And when the Bill passed in 1819, and again restricted the currency, there was the same distress; we then got out of the difficulty by an issue of 1l. and 21. notes. So in 1825 and 1826, when Mr. Huskisson said we were within four-and-twenty hours of barter, the Bank of England happily discovered a million of 1l. notes, which served the purposes of the trade of the country; because, though it is true that bank notes are not available for the payment of foreign accounts, they are perfectly available at home, and a supply of bank notes would set at liberty a great part of the thirty-five or forty millions of sovereigns which are supposed to be in circulation in the form of what is called the "small change" of the country. I was speaking of credit, and the way in which it would be affected by a repeal of the Bank Charter Act, and I will give an instance of the effect of credit. Lately the Bank of France and the trade of France was very much in the same predicament as that in which we now are; the 627 Bank of France then succeeded in obtaining a loan of 800,000l. from this country. Well, no sooner was it known that the Bank had obtained that amount of bullion from this country than confidence was restored, and trade revived so much, that the Bank of Prance was enabled to forego the demand of the whole of that sum. The last instalment of 200,000l. never left this country. That shows how all turns on credit. Set the Bank of England free, and confidence will be at once restored, and they will cease to have these urgent demands for discounts. We have tried this Bank Charter Bill now for three years, and having found it to fail, reason points out to us that we should not persevere in maintaining it. I think that as we have found that this is a tree which has not borne good fruit, we should follow the example of a certain man in the parable, who had a fig-tree in his vineyard which brought forth no fruit, who said to the keeper of his vineyard, "Behold, these three years have I come, seeking fruit and finding none; cut it down, why cumbereth it the ground?"
§ MR. CARDWELL
If I thought the present a proper occasion for importing into the discussion of this question a party character, I do not think I could help making merry with the concluding paragraph of the noble Lord's observations. I would congratulate him on the discovery he has made, that when a great measure, which has been passed for three years, has remained practically inoperative during that period, and under peculiarly ad verse circumstances has suddenly become operative, it is right and proper for its promoters to abandon it. The time has arrived, in the judgment of the noble Lord, who voted for the Bank Charter Bill, at which even the advocates and supporters of that Bill may without any disparagement to their consistency, come forward and vote for its repeal. But I do not think the present is the time for inculpations of this nature; and the few observations which I shall venture to address to you, I hope I shall offer with all respect for the House and the noble Lord, in perfect soberness and earnestness. In that spirit the noble Lord will allow me to say that those who heard the premises with which he introduced his speech, must have been greatly disappointed with the conclusions at which he arrived. I listened to the early paragraphs of the noble Lord's speech with great satisfaction. I heard him tell the House that wheat was 120s. the quarter; that stocks, both of our own pro- 628 duce and foreign produce exportable were low; that the price of cotton had unfortunately risen very high; and I heard him go on and say that he saw no reason why the present pressure should be temporary; and that if for a temporary purpose you did encourage foreign importation and domestic consumption here, then the state of things would justify the belief that you must infallibly have to pay for it in the end. These were the premises with which he started; and since, unfortunately, these things were true, I confess I heard them put in the foreground of his speech with very great satisfaction, because I thought they would bring him to a sound and legitimate conclusion. But all his premises have been addressed to the real gist of the question—the great pressure upon us in reference to the amount of our capital, forming the effective and substantial means we have in our power; whilst all his remedies are directed to a totally different subject—the regulation of our currency. I wish those who speak so freely as to the regulation of our currency would consider for a moment what the function is which that currency performs in the commercial world. I believe they will find this to be the fact; let them manage the arrangement of that currency how they will, they can never extract any artificial advantage from that arrangement. Let the Bank fail to manage it soundly, and those derangements which an unfortunate state of trade produces are most grievously aggravated, and their intensity heightened by any mal-arrangement of the currency. Adam Smith likens it to the operation of a wheel, which creates nothing in itself, but carries round in regular course that which has been created; and it is this doctrine of Smith that those who wish to effect a different arrangement are so fond of relying on. But let them consider to what this illustration carries them. The currency may perform its functions accurately or inaccurately. If accurately, then, when trade and commerce are disturbed and confidence is shaken, the circulating medium will be proportionally contracted; you will economise when the pressure begins, and you will never have to feel its utmost intensity at last. But if the currency act irregularly, it will appear to give you abundance when in reality there is scarcity before you; you will not use economy in the outset, because you will be misled by an erroneous currency to believe there is abundance; the want of economy 629 at first will ultimately diminish the supplies you have at command; and then at the end will indeed come upon you the real intensity of the pressure, and the currency will have aggravated the wants which the real exigency of the crisis has brought upon you. What are the real causes of the pressure that is now felt? Are they far to seek? Has not everybody who has spoken alluded to them? Not long ago, by the blessing of God, we enjoyed good harvests, and were in a state of very great prosperity. This country undertook, I think in an intoxication caused by that prosperity, to execute far larger works than this or any other country was capable of accomplishing in the time. It was a very little thing to embark the small percentage required in the first instance; but before your great works were completed, you had great exertions to make, and an arduous task to confront. Whilst you are in the act of performing this, before you yet feel the pressure severely, what comes upon you? One of the greatest calamities that ever afflicted any country in the world; one which the noble Lord at the head of the Government told us revived in the present day the mournful recollections of the Middle Ages. Cast as you were into this calamity, what did you do? It becomes me not to speak in terms of any great disrespect of the persons who manage the great establishment to which so many allusions have been made; but perhaps I may be permitted to say that it would have been more fortunate if the alarm had been taken earlier in that quarter. I do not think it inconsistent with the respect I feel for them to say, that if they had seen earlier that the contraction was begun, more fortunate results would have ensued. I dare to speak in this same spirit of the operations of the right hon. Gentleman opposite; I hope he will not think me wrong to say that, while the country was labouring under the combined results of its own intoxication, and a great restriction of circulation, when he saw that the Bank had not contracted its issues on the first moment of danger, it would have been fortunate if he had not found it necessary to demand from the Bank of England a considerable assistance at the instant when they were sustaining, from other reasons, great pressure. As regards the currency more immediately, every one will admit that there are two duties, and two only, to be expected from it: the first, truthfulness of standard; the second, and a very subordinate one, eco- 630 nomy of application. With respect to the truthfulness of the standard, you adopted in 1844 a measure which was expressly stated to be only the complement of the measure of 1819. That measure of 1819 secured to you the right of converting your bank notes into gold, but failed in securing you absolute convertibility; for you found by experience that where great and general inducements were offered, the temptation to let out at the moment was too great for individual prudence to resist, and that very thing was done which high authorities have asked the House to do to-night—the circulation was increased, when, upon the ordinary sound principles of currency, it ought to have been diminished. It is a mistake, then, to say that there was any new principle in the Bill of 1844; its principle was to give you in practical effect that to which you had a legal and undisputed right under the Bill of 1819. The first effect of the Bill of 1844 was to produce some considerable drain of gold from the coffers of the Bank of England, which was not exported to foreign countries, but distributed in the coffers of private hankers and others in Scotland, Ireland, and the country districts of England. We are now told that the Bill has been inoperative, but that is not so; it has saturated the country with gold, where otherwise it would have been filled with country notes—no doubt with some sacrifice of economy. But did our trade languish because there was more gold, and our currency was maintained at a greater expense? Not at all; our trade was never more prosperous. Why have you had the command of all the granaries of the world? Why, in a time of famine and of unexampled pressure, have there hitherto been no failures? Why has our trade been in a comparatively sound state? Because the Bill was operative during those two years. Now we are told that the Bill had been found to do mischief, because it contracted the circulation; and in the next breath we are told that the circulation was never very considerably affected: that it was now 20,000,000l., and the maximum 21,500,000l. Another Gentleman said that there is no confidence. How do you propose to increase confidence? Do you think that announcing to the world that Government had made arrangements with the Bank of England, and that they are going to tamper, in a time of distress, with that which had served in a time of prosperity, will create confidence? I believe that it would create distrust and alarm to an extent 631 of which few can form an idea. If you make the alteration, will the foreigner be content? The argument stated is, as there are bank notes at home, you will very easily be able to send your gold abroad. What do you propose to do? By increasing the total amount of money in circulation, to raise at home the price of all the articles in the market. What is the way to avoid a drain of gold? Why, to pay with other things, and not with gold. And how are you to do that unless you induce the foreigner to take those things, and not gold? And how are you to induce him, if, by sending four additional millions of bank notes into the market, you raised in this market the price of every article? I am astonished to hear this doctrine here tonight. We need not disguise the fact. It is not agreeable to reduce prices, and let a foreigner have a thing for 180l., or 150l., or 120l. which is worth 2001. We must pay, however, for what is imported; if not in gold, we must induce the foreigner to take other articles. How does your Currency Law apply to this? There are 35,000,000 sovereigns and bullion in the Bank of England. If we reduce the circulating medium of the country, every sovereign abstracted from the circulating medium will tend to raise the price of money, and depress the price of commodities. It tends to induce the exportability of other things, and to prevent gold from going out. When this measure passed in 1844, we were plainly told how, in a time of prosperity, it would saturate the country with gold; and I agree with the hon. Member for South Lancashire, whose opinion is deserving of much respect, that the opinion attributed to Mr. Huskisson must have been that by thus saturating your country with gold in a time of prosperity, you would have gold which, you could export when a time of adversity arrived; but Mr. Huskisson never meant to say that when the necessity for importing corn—that necessary of life which, at all hazards, you must have—arrived, he would tamper with the currency—that for every guinea that went out for corn, he would provide a paper guinea—and keep up the tendency for other guineas to go, and diminish the tendency for other articles to go. This brings me to the suggestion of the hon. Member for South Lancashire, who proposes, as there is a large part of the circulation in gold, that Government shall call in the gold, send a part abroad, and retain part in the coffers of the Bank, to secure the convertibility of 632 the rest. The hon. Member must excuse me if I point out another great fallacy. It is argued from experience, that a certain amount of gold in the till of the banker is enough to answer a certain amount of liabilities in circulation, and it is supposed that you have only got to take all the circulation of the country, and lock up a third part in the coffers of the Bank, and you may, without the least objection, issue the other two-thirds; and it is assumed that the experience of bankers proves this point. It proves no such thing. What it proves is this—that the circulation of the country being in a healthy state, gold being in the hands of private individuals, small traders, and dealers, throughout the country, one-third will be sufficient to answer the probable demands on the Bank. The noble Lord who has last sat down, who said that the pressure was only temporary, was the most strenuous in exhorting the House to attempt an alteration in the currency. If it is to be permanent, for every departure from sound principle of which we now attempt to be guilty, we shall have a double penalty to pay on some future occasion. Why, knowing what the pressure now is, we should be disposed to run ourselves into double danger, the noble Lord has not stated anything which deserves to be dignified with the title of an argument. I will briefly recapitulate my arguments. Our misfortunes or our prosperity depend not upon currency, but upon the amount of our capital; and our currency represents our capital, correctly or incorrectly, according as it is a good currency or a bad one. If it represent it correctly, which is the most favourable condition of things, then we shall always have to suffer such misfortunes as any pressure on our capital may create; if it represent it incorrectly, then we shall have to suffer such calamities besides as the aggravation of circumstances might cause—the original evil of pressure upon our capital, and the additional evil of derangement of our currency. Truthfulness is the first object of currency— economy only the second. In a time of prosperity, with experience before us, we settled a scale of currency, and the amount of the issues of the Bank. The effect of the Bill has been to saturate the country with gold, without pressing on the energies of trade. We are now called upon, under the pressure of distress, to tamper with the currency—we are told we cannot rely upon the pressure being temporary. We know, however, that if we depart from 633 principle, we shall have to pay for it. We have no reason for believing that the time when we have to make a double payment will be favourable; on the contrary, there is every reason to believe that the mischief will be greatly aggravated. We are required, I think, to say to the people, "We call upon you to accommodate yourselves to the necessity of the position in which Providence has placed you. You have been afflicted with scarcity—you must practise economy—corn you must have, and corn you must pay for. You must pay for it in gold, and the gold must contract the currency until there is a temptation to the foreigner sufficient to induce him to deal with you in other articles. Then the drain on your gold will cease; and above all, considering the clouds that frown upon you, you must not dare—great as the present danger is—to face the far greater danger which in this state of the country a departure from sound principle would most certainly bring about.
§ MR. T. BARING
could not agree with his hon. Friend the Member for Clitheroe, that the distress under which the commercial body throughout the kingdom were now labouring, proceeded entirely from the effects of large importations of corn, the results of railway speculation, or the mismanagement of the Bank; nor could he agree with his hon. Friend in the conclusion he sought to establish, that no new principle had been introduced by the Bank Charter Act of 1844, for that it was to that measure we owed the influx of gold into this country. At other periods it was well known that large importations of corn had taken place without their being followed by similar disastrous consequences. In 1839 and 1840 there had been large imports; but the commercial community had then the means of meeting their engagements, and there was not that excess of anxiety which now existed. Other countries had much wanted corn, and had imported it to a great extent. The wants of France, for example, had been great; but still she was not in that state of financial difficulty which was experienced in this country. It was true that there was a larger metallic currency in France as compared with the paper currency, being 30,000,000l. of the first, to 15,000,000l. of the latter; while we had 30,000,000l. of paper, against upwards of 20,000,000l. gold. But the question was this: had the Bank of France, in the difficulties of that country, refused those facilities of com- 634 merce which the Bank of England had lately refused, and been obliged to refuse? The Bank of France had not. With regard to speculations in railways, he was one of those who thought that operations of that kind had been carried too far. With all the advantages that railways lent to the country in the development of the national resources, still it was impossible not to see that when a great amount of capital was abstracted from the usual channels, and devoted to some one particular purpose, as long as the money market remained favourable, the investment was as transferable as bank notes; but when once a turn took place in the market, those who had invested their money in those securities found them totally unavailable. Still there had been other times when speculation ran high; and yet there had not been that total want of means upon even the best possible security to meet the pres-sing engagements of the day which had lately been experienced. The right hon. Gentleman had hinted that the Bank had a little mismanaged matters; and that the Bank Act had not been exactly worked as it ought to have been by the Bank. If he understood the Act of 1844, it was that Bank notes were to be issued as gold came in; and if the Bank had upon that principle issued last year four or five millions more notes, as it might have done, then when a drain came, instead of withdrawing seven millions, there would have been a withdrawal of eleven or twelve millions. He did not mean to say that the reduction of interest in August was not an unwise step. He believed it was; but at the same time it was a step which it was competent for the Bank to take, according to the terms of the charter. His right hon. Friend had said that the Bank ought early in the year to have raised the rate of interest; but his right hon. Friend should recollect that when he brought forward his budget in February, his right hon. Friend stated, amongst other favourable circumstances, that he was gratified and surprised to find that the whole importation of corn, which had been above 5,000,000 quarters, had not reduced the bullion of the Bank when compared with February, 1846, to a greater amount than rather above a million sterling. Why, then, was the Bank bound by its own act to make money so much dearer? It was no want of discretion on the part of the Bank which had produced a pressure totally unparalleled since 1825. He believed that without a limit on the 635 power of the Bank, a smaller amount of notes might have sufficed. With respect to the Bill of 1844, he had felt incapable of giving a general opinion on its results; but he had ventured to express the belief that it was a bold experiment, but at the same time acknowledging, as he had done, that inconveniences then existed; and looking to the high authority from which the measure had proceeded, he had felt disposed to give it a fair trial. He had not felt prepared to predict what would be the consequences of the Bill; he did not know that he should have been ever able to answer the question put by the right hon. Baronet the Member for Tamworth, "What is a pound?" but this much he could say, that having for a long time been engaged in commercial affairs, and having rather attentively considered them, he could state what facts were; and he knew that for ten days there was a total want of the means of obtaining accommodation by the most solvent houses upon the most undoubted security, and that because the Bank of England by its charter was unable to afford it; and he knew that it was impossible to raise a penny upon 60,000l. worth of silver—a precious metal which was a legal tender in most parts of the civilized world. Parties who imported silver had money to pay; and the owners of silver came to the Bank to sell, and the Bank refused to buy. It was not a question of price with the Bank, but a question affecting its own safety. The Bank could only issue notes upon silver to the extent of one-fifth the bullion in the Bank. But it might be said, "Why not ship the metal to Paris or Hamburg, and draw against it?" But no one had money wherewith to take a bill of exchange. Then it might be said, "Send it, and get returns for it." But suppose that bills having a fortnight to run were sent in return to London, they would be refused discount. If such proceedings on the part of this country were not productive of so much inconvenience, they would be held up to ridicule by foreign countries. Was the case he had mentioned a satisfactory proof of the operation of the Bank Charter Act? He thought a discretionary power ought to have been left either with the Government, or that the House would in its wisdom modify the Bill when necessary. He was ready to allow that the Bill had worked well during the three years of prosperity in which it had been in operation, and that it had prevented any excessive 636 issue on the part of the country banks. But when it came to a drain of gold to meet an unavoidable want, there ought to be some means of avoiding measures by which the commerce of the country would be dislocated. The commerce of this country was carried on upon a system of credit; and if they brought it to a ready-money system they paralysed trade in the manufacturing districts. What was required was to give facilities to exports, in order to pay for the corn in manufactured goods, because the houses in Manchester could not carry on their trade upon four months' bills which when carried into Lombard-street were no better than bits of blotting paper. Would not the manufacturers rather have cheap money than cheap cotton? Cotton was dear all over the world, and they shared the high price with their foreign rivals; but the low rate of interest on money was one of the great advantages in favour of the English manufactures. When they made the interest of money 3 per cent in August, and 13 per cent in April, they made trade the greatest lottery in the world. Something had been said about speculation in cotton; but it must be remembered that it was founded upon a deficiency of cotton. Now, if our manufacturers had large and accumulated stocks of everything, then, by making money dear, they might be forced to export and sell their goods. But it was not so, on the showing of the Chancellor of the Exchequer himself. There had been no overtrading; the manufacturers had shown a sound and careful discretion, and yet it was that part of the community which was to suffer. The Bank might have mismanaged its affairs; the right hon. Gentleman had certainly mismanaged his; but the sound and careful commercial interest was to suffer, and the calamity was to be met by fettering commerce and by paralysing Manchester and Liverpool. Could the mercantile interest carry on the export trade, which must be carried on by credit, when all accommodation was refused them? Or did the right hon. Gentleman think he could secure the revenue and the prosperity of the country by a system which carried commercial affairs to a liquidation? Hitherto there had been a real pressure, but not yet a panic. But there might be a panic if credit were still refused. Hitherto there had not been a whisper of discredit against the commercial body. But the House must not fancy that their resources had not been disturbed, 637 and that great sacrifices had not been made to meet difficulties which had not been of their own creation. It was highly desirable to know how a sudden drain could be met without a sudden depreciation of the property of the country. The country had exported, say 7,000,000l. in gold, and the property of the country had been depreciated 100,000,000l. in value. It was clear that this sudden drain could not be paid in manufactures immediately; it should therefore be spread over a longer term. They would pay for the corn in manufactures, but not all at once. He considered that they either ought to say that a discretion should be placed somewhere, or that in a case like the present, when there was a great emergency, the Bank should have a greater liberty of using its securities for issues of notes. He believed that if the Bank of England was willing to advance half a million of money to-day, it might do so, and thus liquidate private accounts, and yet find half a million in its deposits, with only a change from one deposit account to another. The right hon. the Chancellor of the Exchequer had stated that the present pressure had in no degree been occasioned by the operations of the Government. He was not actuated by any factious motive towards the Government, and he was still less disposed to attribute to them any share in producing the present financial difficulties beyond that of having supported measures which had led to or increased those difficulties. He was quite ready to allow that the system followed by their predecessors, which had been resorted to in the years of prosperity, of taking off duty after duty, on the supposition that an increase in the amount of duty paid would compensate for their loss, was very successful during such a period; but it did not allow any possibility of meeting a time of adversity without placing the Government in the situation in which they now were. Such a system rendered it necessary for the Government, unless it retraced its steps, either to contract a loan or to increase direct taxation; or, it might be, to resort to both those measures. The rule that two and two did not always make four, might be sometimes correct; but they had been going upon the principle that if two were taken from two, there always remained four. The Chancellor of the Exchequer-had said that he had nothing to do with the present pressure—that he had only taken his usual advance from the Bank. 638 He begged to remind the right hon. Gentleman that he had not mentioned his want of advances from the Bank upon deficiency hills; that he had not led the public—and certainly he had not led the loan contractors—to suppose that he would want any deficiency bills. On the contrary, the statement of the right hon. Baronet (the Chancellor of the Exchequer) was, "I want 8,000,000l.; I will not give any discount; I want 1,000,000l. each month, and I don't require it sooner or later." He certainly left the room, after the right hon. Gentleman had made that statement, under the impression that if the Government would not give the same rate of interest which they would have to give for deficiency bills, they would not want any deficiency bills. The right hon. Gentleman, therefore, certainly did not lead the public to expect—what he (the Chancellor of the Exchequer) stated he had given notice of to the Bank—that he would require the ordinary amount of deficiency bills. He was aware that the loan contractors were not likely to find much sympathy from that House or from the public, and he did not think they needed it. He considered, however, that under the circumstances which, from the conduct of the right hon. Gentleman (the Chancellor of the Exchequer) he believed to exist, although it was not a very lucrative affair, the price given was a fair one on both sides. The right hon. Baronet had stated that he thought this was a measure which would benefit the public. Undoubtedly if it benefited national credit and the funds, it would be an advantage to the public so long as the Bank was able to afford them the usual facilities. He trusted that the Bank might be able to afford those facilities; but if there was a demand for gold from America, and no supply was obtained in this country from other places, it must be met by a contraction of the circulation of notes. He thought his right hon. Friend would have pursued a wiser course if he bad not taken what he would call the narrow view of a needy Chancellor— an empty exchequer, but a wide and comprehensive consideration of all the interests of the country; and the right hon. Baronet would then have seen that it was not because we had 8,000,000l. or 10,000,000l. to pay to foreign countries that such an effect ought to be produced upon our commerce as to make our most solid and stable and prudent institutions tremble.
§ SIR G. CLERK
considered that a great compliment had been paid to the operation of the Banking Act of 1844, for it had been admitted that that Act had prevented an undue issue of paper by private and joint-stock banks; and that if such an excessive issue had taken place, the difficulties of the present moment would have been greatly increased. He presumed, however, that the hon. Gentleman who had made this admission would consider that while it was quite right to limit the issue of private and joint-stock banks, because they had abused and were likely to abuse their powers, yet the past experience of the mode in which the Bank of England had managed its affairs, had shown that under no circumstances was it likely to increase the issue of notes, and so to encourage any undue speculation. Now, he believed he could refer the hon. Gentleman to statements made before Committees of that House, which would prove that, whenever great speculation was going on in this country, there would always be abundance of commercial paper offered to the Bank; that the Bank adopted no other criterion of judging of such paper but the solvency of the parties offering it; and that there was no security against an undue issue of Bank paper, which, whenever an undue pressure occurred, would occasion great inconvenience. He thought, however, that the hon. Gentleman had omitted to notice the broad distinction pointed out by the hon. Member for Clitheroe—the distinction between the currency of the country, or the mere machinery by which operations were carried on, and the surplus disposable capital of the country, which was the only fund upon which merchants could draw for the resources they required. What, he would ask the House, was the present situation of this country? We had, owing to a visitation of Providence, experienced an entire destruction of a great portion of the agricultural produce of this country, which had occasioned a deficiency of available capital to the extent of between 20,000,000l. and 30,000,000l. Under what circumstances did this calamity overtake us? There had been, during the last few years, extraordinary speculation in railways, and a consequent abstraction of a large proportion of the disposable capital of the country from the purposes to which it was formerly applied. The consequence was, that there was a much less proportion of that capital left, than there otherwise would have been, to aid and assist the com- 640 mercial world in the present crisis. The necessity of purchasing large quantities of corn abroad, had led to the exportation of a considerable amount of capital; and as the famine had been experienced to a greater or less degree by the continental nations, they were able to devote but a small portion of their money to the purchase of our manufactures. We had, besides, incurred an extraordinary expenditure of 8,000,000l. for Ireland; and the united effect of these causes had been to make a great drain upon that fund which, in ordinary years, was employed in giving assistance to the commercial world. Was it extraordinary, then, that the rate of discount should have risen from 2 per cent in August last, to the extraordinary amount which had been mentioned? He thought the House would admit that it had not been shown that these evils would be alleviated if the Act of 1844 were repealed, and if no restrictions were placed either upon the Bank of England or upon private banks. He might observe, that though in the months of January and February the extent to which the crops had failed was well known, the Bank for a long time took no steps whatever to reduce their issues by raising the rate of discount. The Bank went on without giving any warning or notice to the public till they began to feel the pressure themselves, and they then perhaps drew the cord too tight and refused to give sufficient accommodation. The necessary consequence was, that for a week or ten days the greatest distress prevailed in the money market. Within the last week the Bank had been enabled to give increased accommodation to the public; but that accommodation was afforded under the Act of 1844. He contended, that if the Bank had acted on the principles of the Act of 1844 at an earlier period, although a certain degree of pressure must have been felt, the country would have been saved from the aggravated pressure which had recently been experienced. He regretted, indeed, that with respect to a matter of such vital importance a debate should have arisen in so desultory a manner, and not on a Motion which could bring to issue the question, whether any of the evils now complained of were justly attributable to the Act of 1844; and he was surprised that the hon. Member for Huntingdon, holding the position which he did in the commercial world, did not give notice of a Motion to repeal the Act of 1844. In such a case he thought it would be found that the House would abide by the sound prin- 641 ciples of currency laid down in that Act. It was true, that an Act of Parliament might he passed to make half a sovereign pass for a whole sovereign; and in paying a creditor any man would certainly be benefited by finding his half sovereigns rendered equal in value to sovereigns; but the next day if the same individual went to purchase any article with his half sovereigns, he would find that the nominal price of it had considerably risen, in consequence of the law making a half sovereign a legal tender for a whole sovereign. No advantage would be gained by such a measure; and the only result would be that the monetary transactions of the country would be thrown into confusion. The real fact appeared to him to be, that the people had undertaken too many great works within a limited period, which they had not the money or ability to pay out of their annual revenue. They had undertaken more railways than they could effect within the proposed time. This plunged us into difficulties, which however might have been surmounted if we had had an abundant harvest and an increased export of manufactured goods. But as the case was, the people were now obliged to draw on that surplus capital which otherwise might have gone to the accommodation of the commercial world. This caused the existing pressure; but the adoption of the strictest economy with respect to the public expenditure and every other branch of expenditure would tend to create an amelioration. Any attempt, however, to tamper with the currency, though it might act as a momentary stimulant, would, like all other stimulants, be followed by a reactionary effect. With respect to the particular measure before the Committee, he confessed that he entertained considerable doubts whether it would produce the beneficial effects which the right hon. Gentleman the Chancellor of the Exchequer anticipated from it. He feared that persons who had subscribed to the loan, might continue to find that they could got 6 or 7, or 8 per cent by discounting bills; and in this case they would not be much disposed to advance the payment of their instalments of the loan, when they would get for the money so advanced only 5 and 4 per cent. He was, however, quite willing that the experiment should be tried, and had no wish to offer any opposition to the Motion.
§ MR. DISRAELI
was very glad that the hon. Member for Huntingdon had not pro- 642 posed the repeal of the Act of 1844, because that would have been withdrawing the attention of the Committee from the real question before it. The hon. Member for Clitheroe, while expressing an opinion that the noble Lord the Member for Lynn had introduced the elements of a much wider discussion than the resolution submitted to the Committee seemed to warrant, had, nevertheless, himself pretty extensively travelled into the forbidden province, and touched largely on all the subjects which he had intimated ought not to be discussed. The hon. Gentleman had laid down certain principles for the establishment of a sound currency, the accuracy of which it would be difficult to challenge; but they did not appear to bear a very close reference to the circumstances with which the Committee had now to deal. The hon. Gentleman told the House, above all, in the establishment of the currency to beware of artificial arrangements; but he wished to know whether the currency in this country was not now founded on artificial arrangements? It was very easy to deliver an abstract lecture and lay down principles which might answer in Utopia for the establishment of a currency; but he apprehended that the criticism of the hon. Gentleman could not apply to the exceptionable circumstances found in every existing currency. The hon. Gentleman, however, after expressing these abstract opinions, delivered a panegyric on the measure of 1844; and if that panegyric were just, it must of course terminate all discussion on the subject. The hon. Gentleman said, that the object and result of the measure of 1844 was to saturate England with gold. We might be drained at present, said the hon. Gentleman—we might be subject to a most severe and unusual pressure, but by the providential arrangements of 1844 the country was found prepared for this pressure. The hon. Gentleman would have them believe, that, thanks to the arrangements of 1844, the country was literally saturated with gold; and this being the fact, severe as was the pressure, and severe as might have been the suffering of the merchants and the manufacturers, there was, of course, a fund prepared to meet the unexampled requirements of the exigency; and, of course, nothing could have gone wrong. If this was so, what was the meaning of any discussion whatever on the present state of the commercial world? But he feared that the hon. Gentleman had been rather too liberal of his assumptions. What was the state 643 of this country with respect to the precious metals before the introduction of the Act of 1844? How far was England saturated with gold at that particular period? He held in his hand the last return that had been published before the passing of the Act of 1844, and, by a reference to that document, he found, that on the 7th of September, 1844, the quantity of bullion and coin in the Bank amounted to 15,209,060l. With that amount of bullion in the coffers of the Bank in 1844, it was evident, therefore, that it could not have been the measure of that year that saturated the country with gold. He would not pause to enter into the question of what degree of saturation would be required to enable them to meet the difficulties of the present juncture; but he would revert to the hon. Gentleman's position, that they were indebted to the saturating qualities of the Act of 1844 for being overrun with gold. If there were any hon. Members who were inclined to be influenced by that statement, he would take leave again to direct their especial attention to this fact, that in the year 1844 the Bank had on hands an amount of bullion and coin which had been scarcely exceeded in any account which had been subsequently published. The hon. Member intimated the causes to which he was himself inclined to ascribe the present state of the monetary system, and of the commercial world generally, to the fact, that alarm had not been taken earlier by the Bank: and in a manner more assured and explicit, he then proceeded to quote the opinion of a great authority, to the effect that the Bank ought to have contracted their issue when the danger first commenced; and that it was a fatal mistake on their part to have reduced their rate of interest in the month of August last. Now, notwithstanding the remarks of the hon. Gentleman the Member for Clitheroe, and those of the right hon. Gentlemen the Member for Tamworth, he was strongly inclined to think that it was the opinion of that House and of the country, that they had no right whatever, under the Act of 1844, to criticise the conduct of the Bank in its banking department. They had invented a perfect system of machinery, almost as perfect as the sliding-scale, for the regulation of the issuing department. It was announced by the Ministry, sanctioned by the House, and received by the country, as a system which was independent of the management of the Bank, of the panics of the public, and 644 of the caprices of directors. If, therefore, the Bank had mismanaged their affairs, that was their own business and not the House of Commons'. If they had placed in intimate relation with the transaction of public affairs a body over which not only had they no control, but over which they had, by legislative enactment, ostentatiously announced their intention of not, at any future period, exercising any control—much as they might regret the mismanagement of that body's affairs; great as might be their own sufferings and those of the public; and embarrassing as the consequences might be to the Government—they were stopped from any criticism on its conduct. A feeling of self-respect and a due regard for the decent dignity of that House should put criticism under such circumstances entirely out of the question. What could be a greater opprobrium on the wisdom, prudence, and sagacity of that House than that, on referring to so recent an arrangement as that of 1844, they should now, on the first occasion on which its virtues had been tested, find it wanting? and what could be more inconsistent with their dignity than that, on making this discovery, they should turn round, like common scolds, and abuse the Bank, while, with the same breath, they acknowledged that they had no control over the Bank, and therefore no possible right to criticise? Remembering the speeches of the right hon. Gentleman the Member for Tamworth, and bearing in mind words which still rung in the ears of all present, nothing but the perplexity of the House finding itself in a position from which it was impossible for it to extricate itself, could have induced the right hon. Baronet to turn round and criticise the Bank, as though it was the author of all the evil that had occurred and was occurring. He might take his stand on the non-liability to criticism of the Bank, upon the grounds he had mentioned; but he would not evade in such a manner the charge brought forward by the hon. Member for Clitheroe and the right hon. Baronet. On a subject so difficult and complicated, and in reference to which he spoke with unaffected diffidence, he should give no opinion of his own. He would mention nothing not fully substantiated by the admission of his opponents, or by documents which none could contest; but he maintained that the conduct of the Bank was not only not liable to the imputation made against it, but was entitled, on the contrary, to the expression of an opinion of a 645 very different character. The Bank of England lowered the rate of interest in August of last year. Now, he wanted to know what there was in the state of the country in August last which should have made the Bank look with any alarm to the future? The Bank then had an almost unprecedented amount of treasure; perhaps the largest amount of reserved notes which they had possessed for a year and a half or two years. Looking to their own position, their command over the precious metals, and the amount of their reserve, as well as to the general feeling of the city of London, the Bank, as a mere banking establishment, had a right to suppose that they were justified in assisting liberally every well-founded commercial movement. The directors of the Bank were men of the world, of great character and experience. Some of them were Members of that House, and could not be solely influenced by the state of their till. They might by chance have heard some hon. Gentleman previous to that time predicting the possibility of a coming scarcity, and proposing that the ports should be opened. But did the right hon. Baronet the Member for Tamworth sanction that proposal? Did the Government, which also exercised great influence on public opinion, adopt it? No. There was not, then, in August, when the Bank reduced the interest, having that great amount of treasure and reserved notes, notwithstanding the railway speculation, any apprehension in the commercial or political circles of England. The great statesmen—those who had possessed and those who then possessed power in the country—did not come forward and vaticinate apprehension and warn the Bank of a coming scarcity. What was the opinion of those who should have been better informed on this point than the directors of the Bank of England, or the merchants of the country, or Members of that House, or the Members of the present and late Governments? The best opinion on the subject was that of those engaged in the corn trade, and their opinion might be gathered from the prices which prevailed. The average price of wheat for the six weeks ending August, 1845, was 51s. 11d. per quarter; while the price, on an average of six weeks, ending August, 1846, was only 49s. 2d. the quarter. When, therefore, fault was found with the Bank, it should be borne in mind that it was the opinion of the Ministry, of the right hon. Member for Tamworth, and also of the dealers in 646 wheat, that there was no fear of a scarcity. What was the price in September, 1845, on a similar average of six weeks? It was 55s. 7d. the quarter; whereas the price, on an average of six weeks, ending September in last year, was only 47s. 3d. Was it to be tolerated, then, that the Bank was to be brought forward as a scapegoat under these remarkable circumstances, forgetting the significant silence of the men who were Ministers now and who were Ministers then, and the speaking language of these authentic documents? Let the House mark a little further how far there was any foundation for these imputations upon the directors of the Bank. In October, 1845, wheat was 55s. 2d.; but in October, 1846, it was only 52s. 11d. Even in the month of November, when we were now told that the clouds were rising, it was only 59s. 7d., and it had been 58s. 5d. in November, 1845. In the month of December it was 58s. 9d. in 1845, and only 60s. 4d. in 1846. Taking the average of the six months, July to December, it was 54s. 8d. in 1845, and but 53s. 7d. in 1846. Was not this alone a sufficient vindication of the Bank from the imputation that had been cast upon it—cast upon it, not by a casual word, not by an intimation in the heat of debate, but evidently from a foregone conclusion? Here was the Bill in distress, the great Charter of 1844 in distress. A scapegoat must be found. Let it be the Bank of England. The expression used by the right hon. Baronet (Sir R. Peel) was vague indeed. He seemed touched by a soft-hearted reminiscence; he spoke in a tender tone, and, so far as he was concerned, it might have been passed by. But the charge had been repeated—repeated in a manner the most decided, and by more than one right hon. Gentleman, as well as by the hon. Member for Clitheroe. It was the order of battle; it was the word given to the public—"It is the Bank of England that was not prudent, that did not watch the signs of the times." But what would have been the consequence if the Bank of England had not reduced its interests when it did, but had kept it as it was, or, following up the suggestion now made, had increased it? The most beneficial movement that for years had happened in this country, the most beneficial act, one that had spoken most for the prescience and foresight and admirable prudence of the body who performed it, was the act of the Bank in reducing the rate of interest under the circumstances. 647 What had occurred from it? The confidence of the public was so great, when they found in August that the Bank did not increase their rate, that we were indebted to that foresight and sagacity for the fact that all the merchants of England scoured both hemispheres to procure corn for us. We were indebted to the Bank for the fact that we had had 6,000,000 quarters of corn sent into this country, and that we were at this moment exporting to France, and had the exchanges of the Continent mainly influenced in our favour. And it was not merely that the Bank of England had contributed to feed us, and was one of the principal causes of gold flowing in from the Continent to this country, without any expression of public approbation and of public confidence; but one who, upon such a subject, was a great authority, and the last from whom they should apprehend a rebuke, must seize upon the very first opportunity of branding them for that act, so politic, so sagacious, and so beneficial. Amidst all the incoherent judgments and hasty opinions upon the causes of panic, all agreed in believing that the Bank was the great criminal, and principally believed it from the intimation of the right hon. Baronet (Sir R. Peel). He was not one of those who upon such a subject as this would appeal to the passions of the House; and he believed that if this question, on the Act of 1844, were calmly examined by an investigation of facts, and not by an assertion of windy opinions, the House might be led to a result highly beneficial to this country. What —he would not say he charged against the Act of 1844, because he wished to conduct the investigation in a temperate spirit— but what appeared to him to be imputable to it was, that it was an Act which could not prevent any of the mischiefs that under the previous system occurred, but could prevent much of the benefit that the previous system ensured. The Act, it appeared to him, and could be shown, he thought, by indisputable evidence—the Act had failed in every object which it held out as desirable to the public, and engaged to fulfil. We were told that it would prevent, or tend to prevent, anything like those financial disturbances and disorders which we associated with the name of panic. The House had had held before them, in the speeches with which the Act was introduced, and in the Committee that led to it, the instances of 1836, 1837, and 1839. It was by a picturesque representation of those disas- 648 ters, and of the public discomfort, that the House, yielding to the. great authority of the individual who introduced this measure —legislating upon a subject which he had deeply studied, and of which, in a certain sense, he was a great master—were induced to pass that Act. Now, let the House observe, that if that Bill had been enacted previous to the monetary disorder of 1836–37, that disorder would equally have occurred. In the drain of 1836, from the end of March to the end of December —namely, eight months—the bullion in the Bank fell from 8,000,000l. to 3,900,000l., yet the circulation was never so great as the limit of the circulation would have been under the Act of 1844. If the Bank, in 1836–37, had been controlled (as the phrase was) by the Act of 1844, all the disastrous circumstances of 1836–37 might have occurred. He would prove that by the public records which he held in his hands. The circulation was 17,600,000l. in March, 1836; but, according to the Act of 1844, it might have been 22,500,000l. In April, 1836, the circulation of the Bank wasl8,500,000l. and its bullion 7,500,000l. Under the law of 1844, the circulation might have been 21,000,000l. Not to go through these eight disastrous months in detail, which might weary the House, look at the result—look at December, 1836, the last month in the fatal record of that year's returns. There was a circulation of 17,000,000l., December 6th, and there was in the Bank 3,900,000l.; according to the Act of 1844, the circulation might have been 17,900,000l. With regard, then, to what was termed controlling the discretion of the Bank, it would not have been done by the Act of 1844, if it had been in existence; and therefore that Act would not have prevented the evil of 1836 —that year of great disaster and of drain. Now, how would it have prevented the evil of 1839? In April, 1839, the Bank securities were 26,600,000l.; the bullion had fallen continuously from November, 1838, from 9,500,000l. to 5,200,000l. OH the 16th of May, the Bank raised its rate of discount to 5 per cent; and on the 20th of June, to 5½; on the 13th of July, the dead-weight was offered for sale; on the 1st of August, the Bank raised the rate of discount to 6 per cent. Here was a period of gloom—of disaster—of ruin; the period when we went, he would not say begging, to Prance, but when, by the agency of the French money market, the Bank was saved from stopping. Now, what would have 649 been the effect if the law of 1844 had been in operation? In November, 1838, the circulation was 17,800,000l., and there was 9,500,000l. bullion in the Bank; the maximum limit of the law of 1844 would have added 14,000,000l. to the 9,500,000l. in settling the amount to which the circulation might go. On the 16th of May, 1839, when the Bank raised its discount to 5 per cent, the circulation was 18,300,000l. and the bullion 4,100,000l., and therefore, even at that time, according to the law of 1844, the circulation of the Bank would have been the same within 200,000l. On the 13th of July, when the deadweight was offered for sale, the circulation was 18,600,000l. and the bullion was 3,400,000l.; and therefore, oven at that gloomiest day, the circulation would hardly have been above 1,000,000l. less with the new Act. In November, the bullion in the Bank was 3,400,000l. and the circulation 15,900,000l.; it might under the new Act have been 17,400,000l. As far, therefore, as concerned controlling what was called the discretion of the Bank, which we were told was one of the great virtues of the Act of 1844, it was perfectly clear that, had it been law in 1836 and 1839, it would have operated no sensible difference; and in many months of the greatest disaster and disorder it would have permitted the directors to issue a greater circulation than they really did. Now, take another point which, in the year 1844, was particularly pressed on the House, and promised to the country—the fluctuation of the amount of notes of the Bank of England in comparison to the amount of bullion in the Bank; had that important promise been fulfilled? Take the weekly return of the 21st of September, 1844, the third return after the passing of the Act. The bullion in the Bank was 15,100,000.l.; the circulation was 20,600,000l. In the eighth weekly return the bullion was 14,000,000l.; the circulation 22,300,000l. While bullion to the amount of 1,100,000l. had run out, the note circulation was not reduced, but increased by 1,700,000l. Take the close of 1844, the year when this Act passed to insure that the fluctuation of the notes should bear a relation to the bullion in the coffers of the Bank; it would be found that the bullion rose slowly to the end of the year to 14,800,000l., while the circulation fell more rapidly to 20,100,000l. In January, 1845, the bullion was 14,800,000l. and the circulation 20,600,000l. Three months afterwards, on the 29th of March, 650 the bullion had risen to 16,200,000l., and the circulation remained exactly the same as in the beginning of the year; so that during three eventful months, in which the bullion increased 2,000,0002l., the circulation remained precisely the same. Yet it was to insure a correspondence between the fluctuation of the notes and the amount of bullion in the Bank, that the Act of 1844 was principally recommended to the House. Take, now, the 14th of June, 1845; there were 16,600,000l. of bullion, and the circulation was only 21,600,000l. On the 29th of October the bullion had sunk to 14,000,000l., but the circulation had risen to 23,300,000l. Thus, the highest amount of circulation during the two years was when the bullion had been falling continuously for four months; while the bullion sunk 2,500,000l., the circulation rose 2,000,000l. Then, if this Act did not control the discretionary power of the Bank, nor regulate the fluctuation in the notes with the amount of the bullion— if it had failed during these three years in both objects, what advantages had we gained by it to counteract the inconvenience which had been brought before the House by the hon. Member for Huntingdon? They had been told that there was an unprecedented state of affairs in the city of London—if not impending bankruptcy, a state of affairs, as far as difficulty to meet their engagements was concerned, which had never been equalled; and this when all agreed that the state of trade was sound. They were told that the Bank of England would not assist commerce, because, although it had the means to do so, it was obliged by a law, passed in 1844, to keep a great amount of treasure in a particular department. At the same time, the House had seen that this law had entirely failed in the objects it was to accomplish; that it did not exercise a control over the discretionary power of the Bank; that they might have the same state of affairs to-morrow as under the old law; and that the Bank might enter into engagements to-morrow under this Act, which it might not be in its power to meet. They ran all this risk, and met the inconvenience and injury; and yet they were told that this Act of 1814 was to produce a machinery which would curb the discretion, the fatal discretion, of the Bank, and regulate the amount of notes in circulation by the amount of coin and bullion in the coffers of the Bank. They were to pay for those two great advantages dearly, it was sus- 651 pected, at the time; most intensely it was now felt; but it would be some case for the author of that Bill, and for the Government which supported it, if the country obtained the advantages which were promised in 1844—if the Act did regulate the circulation by the bullion, and had the power of controlling the discretion of the managers of the Bank. But when they had not the power of controlling the discretion of the Bank for evil, were they, by this law, to control its discretion for good? That was the point for the House to consider, and that was the point the country must decide. They might find that our assent to this law was obtained on false pretences—of course, he meant proved so by experience—he did not use the word offensively; all he meant to say was, that it had proved a failure; it had not fulfilled what it promised to fulfil. But while the country was experiencing the greatest possible inconvenience and injury, let not the House be satisfied because the right hon. Gentleman (Sir R. Peel), or the right hon. Baronet opposite (the Chancellor of the Exchequer), turned round and said, "True, you are experiencing this injury; true, you are suffering in your fortunes; but you forget the immense benefits we have gained for you by this Bill of 1844. Do you want the panic of 1836 or 1839 brought back?" The promise that the fluctuations would be regulated, had not been fulfilled; and there was nothing in the Act to prevent the exercise of that fatal discretion which was deprecated on the part of the Bank directors. The same disasters as in 1836 and 1839 would have occurred had it not existed, and the same losses would have been experienced. The latitude of the discretion allowed to the directors was the same. But it was said these were only the superficial views taken at the first moment of public suffering. He held a document in his hand, however, dated June 11, 1844, addressed to "the right hon. Sir Robert Peel, Bart., M. P.," by the bankers of London. It was very short, very pithy, and quite apropos to the present question. It was right the House should be reminded that the united bankers of London addressed this memorial to the Prime Minister:—We, the undersigned bankers of London, are induced by the importance of the measure and our interest in its success, to address you upon the subject of the Bank Charter Bill now before Parliament. We were led to believe, when the measure was first brought forward—and we feel confident it was generally understood throughout the 652 country—that although it was the intention of Her Majesty's Government that the paper circulation of the Bank of England in their issue department, should be limited to an amount not exceeding 14,000,000l. upon securities, yet, that in the event of any particular crisis arising, a power was to be reserved by the Bill enabling the Bank of England, with the consent of the First Lord of the Treasury, the Chancellor of the Exchequer, and the Master of the Mint, to extend their issue upon securities beyond that amount. It is with considerable surprise that we find that the Bill now before the House of Commons does not contain any provision for an extension of the issue beyond 14,000,000l. upon securities, excepting under the special circumstances named in the fifth clause of the Bill now before Parliament. We are apprehensive that the absolute limitation of the issue to 14,000,000l., without any power of expansion being reserved, whether that amount be in itself a proper amount or not, will create a general feeling of uneasiness throughout the country, and, by preventing the satisfactory reception of the measure, will deprive the scheme of many of the advantages it possesses, and interfere with its success. We respectfully submit that the effect of such an absolute limitation will be to restrict the business of the country, by leading to a general withdrawal of legitimate accommodation, unless some power be reserved by the Bill for extending the issue, with the sanction of the authorities above alluded to, in cases of emergency, to be made apparent to such authorities.Who, did the House think, signed that document? Did they think it was even the two Members for Birmingham? Was it the Society for the Emancipation of Industry? Were they practical men, or mere theorists? The House would allow him to read the names, and they were names fitted to create a delightful feeling from their association with ideas of substantial opulence:—Robarts, Curtis and Co.; Hanbury, Taylor, and Lloyd; Bosanquet, Franks, and Co.; Brown, Janson, and Co.; Barclay, Bevan, Tritton, and Co.; Hankey and Co.; Smith, Payne, and Smiths; Willis, Percival, and Co.; Masterman, Peters, and Co.; Rogers, Olding, and Co.; Spooner, Att-wood, and Co.; Currie and Co.; Glyn, Halifax, Mills, and Co.; Williams and Co.; Fullers and Co.; Barnard, Dimsdale, Barnard, and Co.; Barnet, Hoares, and Co.; Lubbock, Forster, and Co.; Stevenson, Salt, and Sons; Price, Marryat, and Co.; Sapte, Banbury, and Co.; Weston and Co.; Twining and Co.; Dixon and Co.; Coutts and Co.; Herries, and Co.; Ransom and Co.; Strachan and Co.; Scott, and Co.; Cockburn and Co.The signatures to this memorial representing the whole banking power of London was preceded by one which none of those whose names were subscribed would, he ventured to say, consider inferior to any that appeared; it was the signature of Jones, Loyd and Co. It appeared, however, that one member of this firm had written a pam- 653 phlet; but, as its representations did not agree with the memorial, that name had been scratched out. Little did that gentleman think that his pamphlet would be turned into an Act of Parliament. Such was the fate of authors; truly it might be said of them that they ruled the world. The right hon. Baronet the Member for Tamworth would seem to convey an impression that some desire existed to adopt a course on which there could not be two opinions among sane and substantial men, as if Lord Ashburton or the hon. Member for Huntingdon (Mr. T. Baring) would set aside the settlement of 1819. He (Mr. Disraeli) thought it as well to remind the House—which liked opinions given by practical men—of the practical opinion of Lombard-street. There was not a firm omitted, not a banking-house unrepresented in that memorial, which in the present state of affairs might be looked upon as a prophecy. There was not one, he ventured to say, who was ashamed of having signed that memorial. All he asked of the right hon. Gentleman was, to answer the opinions of these men. It was not enough to get up, and in this agony of the credit of England raise a question worthy to be discussed by the schoolmen as to what was a pound. That was a question worthy of the Member for Birmingham and his disciples. The right hon. Gentleman had had private interviews and correspondence with the Birmingham school. Let him continue that if he pleased; but let him not mix such considerations with this discussion. What he was called upon to do was to answer Lombard-street. If the right hon. Gentleman's Bill had failed in all its objects—if the fears of the bankers of Lombard-street had been justified by events—it was for the right hon. Gentleman to show why they should endure the injury and inconvenience that measure entailed upon the country? One could wish that this or any country had a currency such as accorded with the idea of the right hon. Gentleman, who was himself, however, obliged to set out in his arrangements on a basis not only imaginary, but arbitrary. Where a perfect metallic basis could not be obtained, it must be made as solid and substantial as possible. But a terrible and most unmerited loss ought not to be entailed upon the people of England because it was pretended to do that which it would baffle any Minister to accomplish. If the right hon. Gentleman admitted in a certain degree an imaginary 654 and arbitrary basis, it was a question of degree whether there ought not to be a power given under the system, such as that indicated by the bankers of Lombard-street, which might be exercised on a great exigency for the relief of commerce. When the exchanges were against this country in 1825, and means were taken to give temporary relief to commerce, was not the general loss then sustained but a drop in the ocean of suffering as compared with that ruin which adherence to a false policy might produce? Was not loss, in short, preferable to ruin? He (Mr. Disraeli) now left the question in the hands of the House. His argument was founded rather on the documents to which he had referred, than on any considerations suggested by his own reflections. He submitted the views he had stated with great diffidence; and any opinion he had given could be regarded only as a link to connect the facts he had placed before the House. But he hoped that in the face of those facts the House would Hot arrive at an opinion which involved an unbending adherence to that Act of 1844, which he had shown to be a great delusion; a reality only as regarded the treasure which was locked up in the department of issue; a reality only now when the public wanted that treasure to assist in the operations of commerce. It was indeed a measure under the operation of which it seemed as if they had locked their treasure in the coffers of the Bank, and thrown the key into the river Thames.
§ SIR R. PEEL
The hon. Gentleman stated towards the conclusion of his) speech that he left this question in the hands of the House. Now, unfortunately, the hon. Gentleman does no such thing; for it is quite impossible that the House can pronounce any opinion whatever. We are discussing the question of the currency in the most inconvenient form possible. The right hon. Gentleman (the Chancellor of the Exchequer) makes a proposition of which I, for one, most cordially approve, and which I believe will meet with general concurrence from the House. An hon. Friend of mine, one of the Members for the city of London, attempts an Amendment; and he has not had an opportunity of putting it in the hands of the Chairman before he is told that there is an objection in point of form; and my hon. Friend modestly retires from the field. Therefore, it is impossible that the House can come to a satisfactory conclusion in regard to the subject which has 655 been submitted to its consideration in the course of debate. Before, Sir, the House forms an opinion on the propriety of taking some new course with respect to the currency, I hope that it will take warning from that which has occurred during the present debate. If this Act of 1844 be really so defective as it is alleged to be, it is extraordinary that there should be no approach to unanimity as to the defects of the measure. And I ask the House to consider whether the real object in view be merely some small modification of the Act of 1844, or whether many of those who press for the small modification of detail, do not expect to open a door to an infraction of the principle on which that Act was founded? Let me review the course of the present debate. My hon. Friend led the discussion; and all he proposes is, that the Chancellor of the Exchequer should give an assurance that he won't borrow from the Bank on a deficiency. [Mr. MASTERMAN: From the banking department.] My hon. Friend says, if the right hon. Gentleman can give him that assurance, it will restore confidence in the City, and tend to relieve the pressure on the money market. But that is a very small measure. Supposing, however, the right hon. Gentleman is able to give him the assurance, that in July he will not require any assistance from the Bank, my hon. Friend would be content to permit the Bill of 1844 to remain in force. My hon. Friend thinks that the Government would act wisely in taking the course most likely to enable them to dispense with the aid of the Bank when the next quarter's dividend becomes due. He who leads the city bankers has no other proposition to make than that the Chancellor of the Exchequer should give an assurance that he won't ask the Bank for temporary assistance. In the event of its being necessary, my hon. Friend desires that for this purpose the Bank of England should be allowed to issue additional notes to the amount of deficiency bills. [Mr. MASTERMAN: Out of the issue department.] Out of the issue department! That is a different proposal from what was submitted by my hon. Friend.
§ MR. MASTERMAN
wished to be allowed to explain what his proposal really was. It was this—that the Chancellor of the Exchequer should apply to Parliament for power to enable the Bank to take money out of the issue department, and allow it to be replaced by the growing revenue, 656 leaving the banking department to manage itself.
§ SIR R. PEEL
I thought I heard from my hon. Friend that it would be desirable that the Chancellor of the Exchequer should give an assurance to the House that he would not borrow money from the Bank for the purpose of paying the dividends. [Mr. MASTERMAN: From the banking department.] Yes, the banking department; decidedly so. There was nothing in the proposal of my hon. Friend, as I understood it, whatever object he may have contemplated, with respect to issuing notes from the issue department. Then followed the hon. Member for Montrose—
§ MR. MASTERMAN
I must say a word as to what I really did propose, for it does not seem to be properly understood. What I actually did say was, that I thought the proposal submitted by the Chancellor of the Exchequer would tend to alleviate the inconvenience now felt by the public. I did not say that it was the best measure that could be adopted; but I did conceive that a modified measure of that kind, going forth with the authority of this House, would be extremely desirable under the pressure now existing. My object in the proposal which I made, was to remove any demand of the banking department upon the issue department, and to leave the Bank to act upon its own idea of what was right and proper for the national interest; for I conceived that the Bank had no power under this restricted Bill to grant accommodation to the Chancellor of the Exchequer without incommoding the public.
§ SIR R. PEEL
My hon. Friend has confirmed my impression, that he would be satisfied if the Chancellor of the Exchequer would give an assurance that he would not require aid from the Bank to pay the July dividends. I now understand that if the aid had been given, my hon. Friend wished it to be given from the issue department. Then came the hon. Member for Montrose (Mr. Hume). His proposal was this, that there should be unlimited competition in respect to banking. [Mr. HUME: Free trade.] That there should be free trade in banking—that the country banks should be allowed to issue five-pound notes to any amount—but that they should be required to pay their notes in gold. I beg to say that I do not think the adoption of that proposal would have any tendency to diminish the present pressure. The hon. 657 Member is satisfied with the general principle of the currency; he only objects to the country banks being restricted in their accommodation, and in there not being imposed upon them the necessity of paying their notes in gold. There was next the proposal of the hon. Member for South Lancashire (Mr. Brown). That hon. Member proposed that the Bank of England should be permitted for a limited period to issue 1l. notes, and that they should hereafter be withdrawn. He may depend upon it, that after permission shall have been once given to the Bank of England to issue 1l. notes in lieu of gold, he would find it exceedingly difficult to persuade the House to retrace its steps, to recall the 1l. notes, and again to have a gold circulation distributed throughout the country. The hon. Gentleman the Member for Rutland admitted that his object is an inconvertible paper currency; he says he would have a limitation of the amount, but that he is in favour of inconvertible paper. Such was the third proposal. Then came the fourth —that of the hon. Gentleman the Member for Warwickshire. The hon. Gentleman says distinctly—"What I most deprecate is any palliative or partial measure; the Act of 1844, which I admit is a necessary complement of the Act of 1819, is a miserable delusion."
§ MR. NEWDEGATE
I distinctly stated that that was the answer the right hon. Baronet gave me in reply to a question put by me in 1844; and as he deemed it a necessary complement, I will so take it on his authority.
§ SIR R. PEEL
Did not the hon. Gentleman say that the repeal of the Act of 1844 alone would he merely delusive; and that any attempt to enforce the standard imposed by the Act of 1819 was utterly impossible? Did he not say that the country could not bear the standard of 1819, and that some new one was necessary?
§ MR. NEWDEGATE
I said that the proposition of the hon. Member for Montrose, for a strictly convertible paper currency, was incompatible with the standard at present adopted.
§ SIR R. PEEL
Does the hon. Gentleman then admit that the standard of 1819 can be maintained? Did he not say that he had often heard that it was now too late to redress the injury done in 1819? And did he not ask whether the adoption of the standard of 1819 had not added to the public burdens—whether the children 658 at least of those who suffered m 1819 did not remain—whether it was too late to bring consolation to them; and that for that purpose we must revise the standard of 1819?
§ MR. NEWDEGATE
I stated that I had heard it said that the injury inflicted upon the sufferers of 1819 was merely temporary, and that it fell with them; but I said I did not believe it.
§ SIR R. PEEL
I think we are approaching much nearer to an understanding of each other. I must observe, that when arguments which fall upon the car are brought forth again without the rhetorical advantage given to them by the speakers, but are simply presented to them bare of such ornament, the speakers themselves often regard them with repugnance. In such cases, the arguments are no longer obscured by rhetorical artifice. I rejoice that the hon. Gentleman is in favour of the standard of 1819—at least that the hon. Gentleman occupies an intermediate position between an unwillingness to adhere to the standard of 1819, and a readiness to alter it. The last proposal was made by the noble Lord (Lord G. Bentinck), and supported by the hon. Member for Shrewsbury, and it is one for a repeal or modification of the Act of 1844, as they think that the evils which we undergo would be remedied by a repeal, or at least a material alteration, of that Act. But, before determining that the repeal or modification of the Act of 1844 will provide a remedy, let us well consider what is the nature of the evil under which this country is at present suffering; let us well consider whether or no, in our desire to attain some immediate present relief, we are not incurring the risk of subsequent aggravation of that evil by an alteration of the principle and practice of our currency. Now, I do not want any better description of the present condition of this country, and of the real nature of the pressure under which we labour, than that which I find in the able and unexceptionable statement of the hon. Member for Huntingdon. I will take his own facts. He says this country is suffering from an unparalelled scarcity of food. A calamity upon which none of us calculated has afflicted us. It has been alleged, on official authority, that the loss of capital in consequence of the total loss of the potato crop, and the partial failure of other crops and articles of subsistence for man in this country and in Ireland, has not been less than 659 16,000,000l. Why, it is difficult to estimate what must be the effect of an abstraction of capital in one year to the amount of 16,000,000l.; but, above all, when that abstraction of capital is caused by such a calamity as a scarcity of food. This calamity of a loss of food has come unawares on every country in the northern part of Europe. How it is that so little calculation should have been made at an early period of the last autumn, I know not. Whether or no the same atmospheric influence—if atmospheric influence it be—that caused the failure of the potato, has affected other vegetable substances, we cannot tell; what we know is, that in this country and in other countries of Europe, even after harvest had been carried, there appeared to be no foreboding of the extent of the calamity. Those countries from which in ordinary years we draw supplies, are themselves suffering from extreme scarcity of food. France, and Holland, and Belgium, and the countries on the banks of the Rhine, are sustaining extreme pressure on this account. Even in the northern parts of Europe, wherein, tempted by extravagant prices, they parted with their food, the pressure is becoming exceedingly great. They find that the contributions they made towards the supply of this country and France have caused a severe pressure upon themselves; and we are, therefore, in this condition, that, not only are we suffering by a loss of food leading to a destruction of capital to the amount of 16,000,000l., but, concurrently with that misfortune, a similar misfortune has visited every country in Northern Europe; and all are looking to the United States as the only source whence food can be derived. What effect must not that have had in paralysing our trade, in deranging our commercial speculations, and depriving us of the ordinary markets for our exports? Do not tell us of the failure of free trade. Has free trade had its fair trial in such a condition of Europe? Is it not clear that the capability of this country and of other countries to consume superfluities has been materially contracted by the superior necessity of devoting their resources to the supply of bread? Customers here and in the other countries of Europe have been compelled to devote their surplus revenue to the necessity of procuring food. But then, says the hon. Gentleman (Mr. Baring), there never was a year in which speculation was so rife as in 1845. Well, but if men will speculate and run riot, depend 660 upon it that whatever legislative measure you may pass respecting the currency, they will inevitably suffer the consequence of running riot. He says, "I do not deny the great importance of railways—I admit that railways may be the foundation of future prosperity; but this I say, that if the capital of the country ordinarily applied to commerce is, to an extraordinary amount, locked up in railways, then the country will suffer great pressure in consequence." Thus, in addition to the failure in food, you have had speculation running riot, and such an investment in railways that in the course of last year applications were made to Parliament, which, if all acceded to, would have required 340,000,000l. to meet the engagements. But there is another cause concurrent with these—there has been a failure in that most important material of manufacture, cotton. The cotton crop has fallen short beyond calculation, and the consequence has been an enormous increase in the price of that raw material, which enters so largely as an element of our manufactures. We are suffering then, according to the hon. Gentleman—for I am taking his facts—from a deficient supply of food; from very rife speculation; from an extravagant application of capital to railways; and from a decrease in the quantity and an increase in the price of cotton—an article of the first importance to our manufactures. How absurd to throw the blame of these things on the Bill of 1844? If you had an inconvertible paper currency or a purely metallic currency, or any modification of paper and metal that you can fancy, depend upon it no commercial country can be exposed to the triple operation of three such calamities without feeling the utmost pressure—one for which an increase of bank notes will be no remedy. Therefore, Sir, while I assure the noble Lord that I adhere to the sentiment he heard me express, namely, that I should think it utterly unworthy of a public man to be swayed by considerations of mere personal consistency on such a question— though I should think it unworthy of me to throw any impediment on that account in the way of the Government if it think right to propose a modification of the Act of 1844—though I should claim the same privilege as I exercised with respect to the Corn Bill, and, if experience convinced me that the interests of the country required a modification of laws I myself had proposed, I should willingly set the example of 661 proposing that modification; yet I must first be satisfied such modification is a remedy for the evil endured. Let us consider the circumstances under which this Act was passed in 1844. The Bank Charter was about to expire, and it became necessary to make some new regulations in consequence. The regulations proposed by me were not adopted without five years of continued inquiries before Committees. First, there was the Committee on Joint Stock Banks in 1838 and 1839; then there was the Committee which, without making any distinct report, gave evidence of the highest authority, on which the Act of 1844 was founded. And was that Act of 1844 a mere speculative improvement of the currency, without any experience of past evils? The hon. Member for Warwickshire says, in 1819 I gave a flourishing account of the state of the country; that I dwelt on the triumphs of our arms; that I recommended, under all our difficulties, a strict adherence to good faith. Why did I do that? As an inducement to Parliament, which had contracted debts with the public creditor under an engagement that on the return of peace cash payments should be resumed, according to the ancient standard, to fulfil that engagement with a scrupulous, though inconvenient, adherence to public faith. But has not the hon. Gentleman, in the ardour of the attack he has directed against this Bill, forgotten some of the events in the history of the currency prior to the period of its passing? Has he read the history of the years 1814, 1815, and 1816? Is he aware that during that period, when we had an inconvertible paper currency, 240 private banks failed in this country? And why did they fail? Because, on a return to peace, nay, the prospect of that peace, there was the collapse which was sure to occur after we had had possession of the trade of the world, and had been indulging in all the luxury of an inconvertible paper currency. Without any intervention on my part, owing to the altered position of trade, there had occurred a state of things to which the present calamity, great as it is, is not to be compared. It is proposed to repeal this Act of 1844. Are we to restore the law to what it was before the passing of that Bill? There will then be an unlimited right of issue on the part of country banks; there will be a power on the part of the Bank of England to issue notes at its own discretion. Is that to be the state of the law for the future? The hon. Gentleman has told 662 us what took place in 1837 and 1838; he said the country was then brought to the verge of ruin. But repeal the Act of 1844, and you will restore the state of the law as it existed at that very period. It gave no security. The Bank had the power of issuing paper without reference to the exchanges; the bullion was reduced to l,600,000l. in gold, and there was every prospect of the Bank not being able to fulfil its engagements. Always bear in mind, if you do consent to repeal the Act of 1844, you restore the old order of things, and have not the slightest security against a recurrence of the disorders that took place in 1838 and 1839. But the object of the Act of 1844 has been greatly misunderstood. The main object of that Act was to insure the convertibility of paper into gold, and to prevent, in times of difficulty and distress, the temptation to which it is so easy to yield, of giving accommodation, of issuing paper without reference to the exchanges, of purchasing temporary ease, and afterwards aggravating the commercial pressure by a panic which leads to a demand of gold in exchange for paper. It is of the utmost importance that in these periods of commercial difficulty we should not be exposed to that other difficulty which aggravates the first—a demand on the Bank for gold, in consequence of doubts of its ability to pay its notes in gold. It cannot be denied that, by the Act of 1844, this object has been attained. The hon. Member for Huntingdon (Mr. T. Baring) says, there is now not the least panic—there is no doubt whatever of the solvency of the Bank—no wish to have gold in exchange for paper—and that the pressure is caused by undue apprehension. But what would be the state of things now if a panic, in consequence of doubts as to the solvency of the Bank, were superinduced upon the pressure the hon. Gentleman describes? What would have been the state of things if that Act of 1844 had not been passed? Suppose there had been on the part of every country bank, while this riotous speculation in railways prevailed, a power of fostering it by uncontrolled issues of paper? Would the state of affairs be as advantageous as it is? Severe as I admit the pressure to be, and deeply as I regret it, yet can any man deny that the Act of 1844, controlling the issues by country banks in a time of rash speculation, affords security for ultimate solvency? Is it not highly probable that without that check, speculation, even now admitted to have run riot, would 663 have nearly precipitated us to the verge of ruin? It is said that the object of the Act of 1844 was to supply a machine that would work by itself, and require no discretion whatever in those who had to deal with its operation. That is perfectly true with respect to the issue department of the Bank. The issue department of the Bank is a machine that acts of itself. I almost regret that it was not separated altogether from the Bank, and trusted to other hands. Then the supposed confusion between two departments would have deceived no one. It was perfectly open to have established a Government board, by which the issue of notes might have been conducted; in that case the issue of notes would precisely correspond with the deposit of gold. There would be a machine perfectly simple in its operation, requiring no intellect or discretion in the management of it. As it is, the Bank of England has the issue as well as the banking department. It was thought advisable not to incur the additional expense necessary for the support of a separate issue department under the control of the Government. The hon. Member for Shrewsbury says, we have no right to criticise the conduct of the Bank of England. How can the House of Commons maintain such a doctrine with regard to such an institution? Who can deny the influence which the Bank of England must exercise over the circulation and currency of the country? The hon. Member for Huntingdon (Mr. Baring) does not agree with the hon. Member for Shrewsbury. He draws a totally different conclusion from the Member for Shrewsbury with respect to the conduct of the Bank of England in August last. The Member for Huntingdon, who, I apprehend, is a higher authority on questions of this kind than the Member for Shrewsbury, quite disapproves of the conduct of the Bank in lowering the rate of interest in August last. As to the right of criticism on the conduct of the Bank at that period, I leave the hon. Gentleman to settle the question with the Member for Shrewsbury. I never complained of the conduct of the Bank in August. What I said was, that for three months, from the 1st of January, 1847, there had been a continuous drain of gold; and I ventured to express a serious doubt whether a great part of the subsequent pressure might not have been obviated if the Bank had not continued to discount at 4 per cent during those three months, when a full knowledge of the extent of the cala- 664 mity in Ireland must have become known, and when a continuous drain of gold was taking place. The hon. Gentleman told us what the Bank had done in 1837, 1838, and 1839; and he ventured to utter—not, indeed, a prophecy—but to give us an assurance that, if the Act of 1844 had been in force in the years 1838 and 1839, not one of the difficulties of those times would have been obviated; for that the Bank would have had unlimited authority to issue a greater number of notes than they did issue at that time. It is exceedingly difficult to say what would have been the conduct of the Bank under an Act which passed five or six years afterwards; but there is one material circumstance which the hon. Gentleman altogether omitted from his notice— that is, the state of the country circulation at former periods of commercial pressure and hazard to the Bank. I will briefly refer to the state of the country circulation at those periods. I will begin with November, 1823. In November, 1823, the bullion in the possession of the Bank was 13,760,00l.; in November, 1825, it was reduced to 3,012,000l.; but it is estimated that between November 1823, and November 1825, the whole bullion having been reduced from thirteen millions to three, the amount of the country bank circulation was increased from four millions to eight. Again, on the 1st of January, 1834, the bullion in the Bank amounted to 9,948,000l.; but between that day and the 1st of January, 1837, a diminution in the amount had taken place, which brought it to 4,000,000l., whilst the country bank circulation, instead of undergoing any corresponding reduction, had increased from ten millions in 1834, to eleven millions in 1837. In the middle of August, 1836, when you were upon the verge of a crisis, the country bank circulation was actually twelve millions. In January, 1838, the bullion in the Bank amounted to 9,722,0002l.; in June, 1839, it had been reduced to 4,344,000l.; and the country bank circulation, instead of being diminished, had again increased. It amounted to 11,740,000l., when the Bank had ten millions of bullion, and it was increased to 12,725,000l. when the Bank had only 4,300,000l. The Act of 1844 was expressly intended to prevent the evils of an increase in the country bank circulation, concurrently with a diminution in the amount of the precious metals. And what was the purpose of this? Why, no other than to give to the Bank of England a greater control over the paper 665 currency of the country. The Bank of England not subject to criticism! I can bear testimony to the high honour and strict integrity which have influenced the directors; but the Bank is a national institution. It holds great privileges and monopolies. It has an exclusive circulation within sixty-five miles of London. The circulation of country bankers is expressly excluded from that district. They are prevented from entering into competition with the Bank of England. Why? In order that the Bank might have more complete control over the circulation. To hold, then, that the Bank of England has a perfect right to issue what it pleases, without reference to the state of the exchanges, and to be exempt from all questions in Parliament, appears to me a dangerous error. The Bank itself will tell you it has material influence, and will acknowledge that confidence was placed in its discretion and judgment by the Act of 1844—that it cannot regulate its concerns with reference to the temporary interest of the proprietors. The hon. Gentleman the Member for Huntingdon took a more correct view when he held that the Bank of England had the power to influence the circulation, and to affect the trading concerns of the country. Although the issue department provides for the variations of the issue of notes, in conformity with the efflux or influx of gold, and although the law imposes no rule upon the Bank in respect to the banking department to which it must necessarily conform, yet Parliament trusted that the Bank, without compulsion, would adopt right principles—would not derange the monetary system of the country by improvident issues. This was the object of the Bank Act of 1844. The memorial of the London bankers which has been referred to, was fully before Parliament in the year 1844. The hon. Member asks why did we not act upon that memorial, and give to the Government the power of authorizing, under special circumstances, increased issues by the Bank? We considered that the main object of the Act of 1844 would have been defeated by knowledge on the part of the public that the Government possessed the discretionary power of interference. Suppose the First Lord of the Treasury, the Master of the Mint, and the Chancellor of the Exchequer, possessed the power of directing that the Bank should issue 3,000,000l. of additional paper money, the moment the least pressure was felt, ap- 666 plication would be made for the exercise of that power; the precautions which individuals ought to take, would be neglected; and every mere temporary pressure would be declared irremediable otherwise than by an exercise of the power so possessed by the Government. We declined to accept that power, not from any unwillingness to undertake the responsibility, but because we thought that Parliament— and Parliament 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. When the Act of 1844 was passed, Parliament was more alive, in the absence of all control, than it now is, after control has been established, to the evils of unrestricted competition in banking. They had before them the consequences of such competition both in this country and in the United States, and gave a ready assent to the restraints imposed by the Act of 1844.
On the whole, I approve of the course that the Government is now taking; at the same time, I cannot help feeling some apprehension—the rise in the price of corn which has this day been announced, is, in every point of view, most painful. Do not suppose that I am not alive to the pressure, which, I regret to say, is not confined to this country. I greatly fear the effect of the increased pressure, though I am glad to hear from the right hon. Gentleman the Chancellor of the Exchequer that there is a prospect of improvement; at the same time, I regret to learn from other quarters that some money transactions have occasioned considerable embarrassment. I admit it to be a subject for deep and serious reflection. I further admit that no pedantic and rigid adherence to any principle ought to prevent us from considering the subject fully in all its bearings. If I myself thought that any relaxation of this Bill would be a cure for the evils which press upon us, I repeat that I would not oppose its relaxation on account of the part which I took in introducing that measure to Parliament; but it is my firm belief—founded upon the information at present in my possession— that a temporary issue of some 2,000,000l. of paper would not increase that capital which, in point of fact, is the source from which you can command the produce of other countries. My great apprehension is, that by any such relaxation of the Bill by issuing notes on Exchequer-bills—by 667 permitting the Bank to issue notes on paper security—we should purchase temporary relief from pressure at the risk of aggravating the very evils from which we are endeavouring to escape. The European exchanges are slightly in our favour; the gradual, I believe I may say, the daily, influx of gold, is tending to give security and confidence to the Bank. It will enable it to give further accommodation to the public, which I trust it will, under the circumstances, extend to the very verge of the power it possesses. But diminish that confidence—turn the exchanges against you—let the Bank feel that its own position is in danger—that the convertibility of its notes is doubtful— then the Bank will have to consult, not only its own security—for that would be a subordinate consideration—but the permanent welfare of the country, by securing at any hazard that great object, the convertibility of paper into gold. You think it would be easy for the Bank to part with the gold which it has in its possession at present, and which amounts to about 10,000,000l. There is, most fortunately, though it may be an expense to the country—great expense—to maintain it, a gold circulation to the amount of some thirty or forty millions. This gold circulation, diffused throughout this part of the empire at least, is, I believe, the foundation of the security of the Scotch and Irish banks. Gold is an expensive circulating medium, I admit; gold is capital, and in that respect differs from inconvertible Bank paper. If you choose, under the apprehension of a temporary pressure, to part with your gold, you may, no doubt, command the produce of foreign countries in return; but if that system be good for you, it is good for every other country. The hon. Member for Huntingdon has said that France has not suffered in the same proportion as we have. The metallic circulation of France compared with the paper is said to be as 80 to 30. Suppose the case reversed— suppose the paper circulation of France to be to the circulation of coin as 80 to 30 —do you think that the Minister of that country would have felt the same confidence in maintaining the public credit and the monetary system of France as he has recently exhibited? Expensive, therefore, though a gold circulation be, it yet gives security against that greatest of evils—the demand for gold on account of internal panic. My humble advice to you is, that you will not, in aiming 668 to secure some temporary pecuniary advantage, issue 1l. notes in place of sovereigns. I hope that we shall be enabled to pass through our present difficulties; and that, without some overwhelming proof of a paramount necessity which would deprive you of all discretion, you will not consent to tamper with the principle which we had the greatest difficulty in re-establishing, after our long experience of the evils resulting from its abandonment between 1797 and 1819. Depend upon it, if you attempt to purchase present relief by endangering the convertibility of paper, you will inflict a severe blow on the prosperity of this country; you will shake all confidence in the medium of exchange; and depreciate the value of property. It will be an act utterly inconsistent with past experience, and altogether unworthy of the character you have hitherto maintained, if, in order to escape from a temporary pressure, you relinquish an advantage which is essential to the welfare of all classes of the community, and, above all, of that class which, by the certainty and fixedness of the circulating medium, is assured of a command over the necessaries of life, proportionate to the wages of labour.
§ The MARQUESS of GRANBY moved that the debate be adjourned.
LORD J. RUSSELL
hoped the noble Lord would not press his Motion. There were several stages of the measure in which the discussion might be renewed; but he feared that, if the resolution were not agreed to that night, the measure could not be carried through before the Whitsuntide holidays.
§ LORD G. BENTINCK
said, that the country took the greatest interest in the discussion, and attached more importance to it than they did to the vote itself. It was perfectly understood that the measure involved in the resolution would be adopted; and his right hon. Friend the Chancellor of the Exchequer might almost act as if the resolution was passed. He knew that many Members wished to take part in the discussion; and, under these circumstances, he could not consent to the withdrawal of the Motion.
LORD J. RUSSELL
said, that his hon. Colleague, the Member for the city of London, objected to the Bank being called upon for a loan on account of deficiency bills. That event was much less likely to occur if the measure should pass before Whitsuntide; and, therefore, he hoped his 669 hon. Colleague would use his influence with the noble Lord to induce him to withdraw his Motion.
§ Resolutions agreed to.
§ House resumed.