Commons Sitting of 14 May 1847

MINUTES.
PUBLIC BILLS.—2° British American Land Company; Van Diemen's Land Company.
Reported.—Turnpike Roads (Ireland); Lunatic Asylums (Ireland).
3° and passed:—Towns Improvement Clauses.
PETITIONS PRESENTED. By Mr. Barkly, from Proprietors, Planters, Merchants, and others, interested in the Colony of British Guiana, respecting Drainage.—By Mr. Heathcoat, from the Tiverton Temperance Society, against the Use of Grain in Breweries and Distilleries By Lord Rendlesham, from Kirton (Suffolk), in favour of the Rating of Tenements (No. 2) Bill.—By Mr. E. Denison and other hon. Members, from several places, in favour of the Agricultural Tenant-Right Bill By Mr. Macaulay, from John Quail, M.D., a Member of the Royal College of Surgeons in London, for Settlement of the Claims of the British Auxiliaries (Portugal).—By several hon. Members, from a great many places, for Regulating the Qualification of Chemists and Druggists.—By Mr. Spooner, from Birmingham, for Consideration of the Currency.— By Mr. Bagot, from several places, against, and by Mr. Brown, from Catholics of Little Crosby, for Alteration of, the proposed Plan of Education.—By Mr. Barclay and other hon. Members, from several places, in favour of the Health of Towns Bill.—By Mr. E. Ellice, from Managers of the Burgh of Kilmeny, and from the Provost, Magistrates, and Council of the City of St. Andrews, in favour of the Heritable Securities for Debt (Scotland); Burgage Tenure (Scotland); Transference of Land (Scotland); Service of Heirs (Scotland); and Crown Charters (Scotland) Bills.—By several hon. Members, from a great many places, in favour of the Medical Registration and Medical Law Amendment Bill.—By Sir J. Hanmer and other hon. Members, from numerous places, against the Repeal of the Navigation Laws By Sir B. Hall, from Officers connected with the Administration of the Poor Laws in England and Wales, for a Superannuation Fund.—By Mr. P. Scrope, from Owners of Pauper Houses in the Borough of Cork, for Alteration of the Poor Relief (Ireland) Bill.—By Mr. H. Drummond, from Noblemen, Justices of the Peace, and Commissioners of Supply, of the County of Perth, for Exempting Scotland from the Railways Bill 3y Mr. E. Ellice, from Members of the Kirk Session of Anstruther Wester, against the Registering Births, &c. (Scotland); and the Marriage (Scotland) Bills.—By Lord Rendlesham, from Kirton (Suffolk), for Alteration of the Law of Settlement.

RESTRICTIONS UPON RAILWAY SPECULATION.
MR. HUMErose to move the following Resolution:—
"That in every Bill to enable a Railroad Company which, by any Act or Acts of Parliament, is now authorized to construct, purchase, or take on lease any Line or Lines of Railroad to raise additional capital by shares, loan, or mortgage, for the completion or extension of such Line or Lines of Railroads, or for the purchase, or taking on lease, or amalgamation with any other Railroad or Canal, a Clause shall be introduced, providing that the Company shall not raise such capital until it has realized the whole of the capital which by existing Acts it is authorized to raise, or so much thereof as is sufficient for the completion of the works, or for other objects sanctioned by Parliament."
This Motion he proposed with a view to putting an end to the practices commonly adopted by railway companies, who, having obtained power to raise capital, what-
822
ever the amount might be, ought not to be at liberty to apply for a second credit to raise additional money until the first credit was exhausted. He wished to compel every railway company to call up the whole of its first credit before it attempted to raise additional capital by other means. Speculation in railways was now extending itself to such a degree as to place in danger all the institutions of the country. He could not have believed, indeed, that railway speculation could have been carried out in so reckless a manner as it had been. There was no correct account of the amount sanctioned by Parliament to be raised within the last two years. A return, however, made to an order of the House of Lords, gave an account of the capital stock authorized to be raised during that period; and, although the aggregate of this amount was enormous, yet he found that the London and North Western, the Manchester and Leeds, the Midland, the Manchester and Bolton, the North Wales, and several other railways, made no return, and their names did not appear in the tables before him. Within the last two years the aggregate amount authorized by Parliament to be raised as capital stock was 124,586,054 l. The total amount actually paid up was 28,320,023 l., and the amount left to be paid was 96,266,031 l. The amount authorized to be borrowed under these Acts was 40,305,093 l. It was impossible to say what amount would be laid out in railways this year and next under the Acts passed; but an estimate had been made by an intelligent man, who said that all the capital sanctioned under the Acts passed during the last two Sessions ought to be laid out by the end of 1849 or the middle of 1850. The expenditure on account of railways could not be much less than the immense amount of 1,250,000?. per week. A return, No. 168, of the present Session, signed by Frederick Bruce, Secretary to the Railway Commission, placed the amount of capital proposed to be raised by Railway Bills introduced during the present Session at 82,553,150 l., which with 41,000,000 l. authorized to be borrowed, made a total of 123,867,259?. proposed to be expended on railways by Bills brought in during the present Session. This sum, added to the 164,000,000? authorized to be raised and borrowed by the Bills of the last two Sessions, made an aggregate sum which it was frightful to look at. No doubt a good many of the Bills lodged with the Railway Board at the be-

823
ginning of the present Session had since been thrown out. But still, looking at the immense amount which remained, the danger which threatened the manufacturing interest, and the reckless manner in which the money was proposed to be raised, he did not believe that the country would be able, if these railways were constructed, to borrow money to carry on any of the ordinary operations of commerce. A large portion of the capital of this country was based on credit, which had been so shaken, that it would be almost an act of self-preservation to put an end to any further advances on account of railways. It was, at any rate, the duty of the House to put as strong a check upon this expenditure as possible. If they allowed it to proceed, it would endanger the credit of the Exchequer itself, for the Chancellor of the Exchequer could not flatter himself that the returns for the next October and December quarters would be equal to those of the last two quarters, and then his right hon. Friend would be compelled to have recourse to extraordinary means. It was not right for the Government to depend upon any bank for money wherewith to pay the public dividends. At this moment they were liable to have an expenditure of about 300,000,000 l. during the present year on account of railways—an amount perfectly terrific. The country was now placed under peculiar circumstances, in consequence of the famine in Ireland, and the abstraction of capital to the amount of 10,000,000 l. for food. Taken in connexion with the high price of corn, he did not believe that all the accumulated power of the country would be able, at the end of the year, to realize capital to warrant so large an investment as he had mentioned. It would have been better if the House had interfered last year; but it was bound under the present circumstances of the country to lose no time in averting the evil. It was said that gold was returning to this country; but the House could not calculate that any large amount would be placed to the credit of this country. The irregularities committed by the directors of many railways deserved notice. He had in his hand a Liverpool share list, dated May 6, from which might be seen the complicated manner in which the affairs of railways were kept by the creation of various kinds of shares. Many of the railways had from six to twelve different descriptions of shares, and it was utterly impossible to understand what ought to be intelligible to every one.
824
He, from practice, could look into accounts as well as most of his neighbours; but he confessed that the railways quite beat him. If a railway were estimated to cost 1,000,000 l., and half the sum were paid up, the company had liberty to borrow one-third of the amount, or 33 per cent, wherewith to complete it. If they were desirous to extend their line, and they wanted another million for that purpose, he was anxious that the company should be compelled to call up the balance of the first million before they proceeded to raise money for the second undertaking. In the same manner he proposed that no company should be allowed to lease or sell any other line until the whole capital should be subscribed and one-half paid up. The South Eastern Company, besides their first capital and their bond debt of one-third, had four supplementary capitals, numbered in the share lists as Nos. 1, 2, 3, 4. Each capital was represented by shares of varying amounts, so that No. 1 was a share of 32 l., which, when paid up, would reckon as a 50 l. share; No. 2 was a share of 33 l. 6s. 8d., to be reckoned as 50 l.; No. 3 was a share of 30 l., to be reckoned as 50 l.; and No. 4 was a 15 l. share, to form a half 50 l. share when paid up. On No. 1, 20 l. was paid; on No. 2, 12 l.; on No. 3, 15 l.; and, on No. 4, 5l.;. was paid up. The London and North Western had also three or four capitals of a supplementary description, and the London and South Western had two or three; but these latter were now called up. Why should Parliament allow all this complication of shares and capitals to take place? Why did not the companies, before they called a second loan, pay up all the first? In the share list to which he had alluded, he found that the London and North Western Railway had ten different descriptions of capitals, and the Midland no less than twelve. In a report of the Commissioners on Railway Bills, they stated with regard to the South Eastern Company, that, by twenty Acts of Parliament passed since 1836, that company received power to raise a capital of 6,415,033 l., and to borrow 2,218,710 l., making finally a capital stock of 8,633,743 l., The South Eastern Company applied for eight additional Bills in the present Session, which, if passed, would give them power to raise additional capital to the extent of 3,025,750 l., and to borrow 1,007,810 l. Before this power was given, why should not the balance upon their former shares be called up? The bor-

825
rowing transactions of this company had amounted to 2,014,177.; of which 1,348,844 l. had been obtained on mortgage, and 665,333 l. on loan notes. For the capital required for six of the Bills, viz., 1,990,000 l., subscription contracts to the amount of three-fourths of the different sums, each signed by eight directors, had been deposited, each director having thus signed to the amount of about 186,000?. Now, Parliament clearly intended to have the security of bonâ fide men; but it was clearly understood that these directors had only signed on behalf of the company, and this was a manifest evasion of the rules of the House. What Parliament wanted was, not paper men, but bullion men. The deposit of 10 per cent, which the House required, had, it appeared, been paid out of the funds of the company; and the directors were not to be called upon for the sums for which they appeared as liable under their contract deeds. The report of the Railway Commissioners stated that the Glasgow, Paisley, Kilmarnock, and Ayr Railway had, in a similar manner, evaded the intention of the Legislature. They were authorized to raise 1,916,500 l. of capital, and to borrow 638,066 l. They had issued 86,557 shares of 50 l., 40 l., 12 l., 10 l., and 25 l., by which means 1,222,487 l. had been already raised, and there remained 1,332,062 l. to be raised. The company had borrowed 622,365 l. upon loan, and they had paid off in part 304,290 l. Under the Act 9 and 10 Victoria, the Kilmarnock and Troon Railway was leased to the Glasgow, Paisley, Kilmarnock, and Ayr Railway Company for 999 years; and the Glasgow, Dumfries, and Carlisle Railway Company, and the Glasgow and Belfast Union Railway Company, were also incorporated with the Glasgow, Paisley, Kilmarnock, and Ayr Company. The Glasgow and Ayr Company had subscribed 96,929 l. to the Glasgow, Dumfries, and Carlisle Railway, 4,911 l. to the Paisley and Renfrew Railway, and 7,900 l. to the Paisley, Barrhead, and Hurlet Railway; and the subscription contracts deposited by the former company, in compliance with the Standing Orders of that House, for seven of the Bills promoted by that company, had been signed by ten directors and one officer of the company for 2,300,000 l. in sums varying from 30,000 l.. to 267,000 l.. The whole subscription of the company was only 1,500,000 l., and yet here were eleven persons subscribing 2,300,000 l. in sums of from 30,000 l. to 260,000 l. Now,
826
although his countrymen were said to have some brass about them, this exceeded all he had ever heard of them. The Glasgow, Dumfries, and Carlisle Railway Company was incorporated in 1836, and was authorized to raise a capital of 1,300,000 l., and to borrow 433,000 l., making together 1,733,000 l. The subscription capital was created by the issue of 52,000 shares of 25 l. each, upon which a call of 5l. a share had been made, and 243,000 l. received, 17,000 l. remaining to be paid on the calls. The subscription contracts for three of the Bills promoted by the Glasgow and Carlisle Company had been signed on behalf of the company by eight directors and the secretary; the directors having each signed for 174,000 l., and the secretary for 168,000 l., The paid-up capital of the Glasgow, Paisley, Kilmarnock, and Ayr Company, amounted at present to 1,222,487 l.; that of the Glasgow, Dumfries, and Carlisle Company, 243,000 l.; making together the sum of 1,465,487 l. The amount proposed to be raised by capital and loans under the Bills of this Session was, in the case of the first of these companies, 3,532,500 l., and in that of the other, 2,866,600 l.; being together, 6,399,100 l.; and the only guarantee offered for this large increase of capital was the subscription of the directors to the contract deed on behalf of the company. He was sorry to find that the nefarious proceedings—for he could apply no other term to them—of these companies had been assisted by some of the chartered banks of Scotland. When that House required a deposit of 10 per cent on the amount of the subscription contract from all English and Scotch railways, it was thought by some persons that it was very hard upon the Scotch people to compel them to send their deposits to London; and it was therefore enacted, that in Scotland the deposits should be paid into the Court of Exchequer, or into any chartered bank, in the name of the Queen's Remembrancer. The Commissioners observed, that it had been stated that the Parliamentary deposits had not, in these cases, been paid out of the funds of the companies, but that they had been paid by the directors themselves; and on inquiry they found that—
"The funds out of which the deposit was made were raised by the individual subscribers, and were advanced on their personal responsibility by the National Bank, to whom they granted bills for the amount."
This, then, it appeared, was the mode in

827
which the public were deceived. On this subject the Commissioners made the following remark:—
"Whatever may be the precise state of the facts in this case, it has occurred to the Commissioners, in considering the transaction, that there is some reason to fear that, under the present practice in Scotland, means might, in some cases, be found of evading the Standing Order which requires a deposit to be made of 10 per cent on the amount of the subscription contract."
Since this opinion was given by the Commissioners, it had been stated as a fact that the chartered banks had, in some cases, transferred the amount required to the name of the Queen's Remembrancer, on the payment of a per centage. The Commissioners stated that in England the money was required to be deposited in the Bank of England, in the name of the Accountant General of the Court of Chancery; and he (Mr. Hume) did not think his hon. Friend near him (Mr. Pattison) would sanction a receipt being given for money by that Bank unless it had actually been paid. [Mr. PATTISON: Certainly not.] The Commissioners further stated—
"In Scotland it is required to be deposited with the Court of Exchequer, and may be paid into any chartered bank in the name of the Queen's Remembrancer. At the end of the Session, on the production of a certificate, either that the Bill has been passed, or that it has been rejected, the money is to be returned to the depositors. There can be no doubt that the Directors of the Bank of England usually require either the actual payment of the money, or the deposit of an equivalent Government security, as allowed by the Act. But, supposing that the directors of one of the chartered banks in Scotland—on the application of the promoters of a railway, and on the payment of a commission and the deposit of a bill, or otherwise—consent to place the required sum to the credit of such promoters in their books, and then to transfer it to the name of the Queen's Remembranber of the Court of Exchequer, it is evident by this means the object of the Standing Order would be evaded, as no money would be required to be raised. In fact, the whole transaction would be merely nominal, as the Bank would, from the first, have reason to be perfectly secure that the money could never be called for, and at the end of the Session they would return the Bill and close the account."
There were some other matters connected with these companies to which he might think it his duty on some future occasion to call the attention of the House, but he would not enter into them at present. Here they had two companies, figuring not very creditably, from the mode in which they had attempted to evade the rules of that House; and he thought no one would defend the conduct of the National Bank of Scotland, which had en-
828
abled them to effect that evasion. But he would now call the attention of the House to another report of the Commissioners of Railways with regard to several projected railways in the neighbourhood of Bury St. Edmund's. This case, he thought, was stronger than the one he had just mentioned, and the facts were these: the Ipswich and Bury St. Edmund's Railway Company sought to obtain six Bills, by which they proposed to obtain power to increase their capital to 2,150,000 l., and to borrow 716,664 l., making their total capital upwards of 2,800,000 l. Now, he would ask the House to consider in what condition that company was to apply for these six Bills? By the Acts of 1845 and 1846 the company was authorized to raise 950,000 l., and to borrow 316,666 l. making together 1,266,666 l. The share capital had been created by the issue of 16,000 shares of 25 l. each, under the Act of 1845; and by the issue of 22,000 shares of the same value under the Act of last Session. On those first issued, calls to the extent of 14 l. per share, or for 224,000 l.,. had been made, and 204,305 l. received; and on the shares last issued, 5l. per share, or 110,000 l., had been called for, and 91,700 l. had been received. The whole capital called up, therefore, was 334,000 l. No money had been borrowed under the Act of 1846. The power of borrowing had been exercised under the Act of 1845. The company had at present power to call up 616,000 l. on the shares, and to borrow 183,333 l. The subscription contracts for these Bills, deposited in compliance with the Standing Orders, had no signatures attached except those of thirteen directors of the company. The amount of those subscription contracts was 1,612,500 l., so that each director had on an average signed for 124,000 l.
"It is admitted," observed the Commissioners, "that those directors have not signed on their own account, but only on behalf of the company, and with a distinct understanding among themselves that they are never to be called upon for any portion of their subscriptions, and that the proposed new works are not to proceed unless the funds can be procured from other sources. It is also stated that the deposits required by the Standing Orders were paid for out of the funds of the company."
The Commissioners then went on to say—
"Under these circumstances, they seek powers from Parliament in the present Session to raise an additional capital of 2,150,000 l., and loans to the amount of 716,600 l.; making together 2,866,664 l., a sum little short of ten times the amount of capital which the shareholders have at present contributed towards the hitherto in-

829
complete undertaking authorized by their former Acts."
Now, he (Mr. Hume) would ask the House whether such a state of things as this ought to be permitted to exist? He would be extremely sorry if any resolution adopted by the House on this subject should subject any honest railway companies, which had real capital, to inconvenience; but he considered that any measure taken by the House must be general in order to be effective. The Commissioners, alluding to the application of the company for powers to raise an additional capital of 2,150,000 l., observed, at the conclusion of their report—
"In addition to the important considerations regarding the interests of the public which are suggested by such a proposal, the interests of the present creditors of the company appear to be very materially concerned in it. They have lent their money under the sanction of an Act of Parliament, on the security of a comparatively limited undertaking; but by the present proposal they evidently would find that security involved with undertakings of a much more extensive character, which, of course, could not have been contemplated by them at the time when they lent their money on the credit of the original works."
He might adduce other examples of the same kind, but he thought those which he had mentioned would at least induce the House to pause before they passed any other Railway Bills. This step might seem harsh towards some companies; but it appeared to him most important that some measure should be taken to cheek the system he had referred to. He thought, under the melancholy circumstances in which Ireland was now placed, and considering also the high price of food in this country, and the difficulty manufacturers experienced in carrying on the manufactures which employed vast numbers of the people, that utter ruin must ensue if they allowed men to indulge in these wild speculations after the statements made by the Commissioners. He could scarcely have believed that such transactions as he had detailed could have been carried on so openly as they had been. He was not acquainted with any of the persons engaged in those transactions, but he strongly condemned the system; he considered Parliament most blameable for permitting its existence; and if they allowed its continuance they would be responsible for the consequences. He considered that the proposition he was submitting to the House was so fair and moderate, that no serious objection could be raised to it. The hon.
830
Gentleman concluded by moving his resolution.
MR. J. A. SMITHrose to second the resolution, and said: Sir, I think the House is under great obligation to the hon. Member for drawing attention to this subject. It is not my intention to follow the hon. Gentleman through that long catalogue of errors, of mistakes, or of misconduct, which he has charged against sundry railway companies; but it appears to me that the hon. Member has shown that there is a state of things existing with regard to railway legislation at present which demands the most serious attention of the House. I think, also, that if the statements of the hon. Member for Montrose are correct, he has not gone far enough in his Motion; and, without intending to raise that question which has so lately and so justly received the attention of the House, as to the cause of the existing monetary distress, I think no one will deny that a strain upon the capital of the country, occasioned by the necessary payments upon railroads, must form a most important subject for consideration at the present moment. I therefore hope that the resolution proposed by the hon. Member for Montrose may elicit from the House and from the Government some opinion as to the propriety of proceeding with the Railway Bills now before Parliament. It does not appear necessary with this view that I should go into the question of the misconduct of the railways to which the hon. Member for Montrose has adverted, or of that misconduct which the hon. Member has, or rather the Commissioners of Railways have, charged against some of them. It is enough for me to bear in mind, that the amount of capital still to be paid in respect to railways, under Acts of Parliament passed during the last Session, exceeds 96,000,000 l., and that, in the present Session, powers have been asked by Bills before Parliament to raise capital the amount of which exceeds 47,000,000 l. [An Hon. MEMBER: 82,000,000 l.] Well, 82,000,000 l.; I thought it had been 47,000,000 l. In the present state of the country, with the vast calls necessarily made upon us for the supply of food for the population, and with the uncertainty which must attend the future, it is most seriously deserving the attention of the House and the Government whether it is not now time to stop. No person, I hope, will charge me with being unfavourable to railways, or with being insensible to the

831
vast social benefits accruing from them. Still less am I unaware of the vast saving they produce in the commercial transactions of the country. Nothing is further from my intention in anything I may state than placing any obstacles in the way of the reasonable, rational, and proper progress of the railway system. But I conscientiously fear that the capital of this country, in the present state of affairs, cannot bear any such extreme and excessive strain as that to which it is now exposed; and I do most earnestly hope that, without perhaps extending to all railway projects an entire stoppage this year—making, I mean, such exceptions as the public wants and requirements in certain cases may justify—yet, I repeat, I earnestly hope that the House will consider whether, with the reservation I have mentioned, the Railway Bills now before Parliament ought not to be suspended for this Session. I do not think I should be justified in saying more on the present occasion; but I hope that the few words which I have spoken will answer the purpose— the only purpose—I have in view, which is to draw from other hon. Members an expression of opinion on this important subject, and to induce also the Government to state what their feelings, opinions, and intentions are, on a point which concerns not only the welfare of the public at large, but the real and well-considered interests of the railways themselves.
COLONEL SIBTHORPwas always consistent in the course which he had taken with regard to railways, and would therefore support the Motion. He was quite aware of the nefarious transactions which had been carried on by railways; and he would ask why it was that the hon. Member for Montrose had not come forward earlier and joined him in his efforts to restrain the tide of railway corruption? He had always foretold what would happen—but even at the eleventh hour let them attempt at all events to render the system fair and aboveboard.
MR. HUDSONwas not about to follow the hon. Gentleman the Member for Montrose through all the details which he had offered to the House on the effect of railways upon the currency of this country. During the course of the evening there would be a more fitting opportunity for the discussion of that question. Still, he was anxious to say a few words on the Motion which had been submitted to the House. During the speech of the hon.
832
Gentleman opposite, he certainly had sat under some fear and trembling, that, considering the large amount of capital, and the great extent of railway mileage, entrusted to his (Mr. Hudson's) care, the hon. Gentleman might have pointed out some extensive errors and faults in his system of management. He had, however, been relieved to find that nothing of the sort was attempted. He would, then, simply address himself to the general principle of the measure. The object of the hon. Gentleman's Motion was to stop the outlay of capital upon railroads—[Mr. HUME: No, no!] Or to put some limitation upon it. [Several MEMBERS: No, no!] That, surely, was the object of the seconder of the Motion.
MR. J. A. SMITHexplained, that he had not said one word as regarded the outlay on railways now established, or empowered by law to be constructed. His observations had reference to the expediency or inexpediency of granting at the present moment fresh powers by law for the raising of capital for that purpose.
MR. HUDSON: Or, in other words, to allow those districts which had obtained railway communication to continue to enjoy a monopoly, and to doom those districts which were now ready with their money for the construction of railways, to remain under the disadvantages which now pressed upon them in consequence of the want of those means of communication. That was the object of the Motion. The money of the railways was expended on the labour and the property of the country; and if Parliament were to interfere in the matter, it ought in consistency to carry out the principle. Might it not just as well interfere in other branches of industry, and say, "You shan't construct a certain number of houses in London—you shall not embark your capital in new iron works, collieries, or other similar undertakings?" Why, by pursuing such a course, they would put a stop to the trade of the country altogether, and throw multitudes now enjoying a comfortable competency into a state of hopeless poverty and distress. He contended that the people of this country had a right to dispose of their capital as they pleased. He might lay out his in one way—his neighbour might dispose of his in another. But what was the result of employing capital on railroads? Why, the fact was, that the railroads of the country employed a greater number of people than the manufacturing districts

833
did. From a return which he held in his hand, it appeared that there were upwards of 50,000 men employed upon the lines over which he had the honour to preside—50,000 men receiving good wages. If hon. Members meant to say that money should not be applied in that way, let them declare so by a direct vote; but let them not by a side-wind, like the present Motion, endeavour to obstruct the flow of capital in respect to the construction of railways. He thought that the proposed resolution was open to many grave and serious objections, though it would not affect any company with which he was connected. In reference to different classes of shares, he stated that in the course of operations those different classes were necessarily called into existence, and were afterwards consolidated into stock; and he thought that there was no difficulty in keeping an account of that kind. The hon. Member for Montrose had made some strong observations on the course which certain railway companies had pursued; and he (Mr. Hudson) confessed that he had seen with some alarm the mode of proceeding adopted by some incipient companies with no funds. But that was the fault of Parliament in enabling those companies so to act. It was not the fault of the railway system, and Parliament had perfect power to check such proceedings. He had seen Committees passing Bills which perfectly astonished him; but he might have been told, for any remonstrance which he might have made, that he was an interested party—that he was connected with other lines—and that it was his interest to prevent competition. But there was a higher interest than a merely personal one, and he trusted that he had kept that in view—namely, the desire to place those undertakings on a solid foundation, and to induce people to invest money in this country rather than in any foreign schemes. The fault was, that Parliament had not properly looked to the financial condition of the different parties applying to them. He thought the proposed resolution required a great deal of consideration as to whether it should be adopted or not; and at a future period he trusted to be able to convince the House that the employment resulting from the railway system enabled people to live better. It then became a serious consideration whether or not they would stop legitimate undertakings. Consider what an amount of saving had been effected by the railway system in favour of
834
the manufacturers, the poor, the farmers, and all classes of society. Railways could not be constructed unless money were collected for the purpose; and why should this money be deposited in banks, rather than expended in useful undertakings? If there had not been railways, the money of the people might have been expended in wild schemes, or invested in some profitless South American bonds, instead of being expended in this country; the amount laid out on railways during the last two years being 40,000,000 l. The monetary difficulty of the country was not owing to the railway system, but to bad harvests; and if there had been good harvests for the last two years, he believed that there would be now no monetary difficulty.
LORD HARRY VANEexplained that neither the hon. Member for Montrose nor the honourable seconder of the Motion had objected to continuing the operations on railroads already constructed; neither did they wish to put any barriers in the way of the legitimate flow of capital towards railroad enterprise. The hon. Member for Sunderland admitted that he wished to see none but legitimate undertakings receive the sanction of Parliament; and it was with this view also that the hon. Member for Montrose had proposed his resolution. For his own part, he did think that some restraint over and above those already applied, was necessary. The amount of capital proposed this year to be raised by several of these railway companies was of a most startling kind. With respect to the tribunals to which the Bills were submitted, he thought it impossible that any one of the various Committees should be able to decide on the question of capital, inasmuch as these different proposed lines were placed in different groups. These Committees might be left to judge of the merits of the different schemes, and the question of capital might be referred to a Special Committee, to report whether the undertakings were within the intentions of Parliament. The question to be decided was, whether Parliament would allow companies without any direct funds, by means of their directors, to sign for large sums to be raised nobody knew how, in order to get possession of certain districts of country. Some such regulation as that now proposed was absolutely necessary in the financial state of the country; but perhaps this regulation would hardly be sufficient. It was a most objectionable thing that the House sanctioned, when it allowed interest to be paid

835
upon calls. It might be impossible to alter the system with respect to schemes already passed; but with respect to all now before Parliament it would be highly desirable that it should be declared, that the parties would not be allowed to take interest on the calls proposed to be made. That would be a legitimate mode of interposing.
MR. ELLICEfelt that the statement just made by the noble Lord, corroborated all that he had endeavoured hitherto to impress upon the House. This great question of the construction of railways, and the investment of enormous capital in them, had been abandoned by the authority which ought to have controlled it—the Government of the country—and thrown loose upon the discretion of Committees consisting of a few Members of the House, differing in opinion with respect to the principles upon which they should make their report. All the subjects now under discussion were considered by the Committee of which he was chairman last year; but they felt it quite impossible—a Committee of five—to decide upon important questions involving interests which affected large classes of the people. The Committee reported distinctly to the House, however, the facts which had come before them; facts perfectly astounding; transactions which he could not individually have sanctioned; and the Committee reported their recommendation that some general rules and principles should be adopted for the guidance of Committees, which recommendation remained a dead letter upon the Table of the House, and was utterly neglected by the late Administration, and he was afraid he must add by the present. He took especial pains, when that report was laid on the Table, to call the attention of the right hon. Gentleman opposite, the then Vice-President of the Board of Trade (Sir G. Clerk) to the subject, by sending him a copy of the report, and expressing to him an opinion that it ought not to be laid on the Table, and the Bills to which it related read a third time, without some opinion being expressed by the Government upon the matter; but no notice whatever was taken of that communication, and no opinion was expressed upon the report. After the accession of the present Government, the attention of the President of the Board of Trade, under that Government, was called by him to these Bills, which had then gone up to the House of Lords; but he believed a communication was received
836
from the Chairman of Committees in the House of Lords, to the effect that the Bills had then passed so far that it was too late to interfere. Surely, however, there were sufficient grounds laid in that report for some general recommendation to have been given to Parliament upon the subject this year. The report stated that it was impossible for any Committee to come to a decision upon questions affecting capital, and affecting the manner of raising money under these Bills, which questions might be decided by a different Committee in another way. In the beginning of this Session he thought it his duty, seeing that the system begun in the last and preceding Sessions was about to be persevered in, to call the attention of the House to the subject again; and as it was impossible, so various as well as contradictory were the details of the different Bills introduced, to know exactly those details, he prevailed on the House to arrange that every such Bill should be referred to the Railway Commissioners, in order that a report should be laid before each Committee, containing an account of all the monetary concerns of any company applying for other powers, and the opinion of the Board, not only with respect to the propriety of granting those powers, but with respect to the manner in which powers formerly granted had been exercised by them. It had been said that impediments had been thrown in the way of the progress of these Bills, by the Railway Commissioners not preparing their reports with sufficient expedition. He (Mr. Ellice) could perfectly understand the difficulties which must have been in the way of his right hon. Friend in the examination of such intricate subjects, and had understood from him that while the companies complained that impediments had been thrown in their way, those impediments had been entirely and always owing to their own fault; that they had been backward in many instances in sending in their reports at all, and that many of the reports had been found deficient upon inspection, and the Board had been obliged to send them back for correction; and, at last, when the Commissioners were able to make their reports, it was discovered that in almost every case there were certain transactions, which not only justified the House in remitting this subject to them for examination, but which absolutely required the Government to interpose, by laying down some general principle upon which the monetary con-

837
cerns of these companies should be regulated. As yet, however, the House had seen no such regulation. There was one subject which, whatever course might be taken with respect to other points, it was impossible to enforce too strongly upon the attention of the House. In almost every one of these cases—he believed, indeed, the exception was where an attempt had been made bonâ, fide to comply with the Standing Orders with respect to capital—the general rule had been for the parties applying in this Session for extensions of their existing powers, or for powers to construct new railroads, to evade openly the Standing Orders of the House with respect to capital. Scarcely in any case had a subscription contract, signed by the parties, and binding them and their heirs and executors, according to the Standing Orders, been submitted to a Committee. Now, whatever course might be taken with respect to the Railroad Bills now before the House, whether those resolutions of the hon. Member were to be carried, or whether the Government desired to have an opportunity of reflecting upon what passed in the House that night—and it was a subject requiring reflection before any determination was taken—at all events, one decision ought to be come to by the House, that the spirit and intention of that Standing Order should not be evaded, and that no Bill should pass the House in future where there was not a subscription contract signed bonâ fide by shareholders having paid a deposit, binding their heirs and assigns to fulfil that contract; and that the House would no longer submit to directors nominally signing contracts, and taking money out of funds appropriated to other purposes, fictitiously to create a deposit for the purpose of new Bills. The case to which the hon. Member (Mr. Hume) called the attention of the House, with respect to the Scotch banks, had escaped his (Mr. Ellice's) attention; but anything so disgraceful or so monstrous he should have thought could not have been resorted to. With regard to the statement of the right hon. Gentleman opposite (Mr. Hudson), he entirely agreed in the great advantage of these stupendous undertakings to the country, and had never expressed an opinion unfavourable to them; there was no encouragement which he was not willing to give them, consistent with common prudence, and with the principles upon which such undertakings could alone proceed with security. And the hon. Gentle-
838
man who seconded this Motion must not be misrepresented; he did not propose to take any measure which should stop the progress of the works on any railway; and if it should so happen, unfortunately, that in consequence of the indiscretion of any companies and of excess of speculation, their means should fall short, and parties should be thrown out of employment, that must not be attributed to anything suggested by the hon. Member. The right hon. Gentleman had asked why we should obstruct or endeavour to regulate the application of capital to this pursuit any more than to others; and, on the general principle, he quite agreed with him, and indeed was an advocate for entire free trade, which he feared was more than the right hon. Gentleman was. But the right hon. Gentleman and his Friends came to Parliament for incorporation and for great powers to borrow money; and an individual could not come to Parliament to borrow money upon limited responsibility—that was given as a great act of favour, and an especial indulgence to these companies; and it was rightly given, in the first instance, to encourage these undertakings in the outset; but it was a very different question when the railroad undertaking had succeeded, and when it was no longer doubtful whether it would be a profitable investment for capital, whether Parliament should be so liberal in giving powers to these corporations to borrow money. He had been of opinion—and he was not sure whether he did not mention it to the right hon. Gentleman last year—that the proper check then would have been, while allowing these companies to raise as much capital as they liked, to carry into operation their great undertakings, to put a limitation upon their power to borrow money; and certainly a stop should be put to the practice, most injurious both to the subscribers and the public, of giving them power to pay interest out of capital. If those two restrictions had been made last year—if the power of borrowing money had been withheld, and the power of paying interest out of capital, before profit had been derived from the undertaking, a stop might have been put to nearly all that was an abuse in this system. The time had now arrived when the necessity of the case compelled the interference of the House; and that interference should take place as much as possible with the consent of the great railroad interests themselves. The right hon. Gentleman himself had admitted that he

839
had arrived at a conviction that we could not go on with the system as at present pursued. [Mr. HUDSON: I spoke only of the abuses of it.] A railroad system properly conducted must be allowed to be one of the most advantageous undertakings ever begun in this country; the only quarrel was with its abuses. The right hon. Gentleman admitted there were such. The Government must be aware that it was no longer possible to let this great affair loose upon Committees without some regulation to guide them; and the time was probably not far distant when the right hon. Gentleman himself would thank the Government for interfering. What he (Mr. Ellice) should recommend would be, that this debate should be adjourned, to give time for consideration as to the course to be pursued. The companies themselves were understood to be quite of opinion that something should be done with respect to the progress of the Bills this Session; and, after communication with the Government, some settlement of the question might surely be arrived at, which might give security to the shareholders and to the creditors of railways, that, going on at the present rate, would require such security, and which might also give some assurance to the public that these transactions would no longer be permitted so to interfere with the monetary condition of the country, as at all events to aggravate its difficulties at such times as the present.
MR. R. HODGSONconsidered that it would be very unjust if Parliament by a resolution at this period of the Session were to interfere with the progress of Bills which had complied with the Standing Orders. Let the House, if it pleased, communicate its sentiments to the various Committees, and induce them to throw out the Bills one by one upon their merits, if they could, but not put a wholesale stop to them without investigation. He should suggest to the hon. Member for Montrose the expediency of withdrawing the resolution. The impression of the hon. Gentleman in regard to railway companies was not consistent with fact; as in the instance of the Glasgow and Ayr Company, of which he (Mr. Hodgson) was himself a shareholder. The whole amount which that company was allowed to raise was 1,275,000 l., out of which 1,250,000 l. had been paid. Did the hon. Member for Montrose mean to say that, a small balance yet remaining unpaid, that company should be precluded from applying to Parliament for power to extend
840
its operations by the construction of branch lines?
MR. MANGLESthought it would be well to refer the question involved in the Motion to the consideration of a Committee before adopting any decided step regarding it. The object of every Member of that House must be to remove abuse, without interposing any check to legitimate enterprise. He thought there was some misunderstanding in the House with respect to the position of railway companies. The noble Lord the Member for South Durham had spoken of the difficulties which such companies had to contend with; but he was not aware that, generally speaking, there were any peculiar difficulties in existence. The noble Lord had spoken of the South Western Railway Company, and he was glad to see the chairman of that company (Mr. Chaplin) present in the House. That Gentleman was much better acquainted with the affairs of the South Western Company than he was; but this he could say, that, so far as the pecuniary affairs of that company were concerned, they were in the hands of the ablest financial men that he was acquainted with. He did not think that the right hon. Gentleman the Member for Coventry, in recommending that a limitation should be placed on the power to borrow money hitherto accorded to railway companies, had looked at the question in all its bearings. He must know that as regarded financial matters there were two classes quite distinct from each other. There were the capitalists who became shareholders, and who ran all the risks of the undertaking; and there were those who ran no risk, but who invested their money because they received from railway companies a higher interest than they could otherwise realize. He would ask what right the right hon. Member for Coventry or the House had to interfere with the free action of the parties possessed of capital, and who laid it out at interest with railway companies? Had the House heard any complaint from those parties of having been overreached or defrauded? He trusted the House would pause and consider well before adopting any such resolution as that now proposed?
MR. CHAPLINbegged, as one of the culprits arraigned on the present occasion, to express his conviction that their position, were it more intimately known, ought to secure for them the favourable consideration of hon. Gentlemen, rather than expose them to a vote of censure. There was

841
nothing, indeed, which he could desire more heartily than that hon. Members should have a twelvemonth's "spell" of duty as chairmen of boards of railway directors. Those concerned in the management were in a position which "patient merit" could scarcely bear. With regard to the South Western, they had at the outset to raise their capital at a very large discount, and they did not feel themselves justified in launching forth into now schemes like other more prosperous companies. When the hon. Member for Guild-ford invited them to form a branch line, they resolved to wait a year; but a separate company started the Richmond Railway, which they then purchased. The atmospheric line projected to Epsom was started under noble auspices, under the auspices of Earl Grey. And what had been the result? The papers were at this moment teeming with advertisements that it was now to be opened with locomotives. The company with which he was connected had from the commencement always evinced a desire to execute a line towards Exeter; but Lord Dalhousie's Railway Board thought, after due investigation, that the route might be dispensed with. In consequence of their report, the company withdrew their application, and resolved to delay till greater necessity for the line should be shown. What was the result? The inhabitants filled the place of the company, came forward with subscriptions, and commenced a project which the company would have had to take off the hands of its projectors. Again, with regard to a line from Richmond to Windsor, though they had been charged with going too fast, what was the real state of the case? Last year an atmospheric scheme was started, and also another scheme; and though both fell to the ground, it would be seen how circumstances tended to force a company into applications which, if left to itself, it would be disposed to delay. The South Western company had waited patiently, but were driven into the adoption of the line. There were many difficulties which railway companies had to encounter, for which, not the Government, but the Legislature might be blamed. Schemes and plans were produced, and the companies never from one day to another knew to what they might be subjected. There was one subject on which they did agree, and that was in hailing the prospect of grouse shooting; when hon. Gentlemen left their Committee-rooms and railway directors saw their backs
842
the latter had some hope of repose. The hon. Member for Chichester (Mr. J. A. Smith) said he had not been concerned in railways; but it might he asked, whether he had taken part in the late loan? The Railways Bill of the hon. Member for Derby (Mr. Strutt) had not yet been disposed of; but it was most desirable that the House should come to a satisfactory understanding as to what should be done with regard to the Bills proposed this Session; for the want of some definite arrangement on the subject only weakened the confidence of the public in railway enterprise at a time when public credit was so much shaken. In conclusion the hon. Gentleman was understood to state that the effect of such a Motion as the present, if adopted, might be to jeopardize the whole railway interest; but he had no confidence while that House was sitting that measures having such a tendency would not be adopted.
LORD J. RUSSELL: I cannot think it would be wise in the hon. Member for Montrose to press his resolution in the present instance. It certainly appears to me upon any consideration I can give to that resolution, and so far as I can see the effects of it, that it would not be prudent for the House to come to a general resolution, expressed in strict terms, when the practical effects of such a measure cannot be before the House, and must in many instances be very inconvenient. I mean, inconvenient to the public at largo. I take a case which was put by an hon. Member. There may be a branch line about to be made, and yet the main line may not be in such a state of completion as, having regard to all its expenditure, to be entitled to make that branch. Is it requisite that the operations in regard to the branch line should be suspended until the whole expenditure on the main line has been exhausted, and that the power of making that branch line should be given only to another independent company? I own I think that there might be practical inconveniences—that whatever its advantages the resolution has counterbalancing disadvantages—that it will not meet those very evils which have been pointed out with so much force by the hon. Gentleman himself. It might be expedient that the House should come to some further resolution, especially after what has been stated by the hon. Member for Sunderland; yet, I do hope we shall not fall into error, that from being too lax in giving our sanction to railway speculation we shall suddenly take an opposite

843
line; endeavouring to check a most advantageous and wholesome application of the capital of the country. I cannot agree with the hon. Member for Coventry (Mr. Ellice) if he says that a considerable time ago the House ought to have required measures to be taken for that purpose, and the late Government ought to have interposed and placed a greater control over railway enterprise. It appears to me that this is a speculation which requires the sanction of this House, and ought, therefore, to be the subject of debate and discussion in Committee; but the application of the capital of this country, the disposal of the surplus property of trade and commerce, is a matter entirely beyond the control of this House, and might take place quite independently of any resolution of this House. I remember the time, and it is not a great while ago, when I heard bankers complaining that they had a great quantity of money lying on their hands, for which they could not get two per cent. I remember also a further time, when there was a good deal of money sent to South America, when large sums were invested in the State stock of those not very honest and not very stable republics; that at other times great sums of money were invested in schemes for the improvement of certain harbours, canals, and various other public works in North America; and that, in some cases, our debtors in North America were not more prompt in answering the expectations of those who lent them money than in the South. If we had in the beginning interfered, and said we should put a check and a control upon railway enterprise, the consequence would have been, not that we should have prevented improvident speculation, but that improvident speculation would have taken another direction; and that some such wild and useless adventures as had been entered into in former times would have been entered into again—everybody lamenting that such improvident speculation should take place, but which, nevertheless, would have gone on without the sanction of this House being required. I do not agree in thinking that it should be a necessary consequence, that because a party comes before Parliament seeking its sanction to some enterprise, therefore Parliament should put a certain check upon the enterprise of that party. I think that that should be regulated by certain rules and regulations—for instance, no one will deny that in the case of a railway being proposed between Manchester
844
and Liverpool, and it was evident that there was sufficient capital to execute it— no one would deny that such a railway should be made. There were other cases of less obvious importance, but still they might be such as to show that a railway ought to be made. But still it is possible there may be cases in which you may say that the capital of this country having been applied by Act of Parliament to a great amount to certain railway speculations, you are of opinion that certain other railway speculations should not be entered into, because the result would be that those speculations could not be carried into effect, and must end in the ruin of the persons who undertook them—that they could not be carried into effect without causing very great distress in the first instance, and probably would never be carried into effect at all. It appears to me that this course of argument should be listened to with great caution—that while you obviously cannot put a stop to other speculations, it is only with great doubt and caution you should listen to this argument for interfering with railway speculations. But cases have been put by the hon. Member for Montrose, and others by the right hon. Gentleman opposite (Mr. Hudson), both agreeing in the general statement, where this House and the other House of Parliament, by their laxity, have connived in some instances at the violation of the bonâ fide intentions of the Standing Orders of the two Houses—cases where in order to insure that only speculations of a bonâ fide character should be entered into, and that by persons who had capital to carry them into effect, certain conditions had been laid down—which conditions had frequently been evaded—that where 10 per cent has been required to be lodged in the Bank before applying to Parliament, there had not been I per cent so lodged. The right hon. Gentleman opposite mentioned a case where several millions had been engaged to be employed in a particular railway without the prospect of the parties having capital to the extent of so many thousands. Other cases had been mentioned where a guarantee had been given for the payment of interest on certain railways which had been undertaken; while at the same time they could not have paid 5s. per share. In cases of this kind it is fit that Parliament should be more strict and more careful than hitherto to put a check to such abuses. How that can most effectually be done, I

845
do not wish to give any opinion at the present moment. I think it, however, a matter which deserves the utmost consideration. It is sufficiently obvious, from the experience we have had that the mere appointment of a Select Committee of five Members of this House is not a sufficient security. It may be that each Committee sitting independently may feel that the responsibility does not rest with them, but on Parliament; and that, on the other hand, Parliament may consider that they need not trouble themselves on the subject, as the Committee had no doubt considered the matter; and that, therefore, between the two no proper investigation may be made. It is right, therefore, that we should endeavour to see that we have greater security against abuses than we at present possess. I shall end by saying, that I hope my hon. Friend (Mr. Hume) will not press his resolution. I do see very considerable objections to it. I do not say that, after the consideration of another day or two, I might not give my consent to the resolution as it now stands. It may be proper that, either by means of inquiry by a Committee, or by a resolution, we should take some further security for the proper regulation of railway enterprise; but I would say, that when we take further security for the proper regulation of railway enterprise, it ought not to be taken in the direction of checking the application of capital to railways. For my own part, I believe that they are very advantageous to the country—that their advantages are so great that we do not know at present what their ultimate end may be. They are very likely to have been profitable to those who have undertaken them, if, as the right hon. Gentleman has stated, a capital of 80,000,000 l. has produced a return of nearly 9,000,000 l. a year; but it is not with a view of checking this kind of enterprise, which I think highly beneficial to the country, and in which the individuals engaged in them may likewise gain a fair and profitable reward for their exertions— it is not with that view, but with the view which was indicated by the right hon. Gentleman the Member for Coventry (Mr. Ellice), namely, of cutting off and pruning the abuses—of checking the inroad of a spirit of wild speculation which always attaches itself to schemes of commercial enterprise—it is with that view, and not with the view of checking enterprise itself, that I am disposed to enter into any regulations on the subject.
MR. W. R. COLLETTwas glad to hear the recommendation of the noble Lord that the resolution should not be pressed—the more so because it was not necessary at the present time. It appeared there were few new projects on foot this year in England, still less in Scotland, and none at all in Ireland. The House had interfered with this question a little too frequently, and there was no knowing from one year to another what they were going to do about railways. Last year they had decided the narrow gauge should not extend beyond a certain degree southwards; but now this decision was evaded with impunity. He hoped they would hear no more of the threatened Railway Bill. The country had its hands quite full enough of railways at present—the banks were sick of them. He hoped the House would look with great caution before they encouraged more railways, but at the same time he trusted the resolution then before them would not be pressed.
LORD G. BENTINCKsaid, that his noble Friend (Lord J. Russell) had omitted one reason why they should not consent to this resolution, and that was, that its mover, the hon. Member for Montrose, and its seconder, the hon. Member for Chichester, both concurred in expressing great doubts whether the resolution was intelligible. He entirely concurred with them that it was totally unintelligible. He did not refer to the latter portion, which said that no railway company shall sell the line of any other railway company. He did not know that any company could propose to sell the line of another company. His remark referred to the main resolution itself. He understood that many other individuals did not understand the exact purport of that resolution; and he confessed, for one, that it was not intelligible to him. But he gathered from it that, for example, the line to Galway could not have been made unless the entire capital originally subscribed for the Midland and Great Western (Ireland) Railway had been paid up. The hon. Member had said something in his speech to the effect that no railway company should be permitted to enter upon a second credit until the first was exhausted. That was certainly a singular commercial proposition; for if a company had exhausted its credit, it would, he feared, find some difficulty in embarking in a fresh loan; and it was, therefore, somewhat unnecessary to provide for cases of this kind. The South Western Railway also would

847
never have been completed if that resolution had formerly been enforced. He apprehended that that company got into great difficulties; and if they had not had the power of raising new shares, they could never have proceeded with the works. When his noble Friend spoke of speculations in North American and Mexican mines, he might also have remembered the remarkable speculation of the Greek loan, in which the hon. Member for Montrose, he believed, had some shares. He thought it far better that they should leave speculation to take its own course in this country in the construction of railway works, and in the improvement of communication at home, than in throwing obstructions in the way of such schemes, and encouraging English capital to embark either in Greek loans or Spanish loans, in which he had reason to know this country had lost 70,000,000 l. within twenty-five years. It was sometimes charged against him that he was a monopolist; but he thought the parties who introduced this Motion were monopolists. He was for free trade at home; there was something like class interest lurking here. The hon. Member for Chichester did not like to see the scrip for the new loan depreciated. [Mr. J. A. SMITH: I have nothing to do with the loan in any shape whatever.] He confessed that he, for one, considered that this inroad upon the free employment of capital invested in railways, had, in point of fact, in it a great deal of the spirit of monopoly; he considered that the resolutions would be exceedingly mischievous if they should in any way have the effect of checking speculations in railways, and sending capital abroad. He believed that a large quantity of English capital had lately been embarked in the Paris and Rouen Railway; that though 20 per cent was required to be paid up, the capital had been subscribed fifteen times over, in fifteen different companies, and that one half the constituency of each company consisted of English capitalists. He thought it far better that English capital should be employed at home, than that it should be embarked in French or any other foreign railways. He felt certain, that if they insisted upon imposing restrictions upon the outlay of English capital, the effect would not be to prevent people from speculating who had money to lend; for, so long as the interest of money was at no more than 3 per cent, which it was in August last, they might depend upon it that
848
people would not be content with the 3 per cent Consols, but would seek to employ it where they would meet with a greater return.
The CHANCELLOR OF THE EXCHEQUERthought that the hon. Member for Montrose would do well to take the advice which had been given him to postpone the discussion. At the same time he thought the discussion which had taken place was likely to produce some benefit to the country, as well as to those who were interested in railways. From all parts of the House there had been a general concurrence of opinion, not only as to the advantages of railroads to this country, and as to the importance of investing capital at home in place of abroad, but there was also a general concurrence of opinion that, in the present system of railroad legislation, there were several abuses to which they ought to apply a remedy. The principal blame of these did not so much rest on railway directors as on Parliamentary Committees. Looking, then, at the question in the several aspects which it presented, he was sure that hon. Gentlemen generally would agree with him when he said that the House ought to turn its attention to the subject, with the view of devising some plan to obviate the difficulties which had furnished matter of complaint. It was true, that much consideration had already been bestowed upon the subject; but it was equally true that no practical good had yet resulted. Although he thought it would be exceedingly unwise to go to the full extent that some persons recommended, yet he could by no means omit to notice the attempts frequently made by many parties to evade the Standing Orders. There were two points before the House—one relating to the evasion of the Standing Orders, the other to the general principles of railway legislation; and he must take the liberty of saying that the manner in which some Committees had passed Railway Bills was exceedingly lax, especially when they so passed them in opposition to the reports of the Railway Commissioners. At the same time, he did not think it at all desirable that the Motion of his hon. Friend the Member for Montrose should be altogether abandoned; he did not desire to see it put an end to; he merely hoped that it would be postponed for some time. It must be regarded as most laudable, though at this moment it would, perhaps, not be expedient to press it. He, for one, would be quite willing at

849
a future time to consider the proposition which the hon. Gentleman had made. In the meantime, he thought it would be very advantageous if hon. Gentlemen would communicate with each other and with the Government; and the Government would, no doubt, be perfectly willing to lend its aid in carrying into effect any plan which afforded the prospect of remedying the evils that had given rise to the just and natural complaints that the House had just heard. He thought it might be advantageous to appoint a small Committee, and refer the whole question to their consideration. The resolutions which the hon. Member for Montrose moved might also be referred to such a Committee; but whether they adopted that course or any other, he recommended that the present discussion be postponed, either by adjourning the debate or withdrawing the resolutions, for a time.
MR. HENLEYdefended the conduct of the Committees up stairs on the subject of those Scotch railways to which allusion had been made. The evasions of the Standing Orders had been allowed by the examiners, and not by the Committees; and the latter were quite justified in supposing, when those Bills came before them, that all the provisions of the Standing Orders had been duly complied with, or that they would have received a report to the contrary effect from the examiners.
MR. MORRISONobserved, it was quite manifest that for some time past there had been in this country very large sums withdrawn from the purposes to which capital was ordinarily devoted, for the purpose of carrying out the various railway schemes which within the last few years had been projected. The sum of 28,000,000 l. was required for railways, to be drawn from the floating capital of the country. The last two years had been years of business and saving; but the present was one of the least prosperous which had occurred for a considerable period. It was quite absurd to talk of their being able to construct one-half of the lines for which Bills had been obtained from the House. Whether they passed Bills to the extent of 500,000,000 l. or 50,000,000 l., was now of no consequence. Vast sums of money had already been sunk, and the floating capital of the country had therefore been very greatly diminished. Unhappily, also, that capital yet remained unprofitable; and at the very time when that great
850
amount of capital was withdrawn from the customary uses of trade and manufactures, a sudden and severe demand came upon the country to provide for the relief of Ireland; and he feared it would soon be necessary to make great sacrifices to relieve the people of England. No rational man doubted that the great extent of railways projected could never be executed. The thing was impossible, and at the same time absurd. Half the lines for which Bills had been passed could never be constructed. The House had chosen to confer certain privileges on certain railway companies, and the result was, that the employment of capital in those lines offered a larger amount of profit than the employment of the same capital in any other way; and if the parties engaged in railway schemes offered a greater interest than other speculators were willing to pay, it was obvious that money must rise in the market to a very high rate of interest, and then how were the manufacturers of the country to go on? The interest of the money employed as capital constituted the chief costs of manufactured articles—all small manufacturers carried on business by means of borrowed capital. He conceived that was a state of things which would soon demand from Parliament very decisive remedial measures; and it appeared to him that a remedy could only be found in preventing too great an increase in the sums paid for the use of capital; it would, therefore, he thought, be highly expedient to place such restrictions on future railways as would, by diminishing their profits, deprive them of all motive to pay large premiums for the use of capital. He rejoiced that the present Motion had been made; for he believed that the discussion would produce much good.
MR. HORSMANobserved, that the right hon. Member for Tamworth had, on a former occasion, urged the necessity of placing restrictions upon future railway companies; and every one knew that of late the demand for supplies of capital had become more pressing than ever. He understood that the Government were now about to take a course which he much regretted that they had not long ago adopted, and that was, to exercise an efficient superintendence over railway legislation. For the present, however, he thought that the hon. Member for Montrose could not do better than to withdraw his resolutions; at the same time, he thought that the discussion to which those resolutions gave

851
rise, would prove advantageous to the House and the country.
MR. NEWDEGATEwas not in the least disposed to deny that the amount of money invested in railways was enormously large, but he rose to protest against the doctrine propounded by the hon. Member for Inverness (Mr. Morrison). He thought it monstrous for any Gentleman to declare that the House ought so to cripple the profits, the transactions, and the movements of existing as well as future companies as to drive the capital into other channels. He thought that would be a most monstrous proposition from any one; but for the hon. Member, who professed himself to be a free-trader, to assert such a principle as that was beyond everything he had ever heard. He thought no honest free-trader could have propounded such a doctrine.
MR. MORRISONexplained that he did not refer to Bills already passed, and was surprised that the hon. Gentleman should have supposed that he could have intended his remarks to apply to existing companies.
MR. NEWDEGATEunderstood the hon. Member to say that the only way to prevent so much capital being diverted from the manufactures of the country was for the Legislature to diminish the attractions of railways by preventing them from realizing such large profits. If he misrepresented what the hon. Gentleman had said, he begged his pardon; but he protested most strongly against the principle of interfering with the national investment of capital.
MR. MORRISONagain explained. He had said that the profits on railway capital should not be larger than on capital employed in any other way.
MR. MITCHELLthought the loss of 20,000,000 l. by the failure of the crops was an unavoidable evil, but one which the resources of the country could easily have borne, and he was therefore of opinion that the cause of the present distress was extravagant and improvident railway speculations. The fact was, that with the exception of that spent by the labourers in exciseable articles, by which the revenue was benefited, all the money laid out in railways was sunk, or at least taken from the working resources of the country. The whole of the capital was sunk, for there was nothing available but the dividend when the line was finished. What was the real operation of this loss of capital? Why,
852
that the manufacturer was obliged to decrease his imports of the raw material. When a manufacturer was giving his order for the raw material in ordinary times, he reckoned that a bill of a certain date would be available, and gave his orders accordingly; but now he said to himself, "We have had the dire calamity of a failure in the crops, we have the expenditure of a million a week in railways, and this will make it difficult to obtain discounts;" and instead of purchasing his usual quantity, he only ordered one half. This was what every prudent man would do; and it would be found at the end of the year, all the imports of the raw material, by the manufacture of which the people were to be maintained, and the foreign corn dealer paid, would be shorter than was ever before known. So much alarmed were the merchants of London and the manufacturers of the country, that the House might depend no more would be imported than they were certain of having cash to pay for; and the only thing left next year to send in payment for the raw material would be railway scrip. Would the hon. Member for Sunderland (Mr. Hudson), or the noble Lord opposite (Lord G. Bentinck), guarantee that the countries from which they had to look for supplies of the necessaries of life, would take railway scrip? If they could not do that, he could not see how the raw material or supplies of food could be procured.
MR. STUARTsaid, that the hon. Member for Inverness was of opinion that in consequence of railway speculation manufacturers with a small or borrowed capital must suffer, and that that state of things ought to be corrected. The mode in which the hon. Gentleman proposed to reduce this mischief—and the hon. Member for Warwickshire (Mr. Newdegate) was not at all mistaken in what he stated—was by the interference of the Legislature—to bring down the profits of railways to a certain level. Why, what was the ordinary notion of free trade? His notion was that every man was to be allowed to use his capital in the most advantageous manner; and that that capital should thus find its way into every description of profitable employment. Why then did the hon. Gentleman, who was a free-trader, wish to legislate to protect the interests of the cotton manufacturers at the expense of the railways? He always thought that hon. Gentlemen who voted for the Corn Bill did so with a view to direct the employment of capital

853
in such a way as to suit themselves; and now the hon. Member for Inverness distinctly proposed legislative interference to prevent the employment of capital in a particular way, because it did not meet the interests of the cotton manufacturers. He could not see the consistency of this with the theory of free trade, neither could he agree with the argument of the hon. Member for Bridport that the employment of capital on railways did no more than pay the wages of the labourers, and fill the coffers of the Chancellor of the Exchequer by the consumption of exciseable articles. With regard to the Motion of the hon. Member for Montrose, he thought the wisest course would be to withdraw it.
MR. TRELAWNYsupported the views of the hon. Member for Bridport, that all the money used in the construction of railroads was so much extracted from the general capital of the country, and sunk.
MR. AINSWORTHexpressed the greatest surprise at hearing such a doctrine. Did not the hon. Members for Bridport (Mr. Mitchell) and Tavistock (Mr. Trelawny) say that the money laid out in railroads employed the people of their own country, the produce of their own country, and the capital of their own country? Indeed, the amount of indirect employment, such as in the coal and iron mines, was as great as that of constructing the roads and locomotives. He trusted no impediments would be thrown in the way of capital being laid out in railways on a fair and just principle.
MR. HUMEwas not at all surprised at the speeches of the hon. Members for Bolton (Mr. Ainsworth) and of Newark (Mr. Stuart), for they did not appear to understand the question at all. He entirely agreed with the hon. Members for Bridport and Tavistock. The hon. Gentleman opposite did not understand what free trade was. He, as a free-trader, objected to privileges being given to any class; and if he could show that one single railway in this country, the proprietors of which had laid out 4,000,000 l. in its construction, and who put into their pockets, besides 10 per cent interest on the outlay, bonuses to the amount of 3,900,000 l., he thought no one would doubt that the railways enjoyed privileges. He knew that railroads were first established under great disadvantages; that they were opposed by the landowners, and that advances of capital were hard to be obtained; and he did not say a word against a proper return to these rail-
854
ways. He never had done so, and on that ground he complained of the noble Lord the Member for Lynn perverting his argument. The noble Lord had been rather facetious on the subject of credit; but of course as the noble Lord had formerly been otherwise employed, he could not be expected to know much of credit. Thus the noble Lord picked out a word in the resolution which a school-boy would see was a misprint. He believed that the noble Lord knew nothing of the question. He should not take the advice of those who recommended the withdrawal of the Motion, but of the hon. Member for Sunderland (Mr. Hudson), who wished it to be postponed, as the great interests affected by it had not had time to consider the question. He would be the last man in the world to refuse to capital its fair and legitimate use; but there were great abuses of the powers given by Parliament. The hon. Member for Sunderland admitted that there were the greatest abuses. Then his hon. Friend the gallant Colonel asked why had he not taken moans to stop these abuses before? Nine years ago he had attempted to take the sense of the House on the subject, and to prevent dividends being paid out of capital; and on the assurance that Government would look to it, he had let the matter stand over. But Government never had attended to it—and they never would if the House did not take it up. This resolution was printed last year, and submitted to the House, and had now been printed and in the hands of the President of the Railway Board from the beginning of the present Session, and therefore he was not to blame for the delay. All he wanted was to stop abuses, and he was by no means satisfied with that discussion. The noble Lord at the head of the Government had made a speech which convinced him that nothing would be done till next year. He liked the speech of the Chancellor of the Exchequer better, and agreed with him that it might be necessary to go still further than the restriction mentioned in the resolution. He concluded by consenting to postpone, the discussion for a week.
Debate adjourned until Friday.

DIPLOMATIC RELATIONS WITH THE COURT OF ROME.
MR. HORSMANrose to ask the question of which he had given notice, namely, —Whether it were the intention of Her Majesty's Government to establish diplo-

855
matic relations between this country and the Court of Rome? He thought it would be highly advantageous that this country should have a resident Minister at the Court of Rome, with relation to questions both of a commercial and territorial character. It had until recently been doubted whether, if we were disposed to endeavour to establish a more friendly footing with that Court, such a measure would not be objected to on the opposite side. But a change had now come over the feelings of the Papacy, and the recently elected Pope, having adopted the maxim that the internal relations of his State should be regulated rather by political than by religious feelings, and having given a very hospitable reception to the Ambassador of the Porte, there was no doubt that he could not feel otherwise than honoured at receiving at his Court the representative of this country. There could be no doubt of the friendly feelings of this country towards the present Pope, whether or not they took any steps to establish relations with him on a more friendly footing, such as became the interests and character of this country.
LORD J. RUSSELL: I certainly concur with the hon. Member in all that he has stated of the liberal policy of the present Pope, and I believe that it would be his wish to see more formal diplomatic relations established between this country and the State of Rome. I have seen, with very great pleasure, the course which the present Pope has pursued; and I think it will tend much to increase the happiness of the people of Italy. I have no hesitation in saying, that I think it would be desirable that these more formal relations should be established; but the question is one both of law and of policy: in point of law exceedingly intricate; and in point of policy likely to excite considerable discussion. The law, as it at present stands, leaves a difficulty; there are expressions and words in the Act of Parliament to which it is difficult to give a legal interpretation. Therefore, as the law at present stands, I do not think it would be safe to advise Her Majesty to send a Minister expressly with credentials to Rome. With respect to introducing a Bill on this subject to make the law more clear, I do not think it would be advisable, at the end of a Session, with a great deal of other business before us, to introduce a Bill on so important a subject. I cannot tell the hon. Gentleman that we intend to introduce a Bill; but it is a subject on which I hope we
856
may legislate in future; and I do think it desirable that diplomatic relations should be established between this country and Rome.

LOAN DISCOUNT BILL.
On the Question that the Speaker do now leave the Chair, for the House to go into Committee on the Loan Discount Bill,
The MARQUESS of GRANBYfelt that it was necessary for him to make an apology to the House, for venturing to address it on a subject of so much difficulty. As it was in the power of any person who paid any attention to the subject, without entering into the chemical properties of the soil, to say such and such a soil produces such fruits, and such another soil will not; so he hoped the House would indulge him, if he did not enter into the intricacies of the subject, but contented himself by reviewing the facts of the case as they stood before them, and their financial and social aspect. The question they had to discuss ought not to be confined to the proposition of the right hon. Gentleman the Chancellor of the Exchequer. They ought to take a more extended view, look calmly at the present state of the country, and consider to what extent that state was to be attributed to the banking law of 1844. It had been admitted upon all hands that great distress existed in the country, and that a great deficiency in the circulating medium was generally felt. It was not his intention to occupy much of the time of the House by reading extracts from communications which he had received, to prove the extent and alarming nature of that pressure; but he might be permitted to observe, that the magnitude and extent of the monetary disorganization was painfully attested by a letter received from Mr. Foster, of York. The noble Lord read extracts from the letter in question, and also an extract from the Manchester Courier, detailing the distress which the manufacturing districts laboured under in consequence of the pressure of the money market. The state of trade had become desperate; and in Manchester and the adjoining district of Sal-ford thousands of hands were but partially employed on the short-time system, and thousands of other men wholly without work, while the price of food was rising, and the condition of the people was becoming more calamitous every day. He should not trouble the House by reading further extracts, as it was admitted on all hands

857
that the greatest possible distress prevailed in the manufacturing districts. They had been told that the Banking Bill of 1844 was to saturate the country with gold; but he believed that the statement was made for the purpose of saturating the minds of hon. Members, that the Bill had saved them from great distress. But what were the facts of the case? He believed the Bill came into operation on the 7th of September, 1844. What quantity of gold was in the Bank at that time? In the issue department there was coin and bullion to the amount of 12,657,208 l., silver, 1,694,087 l.; and coin in the banking department, 857,765 l.; making a total of 15,209,050 l. But what was the quantity of gold in the Bank on the 24th of April, 1847? There was gold coin and bullion amounting to 7,120,006 l.; silver, 1,429,134 l.; gold and silvercoin, 664,750 l.; making a total of 9,213,890 l., so that in point of fact there were 6,000,000 l., less of gold in the Bank of England in the year 1847, than there was previously to the passing of the Bank Bill of 1844. Was it then true, or not, that the Banking Bill of 1844 saturated the country with gold? It had been said, how was it possible to foresee what was likely to happen; how was it possible to foresee the famine in Ireland, the failure of the cotton crop, or the inordinate speculation in railways? But he begged to say, those failures and that speculation had not been foreseen. There was the memorial from all the eminent bankers in London alluded to a few days ago by the hon. Member for Shrewsbury (Mr. Disraeli), which was drawn up previously to the passing of the Act. Now, were the Gentlemen who signed that memorial men of no note, or were they persons who did not understand the question? He knew it had been said, the House of Commons was responsible for not having paid attention to that document; but it should be borne in mind that the memorial never had been laid upon the Table of the House, nor never had been fairly before it. It might have been accidentally mentioned, but it never was before the House in a practical shape. But, in addition to that memorial, was there nothing in their legislation of the last few years to lead them to expect what was likely to happen? Were there no other signs in the sky of the tempest that was to be dreaded? What had been their course of legislation for the last few years? Had they not by their measures of 1842 and by their free-trade
858
legislation, induced gold to be taken abroad with one hand, and with the other declared that for every pound in gold taken abroad, not only would they not allow the vacuum to be filled up by another medium of circulation, but they declared that for every pound of gold they would take away its equivalent in Bank paper. This showed that it was quite clear the pressure must have come sooner or later. He knew it was said, if they wished to get back their gold, the only means would be to restrict the issue, and to make money dear and commodities cheap. But he begged the House to consider the distress that must intervene before that could be carried out. Let them remember the great number of mills which would be stopped, the number of manufactories that might be closed, the reduction of wages, and the pauperism that would be entailed upon the country before the measures could come into operation which were to relieve the pressure. He had often heard the popular adage, "Before you get better you must get worse;" but he never heard of a doctor who undertook to make the patient worse in order that he might get better. But how did they propose to get back the gold that had been sent out of the country? The only means for effecting that object would be to send manufactures abroad, and get gold back in exchange. But then, what manufactures were there in the country? They had been told they could not send their railway stock—then what manufactured stock had they? He feared they had hardly any, in consequence of the working of short time. And what raw material had they to work upon? He held in his hand a statement of the quantity of bales of cotton in the markets of Liverpool, London, and Glasgow, in the three years of 1845, 1846, and 1847. There were in the year 1845, 1,624,744 bales; in 1846, 1,556,804; but in 1847, there were only 1,320,944. There were imported from January to the 30th of April, 1845, 727,684 bales; in 1846, 510,750 bales; but in 1847, there were only 487,154 bales. The deliveries were in 1845, 32,220 bales; in 1846, 31,040; and in 1847, there were only 20,273 bales. He would not go into the question of other articles of raw material, from which the manufactures of the country were to be produced; but it was well known that manufactured stocks were low, and therefore it was he feared they would have to wait for some time before the desirable effects that were

859
anticipated could be realized. He was also of opinion that the high price of cotton was not in consequence of the superabundance of money, but owing to the scarcity of cotton. They had been told that one of the great objects of the Bank Restriction Act was to prevent the country banks from issuing more than a certain quantity of paper, and so to give the Bank of England some general control over the issue of paper throughout the country; but no sooner was that doctrine laid down, and the public mind became impressed with the necessity of it, than they found that when the memorial of the bankers was presented to the Government of the day, the answer then made was, "We cannot allow the Bank of England to have the control over the issues." And why? Because it was feared the Bank might avail itself of the permission. Then, again, they heard that another great object of the Bank Restriction Act was to insure the convertibility of notes into gold. This was to be the basis of the currency; but no sooner were their minds filled with the truth of the principle than they heard that a sum of 14,000,000 l. was to be issued, not upon the security of gold or silver, but upon Bank securities. If they were to give up that great principle, if they were not to stand by that principle, why did they they not give to the Bank a discretionary power to relieve the country from the severe pressure and distress which it was now suffering. What was the object of money? Was it not to facilitate the interchange of commodities between different companies, of persons, and individuals? But if the population increased, and manufactures increased, did they think the circulating medium was to remain the same, and that, let the circumstances of the country be what they might, that they could not alter the standard of the currency? Or, supposing the population and transactions to remain the same, the circulating medium could be diminished without causing great pressure and distress. In concluding this part of his subject, he could not do better than refer to a speech made by a noble relative of his (Lord Morpeth) in the autumn of last year at Sheffield. The occasion was a great one. There was an immense meeting, and the extinguisher was to be put completely on the Protection party. In that speech he found the following passage:—
"Now, feeling how much more they have always done, and done so well, I am quite willing to take the injunction of my friends near me, to let
860
them alone and manage their own affairs, which they can do much better than with the help of a meddling Government."
But this principle is much more applicable to your own Bank of England, than to our commercial relations with foreign countries. He would read an extract from a speech of the right hon. Baronet the Member for Tamworth, who alluding to a speech of the noble Lord the Member for Lynn, said—
"The noble Lord had said that if we get the corn of France and the timber of Prussia, the great consideration was, what we should get them to take in return. Why, suppose they took nothing in return, what should we suffer from that? On what principle does the noble Lord think foreign commerce is carried on? When we buy the brandies of France, they are not given to us—something is given in exchange for them. There is no mode of making purchases but by giving an equivalent for them. Well, but you say we shall sent out gold for them; but do you send out gold to these countries now? I have not seen any diminution in the gold of the Bank of England that could be attributed to this cause. If there has been a decrease in gold, it has been from our internal concerns. I have not seen that any great quantities of it have gone to Prussia. What will astonish you still more perhaps is, that I wish it had. This country would be able to command a sufficient quantity of gold if it were required in the steady and legitimate course of trade. When a regular commerce is carried on, there can be no drain of gold; and even if they take nothing but gold, we can only procure that by transmitting our manufactures for that gold, and then purchasing corn and timber with it. I should not be alarmed, therefore, if there should be an export of gold from this country, knowing that we shall obtain that gold by exchanging our manufactures for it. No such export can take place as will derange our internal affairs, or derange the stability of our commerce."
He really thought that the free-trade friends of the right hon. Gentleman had not paid that attention to him, which, from the attention he paid to them, they were bound to do. He thought they should have congratulated the right hon. Gentleman on the way his wishes had been fulfilled. But no expression had yet fallen from any Member of that House, showing any sympathies for the feelings of the right hon. Gentleman. It had been said that it was unfair to refer to free-trade measures in the present circumstances of the country; that the potato famine, the high price of cotton, and the general deficiency in the harvest, prevented the free-trade measure from being fairly tried. He admitted that there was something plausible, but denied that there was anything conclusive, in the argument. Were we importing nothing but food? Was it a drain of gold to supply our deficiency of food, that caused our

861
deficiency of gold? He thought he could show the House satisfactorily that this was not the case. He held in his hand a return of the imports of various articles during 1845 and 1847; and he found that of cotton, clocks, cotton manufactures of Europe, fancy woods, glass bottles, iron, brass, lead, leather, gloves, linen, silk manufactures, brandy, sugar, tallow, woollen manufactures, tin, wood, and a variety of other articles, breadstuffs being entirely excluded, the official value in 1847 exceeded that in 1845 by 4,333,792 l. The excess in glass bottles amounted to 7,473 l., although the House had been told, when the duty was taken off glass, that we should be able to supply the world. In the article of sugar, which was principally slave-grown, the excess in the imports of 1846 and 1847 as compared with 1845, was 1,175,043 l. The articles he had enumerated showed to what extent free trade had injured our own artisans. Cotton, glass bottles, iron in bars, lead, leather gloves, linen, the silk manufactures of Europe, and woollen manufactures, were the articles which interfered more particularly with our native industry. He found that the excess of imports in those articles during 1847, as compared with 1845, amounted to 857,559 l. The right hon. Gentleman the Chancellor of the Exchequer, in speaking of the number of labourers employed in railways, stated that for every 1,000,000 l. expended, there would be 45,000 employed; and that for every 1,000 l. there would be forty-five labourers employed. If, therefore, this 857,559 l., which had been taken away from this country, in order to buy those manufactures which were to enter into competition with the productions of our own countrymen, had remained in the country, we could have employed no fewer than 38,590 heads of families. Let no one tell him that the free-trade measures had not been tried. They had been tried, and they had not only been found wanting, but it was found that they had done material injury to the people of this country. His noble relative had also told the people at Sheffield that the sharp cry of the people, under the pressure of famine, would be strong enough to sweep away every obstacle; and that in every year, in every season, in every state of the weather, the ports of Britain should be open for the admission of foreign produce, and that the people of England should open their mouths wide for all this, and that no man should stay it. He hoped
862
that if the people of England opened their mouths then, that they would now open their eyes as wide. He feared that their breeches pockets had been rather widely opened, and that more had come out of their pockets than had gone into their mouths; and he believed that they were now better ahle to judge of the fallacy of the free-trade principle. But it was stated that this famine was not confined to England—that it had extended itself to France, Belgium, Holland, up the Rhine, and up the Danube. In that declaration he heard the echoes of another speech made by his noble Friend (Lord G. Bentinck), and than which a more eloquent speech was never delivered in that House. That speech came back upon his (the Marquess of Granby's) ears like "the remembered tone of a mute lyre." That which had been now stated as a fact was then predicted as what would probably arise. In quoting from Mr. Tooke's prices, he said—
"In ordinary circumstances we may safely trust to a regular supply from abroad; the discouragement of our home productions may not then seriously affect us; but if a famine arise, then we may have bitter cause to repent the folly of our course, and may find that the encouragement we gave to home productions by the imposition of restrictive duties was absolutely necessary. The more you increase your dependence on foreign supply, the more you increase, in the event of a general pressure, the risk of a monetary derangement."
He thought the House ought to congratulate itself that the corn laws were not repealed eight or ten years ago, for if they had been, it was his confident belief that in years where there was no scarcity, they would have put out of cultivation their own soil; and we would, under present circumstances, require five millions of quarters of wheat from abroad more than we were now importing. He did not pretend to say that, in years like the present, we could prevent great scarcity—what he meant to say was, that more corn would be sown in our own country under a system of protection, and that it would be our own fault if we permitted that corn to leave the country in a time of scarcity. We should then have, at all events, all the diminished produce if we chose; but if it was grown abroad, we might not be able to obtain any portion of it. We were told, again, that we could not judge of the free-trade measures at the present time, in consequence of the scarcity being general throughout a great part of Europe, and that those from whom

863
we were obliged to buy wheat were themselves in want, and could not afford to spend money on British manufactures. Now what was the truth? From what countries did we get our corn? Did we get it from countries that were in distress? Did we get it from France, from Belgium, or from Holland? Why, those countries were unlike our own. The rulers of France, whenever a scarcity occurred, and they thought there was any danger of famine, closed the ports. It was not from countries in distress we got our corn, but from countries that had a superabundance—from America and Russia for example. And not only did this do away with the argument, but it told the other way. Undoubtedly there was distress in other places as well as in England. America was able to get a higher price for her corn than if there was no deficiency in the harvest in other parts of the world, and she was therefore better able to buy our manufactures than she would be under ordinary circumstances. Therefore he would say that the argument that we could not now judge of the effect of the free-trade measure was not founded upon truth, and would not bear scrutiny. He thought his noble Friend the Member for Lynn had acted fairly and honestly when he exposed the fallacy, that if you took care of your imports your exports would take care of themselves. He believed the noble Lord was right, and that he had pointed out the true policy in calling upon them to protect our own industry and our own people, and to extend, as contradistinguished to the foreign trade, our colonial trade. When we imported corn or other articles from our colonies, they were willing to take our manufactures in return; but if we went to America, Russia, France, or Prussia, they would not do so. The truth of what the noble Lord said, was now being exemplified; and whatever eloquence might be opposed to it, truth would make its way. He did not know how long we might go on worshipping this idol of free trade which we had set up—he knew not how long our affections might thwart our judgment— how long, like the moth, we might flutter round the candle, and when our wings were burned, offer up our bodies also as a sacrifice. But what he had to say was this— that if they would pass measures causing the exportation of gold and ruinous to our artisans, it was impossible to refuse to give some other circulating medium, instead of the exported gold, in order to al-
864
low our manufacturers and our countrymen generally to employ their capital upon the remnant of the trade left them, or on any other occupations, if they were lucky enough to find them, in which they might employ their capital. Before he sat down, he would venture to express a hope that Her Majesty's Government would not rest contented with merely satisfying and relieving their own necessities, which they could only do at the expense of their country, but that they would listen to the prayers of a vast majority of the intelligent, thinking, and industrious classes of this country, that they would allow them the means of carrying on their business, and employing their workpeople by taking away the restrictive character of the Act of 1844, and by extending the currency.
The CHANCELLOR OF THE EXCHEQUER: Mr. Speaker, I certainly thought that the debate which has just been commenced by the noble Lord, was to have been a continuation of the debate which took place on Monday night, and that it was to be confined principally to the monetary condition of the country, and to the question whether the House was of opinion that the principle of the Act of 1844 should or should not be adhered to. But, although it is true that the noble Lord, at the beginning and at the end of his speech, has uttered a sentence or two with reference to that subject, the greater part of his speech has been directed against the general measures of free trade, and has referred to the reduction of duties upon the importation of foreign goods, the consequent injury to the English manufacturers, and the drain of gold which he attributes to the importation of foreign manufactures, and not to that of corn and flour. The noble Lord, however, seems to forget for how long a period previously to last August measures of free trade of an extensive character have been in operation, and the very large importations of foreign goods which have taken place for two or three years past; and he seems to forget that up to last August, when the necessity of importing corn was for the first time felt, there was, nevertheless, an unexampled flow of gold into this country. I do not think the noble Lord is very correct in his statements with reference to what has occurred within the last eight months; but certainly he is entirely mistaken as to the events of preceding years. The noble Lord has referred to the misfortunes which might be entailed upon this country by rendering it dependent

865
upon foreign countries for a supply of food. Now, I would ask whether the noble Lord means to say that the supply of food produced in this country has been diminished by the operation of the Act of last year? The noble Lord cannot make such a statement. There has, then, been no diminution of home supply in consequence of our being dependent upon foreign countries; and I should like to ask the noble Lord what situation a great part of the population of this country would have been in at this moment if they had not received from foreign countries, and especially from America, those enormous supplies of food which have kept a large proportion of the people from starving? The noble Lord has quoted some extracts from the speech of a noble relative of his at Sheffield. I confess, I cannot discover what that speech has to do with this question; but I consider that the advice given in that speech to the people of America, was remarkably sound; and I hope they will follow it. I hope that the people of America will cut down their forests and plough up their prairies, and in their place cultivate extensively grain of various kinds by which the people of this country may in future years be plentifully fed. I will not follow the noble Lord opposite in his arguments on the subject of free trade, for I think we have to deal with a subject quite large enough in considering the monetary condition of the country and the state of the currency. With regard to the measures which I have proposed to the House, it is a great satisfaction to me to find that they have met with the universal concurrence of every hon. Gentleman who has spoken on the subject. I may, however, be permitted to refer to some of those topics which were mentioned on a former night, because, in the position which I hold, I consider it essentially necessary that I should state my views on a question of this nature. An hon. Gentleman opposite, the Member for the city of London (Mr. Masterman), has invited me to give an assurance that, under no circumstances, will I ask from the banking department of the Bank of England any deficiency bills in the next July quarter. That is an assurance which I shall certainly not be so indiscreet as to give; but I think the hon. Gentleman may be well satisfied that it is my intention, if possible, to avoid that necessity, for I believe I have taken those measures which, in the unanimous opinion of all who have spoken on the
866
subject, are best calculated to obviate that necessity; and, from the experience of the last week, I hope that the course taken by the Government has also, to a considerable extent, been attended with beneficial effects as regards the state of the money market, which is now comparatively easy. The noble Lord the Member for Lynn (Lord G. Bentinck) has stated that the question upon which the country is most interested is, as to the principle upon which the currency is to be conducted—the maintenance or non-maintenance of the Act of 1844. The right hon. Baronet opposite (Sir R. Peel), who introduced the Act of 1844, has stated most fairly that no affection for his own offspring, as it is termed, should induce him to abstain from candidly considering the subject, if the Government deemed it necessary to call upon the House to revise that Act. I have not the slightest doubt that the right hon. Baronet would fairly act up to that declaration. If the Government considered it advisable to revise the Act of 1844, they would bring the question before the House. But, as I declared on two former occasions, such is not the opinion of the Government. [Sir R. PEEL: Hear, hear!] This is a question in which party spirit never has entered, and I trust never will enter. It is far too important a subject to be made a mere matter of party discussion; and I gave my unhesitating support to the Bill of the right hon. Baronet (Sir R. Peel), although I was not a supporter of the right hon. Gentleman's Government, because, on the best inquiry I could make, and the best consideration I could give to the subject, I had arrived at a deep-seated conviction that the measure of 1844 carried out the sound principles upon which our currency ought to be regulated. I was the chairman of a Committee which had been appointed with reference to the subject, and before which many most able men, well conversant with the question, were examined. I entered that Committee without any great bias, but with an anxious desire to ascertain the truth as far as I could; I left the Committee with the conviction that the principles which were subsequently carried out by the right hon. Baronet's Bill were the sound principles for the regulation of our circulation; and I do not hesitate to say that the opinion which I then formed, remains unshaken at the present moment. [Sir R. PEEL: Hear, hear!] I must say that I am more and more convinced by the discussions which have taken

867
place on this subject of the policy and expediency of maintaining that Act. Nothing can be more remarkable than the extraordinary discrepancy of opinion which prevails among those hon. Gentlemen who have spoken and who have impugned the Act of 1844. The noble Lord opposite proposed simply to repeal that Act, and the hon. Member for Shrewsbury (Mr. Disraeli) took the same view; but a great authority on the subject, the hon. Member for Birmingham (Mr. Muntz), said very truly that the measure of 1844 was indispensably necessary for efficiently carrying out the measure of 1819. To satisfy that hon. Gentleman, therefore, we should have to repeal not only the Act of 1844, but the Act of 1819. But the hon. Member for Birmingham who sat opposite (Mr. Spooner), was not satisfied with the state of the law as it existed before 1819. We should have to go back then to the law as it stood before 1797; but before that period the standard was precisely what it is now—a gold standard with the Mint price at 3l. 17 s. 10½d. for the ounce. The hon. Member for North Warwickshire seems to think that there had been a silver standard at that time; but, in point of fact, it was not so, owing during the greater part of last century to the value at which silver was at that time rated by the Mint; and when towards the close of last century it became advantageous to bring silver to the Mint to be coined, the Legislature interfered to prevent it. The result is, that for the last 150 years we have never practically had silver as a standard. In matters of this kind there is nothing so essential as certainty; and I must remind the hon. Member for Birmingham that we have not yet heard from him what he means by a pound. I believe that it will be admitted by all sensible men, that nothing would be so foolish as to repeal the present law, unless we are prepared to state what we would substitute for it. When those Gentlemen who recommend that course, have come to an agreement among themselves, and shall make any definite proposition to the House, we may, perhaps, discuss the question with advantage; but I think it would be little short of sheer folly to disturb the present law with no clear and certain alternative to be adopted in its place. One other proposition has been made, and that is, for the establishment of free trade in banking. I think that, to show the danger of adopting such a system, I need only refer to the example of
868
America. Free trade in banking, that is to say, an unlimited competition of issue, had been established in that country, accompanied by every guard which the ingenuity of the American people could impose upon the administration of the banks, save and except that of insuring a practical convertibility into coin; but in 1837, the experiment ended in an universal suspension of cash payments, and in very general bankruptcy from one end of the union to the other. The hon. Member for Rutlandshire had talked of some scheme for properly limiting the issues; but, until some practical plan is submitted to us, I can form no opinion of its efficiency; and, for my own part, I can conceive none that would answer the necessary object, except some law which limits the issue of paper with reference to the quantity of the precious metals. With respect to the attacks made on the Act of 1844, I do not think that those who have impugned that Act have treated those who promoted it quite fairly; because they have put their own anticipations of what they expected from it into the mouths of the promoters of the measure, and when they find that their own expectations have not been realized, they turn round and complain of having had delusive hopes held out to them. No stronger instance of this can well be conceived than that which has been stated both in and out of the House, and which has been repeated by the hon. Member for Montrose, that expectations were held out that after the passing of the Act of 1844, the Government was never to have recourse again to the issue of deficiency bills. Since the debate on Monday, I have referred to both the speeches made on the occasion of that Act by the right hon. Baronet the Member for Tamworth, the authorized expositor of the objects of the measure, and I cannot find that a single syllable on the subject dropped from that right hon. Gentleman. I cannot find that any other person referred to that subject except myself. I do not pretend to be the expositor of the Bill, but it was my fortune, from circumstances, to take a somewhat prominent part in that debate in 1844. I find that I was the only person who, speaking on that occasion, referred to the subject of deficiency bills; and I then said what I referred to on Monday night, namely, that under the operation of the Bill, the Bank of England might, without difficulty, and with advantage to the public, continue its former practice of making advances to the

869
Government out of its means as a banking establishment. If this were, as I believe it to have been, the only observation made on the point at that time, it is hardly fair in those who impugn the Act to turn round on those who promoted it, and accuse them of holding out expectations directly the reverse of their expressed anticipations. I never was more surprised at anything than at the charge made against me by the hon. Member for Huntingdon on Monday night, namely, that I had been guilty of some concealment in not mentioning my probable want of advances from the Bank upon deficiency bills for the April quarter; because, if I hold a strong opinion upon one point more than another, it is on not only the inutility but the absurdity of concealment. I think that there is nothing-more wise than the most open and frank dealing in all matters of this kind; and if I had been asked the question, I should not have had the slightest hesitation in telling the contractors what my probable demand for deficiency bills was likely to be. I communicated to the Bank, I believe in the month of January, that I should probably require about the usual amount of deficiency bills for the next payment of dividends, and I should not have had the slightest hesitation in saying as much to the contractors if they had asked me. If they were deceived, they were deceived by themselves, because, in every quarter since the passing of the Bill, with the exception of one, there has been an issue of deficiency bills; and if they were so shortsighted as to conclude, from one instance, that there never would be deficiency bills again, when in every preceding quarter but that one there had been deficiency bills, I cannot blame myself for having deceived them. In the course which I adopted, my object was to disturb as little as possible the ordinary course of monetary transactions. That a loan always does more or less disturb those operations, is undoubtedly true; but I made the amount of the loan as much and no more than I thought I should want for the, demands of Ireland up to the harvest. I arranged also the instalments of that loan as equally as I could over the time, in order that it might be paid up with as little pressure and disturbance of monetary operations as possible; and I never intended that any mode of payment should be adopted which should, in any way that could be avoided, interfere with what would have taken place if the loan had not been
870
made. Now, what were the two requests made to me by the contractors which I did not accede to? One was, that the instalments should be spread over a larger space of time; and the other, that they should be allowed to pay up their instalments on discount. As far as the public was concerned, the probable effects of the two propositions were contradictory. If the contractors were not to pay a part of their money until after the period which I named to them, I should not get my money when I wanted it; and if they were to pay up on discount, with a longer period for the payment of the loan, it might be necessary for me to pay a larger amount in discount on account of the longer time allowed for payment of the instalments. This was the only possible effect of the two propositions taken together. The proposition of a longer period for the payment of the instalments was, so far as the interests of the public are concerned, totally inconsistent with a concession to enable the contractors to pay up on discount. I did not at that time consent to the allowance of discount, because it was not necessary for me to have the money so promptly, and I felt that the payment of a large sum of money in that way might have some effect in deranging the money market. Circumstances have, however, changed, and I have adopted the course which has been explained to the House, of giving inducements for the paying up of the instalments, by allowing discount, in order that the balances may be increased for the July quarter. The noble Lord seems to think it perfectly certain that the amount of the pressure could have been foreseen. I, as well as others, had foreseen long ago that there must be a large importation of corn, which would cause a drain of gold from the country, and that always causes a pressure. Nevertheless, even so late as February or March, no one anticipated the severity of the pressure which has since taken place, arising, I believe, in no inconsiderable degree from the alarm which was excited in the mind of the public by their observing, in the published accounts of the Bank of England, the small amount of notes in reserve which appeared on the 17th April. This again has been attributed to the existence of deficiency bills; but a moment's consideration must show hon. Gentlemen, that whether the sums paid to the receivers of dividends are provided out of balances in the hands of the Bank to the credit of Government, or out of advances made on

871
deficiency bills, precisely the same amount of notes must be paid out of the Bank, and the existence or non-existence of deficiency bills makes no difference whatever in the amount either of the notes with the public or of those in reserve. Hon. Gentlemen have also taken a most exaggerated view of the effect which deficiency bills produce on the accommodation to the public, afforded in the way of discounts or advances on private securities. If the Bank has Government balances in its hands, it is not to be supposed that they will remain in the shape of bank notes in the till of the Bank; of course they will be invested in some kind of securities; and when the time for payment of the dividends arrives, those securities must be realized to a certain extent, in order to enable the Bank to pay the dividends. If it so happens that the balances have been employed in discounting bills, then the accommodation thus afforded to the public by means of the money of the Government must be curtailed for the short period during which the creditor of the Government is receiving the money due to him every quarter. Take the last quarter for example. I had apprized the Bank early in the quarter of the probable amount of deficiency bills for April; and in January and February they sold public securities with the view of being prepared for this demand; but towards the end of the quarter, they applied the money so procured in discounting bills. But they might have done precisely the same thing with an accumulation of Government balances; and if they had done so, then the same result would have followed, and when quarter-day came, the accommodation thus afforded to the bill brokers must, to exactly the same extent, have been withdrawn for the time. If the Bank has a large reserve, the existence of deficiency bills produces no effect; and if the Bank does not keep an adequate reserve, then the Government balances do not obviate the necessity of withdrawing for a short time, during payment of the dividends, a part of the accommodation previously afforded on private securities. I think, therefore, that to attribute the whole of the pressure in the beginning of April to the existence of deficiency bills, is to take a most exaggerated view of the state of things. I will now state to the House what, on former occasions of pressure, has been the amount of deficiency bills, and the amount of accommodation afforded to the public chiefly in the way of the discount
872
of bills. The amount of private securities does not correctly indicate the bills discounted; but in all probability the difference in the amounts in the different years is mainly in the amount of bills under discount at the respective periods. Comparing the last two periods of pressure, both of which happened to be coincident with the payment of the dividends, it will be seen that a very much larger amount of deficiency bills was issued by the Government, and, at the same time, a smaller amount of accommodation given to the public than during the present pressure; and yet I never heard then the extreme outcry which is now raised against deficiency bills. I will observe, that the amount of circulation at the two former periods included the Bank Post Bills, and does not do so for 1847; so that I am entitled to deduct about 1,000,000 l. from the amount of circulation which I shall quote, both for 1837 and 1839. I will read a return showing the amount of circulation, deficiency bills, &c, at the several periods referred to:—

Date.

Circulation.

Deficiency Bills.

Private Securities.

1837.

£.

£.

£.

January 10

18,776,000

4,800,000

17,900,000

January 17

19,033,000

4,380,000

17,000,000

1839.

October 15

17,646,000

4,376,000

13,100,000

October 22

17,716,000

4,211,000

12,100,000

1847.

April 10.

20,403,000

2,475,000

18,136,000

April 17.

20,242,000

1,315,000

17,111,000

Comparing 1839 with 1847, it will be seen that the circulation was about 3,000,000 l. higher at the latter period, while the deficiency bills were from 1,900,000 l. to 2,900,000 l. less, and the private securities about 5,000,000 l. more. To suppose, then, that owing to the amount of deficiency bills in April, which is so small as compared with the amount in previous times of similar difficulty, the private accommodation was very much reduced, is to attribute a great effect to a very inadequate cause. Some hon. Gentlemen who have come forward as the self-constituted defenders of the Bank of England, have put into the mouth of the advocates of the Act of 1844 charges against the Bank of England which they never made. We have been charged with blaming the directors of the Bank for lowering the rate of interest in August. The hon. Member for Huntingdon himself blamed the Bank for doing so. The right hon. Member for

873
Tamworth has disclaimed having referred to this point; neither have I said a word on the subject. The hon. Member for Huntingdon also imputes to me that I blamed the Bank for not raising the rate of interest earlier in the last quarter. I have said nothing on this question. With respect to the directors of the Bank of England, I believe that they have used their best exertions to promote the interests of the country; and nothing is further from my wish than to impute blame to them, or to speak otherwise than respectfully of those gentlemen. Still, I am not to be debarred from expressing my opinion on their conduct, if the public interests seem to me to require that I should do so. What I did say, was in answer to a position assumed by the noble Lord the Member for Lynn (Lord G. Bentinck), who, late one night, asked me what was to be done in consequence of the contraction of the circulation produced by the Bank acting in compliance with the principle of the Act of 1844; to which I answered, that there was no such contraction of the circulation. That is a matter of fact beyond dispute, for the returns show that the amount of notes with the public wore very nearly as high in April as in August last, although the bullion in the Bank had been diminished to the extent of nearly 7,000,000 l. It is clear, therefore, that the Bank had not acted in accordance with what the noble Lord assumed to be the principle of the Act of 1844, namely, reducing the notes with the public in proportion to the drain of bullion. Indeed, the hon. Member for Shrewsbury (Mr. Disraeli) demonstrated most clearly, in the comparison which he made of the drains of 1836 and 1839 with that of the last eight months, that for a certain time the same course had been pursued in all, namely, that the usual accommodation had been afforded for a considerable period of the drain, and then had been suddenly checked. The hon. Gentleman might not be very correct in his figures, but I do not wish to stop to dispute them, for I am not arguing merely for the sake of answering an opponent. The hon. Member is perfectly right in saying, that the amount of note circulation might have been higher than it in fact was at the commencement of the drains in 1836 and 1839, if the Act of 1844 had been in force. This, however, would not have been the case for any long time, either in 1836 or 1839, from the circumstance of the bullion in the Bank being lower in amount in both
874
those years at the commencement of the drain, than it was in August last. I admit, therefore, that for a certain time, even the Act of 1844, if it had been in force at that time, might not necessarily have produced so early a contraction of the notes with the public as was desirable; and the hon. Gentleman has shown, that in 1847 the drain of bullion has not produced a corresponding contraction of the notes with the public, or what is commonly called the circulation, up to the month of April. But the noble Lord and the hon. Gentleman cannot have the benefit of the argument in both ways; it is not competent for them, taking a prominent position in impugning the Act of 1844, to advance diametrically opposite assertions, and the one to find fault with the Act because it produced a contraction, while the other argues that it did no such thing. The argument used by those who advocated the Act of 1844, was not that it would necessarily produce the effect, but that its tendency would be to produce the effect which they held to be essential, in order to prevent the severity of the pressure which always has followed a drain of gold namely, an early, gradual, and steady pressure from the commencement of the drain. But the truth is, that in this case, as in former instances, the pressure came after the usual accommodation had been extended for a longer period than it ought to have been, and that the screw was put on, as it is termed, not only severely, but suddenly. I believe that in this year the pressure would have been less severe, if it had been more gradual; and this is not my own opinion only, but one of the largest bill brokers in the city said to me, that they could have borne this, and even greater pressure, if it had come upon them more gradually. The difference, however, between this and former cases is most important, and it is this—that the pressure, though severe, was brought on when the amount of bullion in the Bank was large, and when there was no fear of insolvency or doubt of the convertibility of the notes. The pressure for gold in the most critical period of the year 1825 was not from abroad; for the exchanges were in our favour: the main demand for gold then was stated by Mr. Horsley Palmer, in his evidence before the Bank Committee of 1832, to have been owing to the discredit of country paper. In December, 1825, a large bundle of 1l. Bank of England notes was sent down to Norwich, and the tender of them by the country banks there immediately checked the run

875
in that part of the country. There is no analogy between that case and the present; we are now protected from the danger which arose in 1825. The hon. Member for Huntingdon has borne the most decisive testimony to the beneficial effect of the Act of 1844 on the country circulation; and he attributes to it the safety from much over speculation to which in the last two years we probably should have been exposed but for its operation. The present drain is not an internal drain from discredit of the paper, but entirely for foreign export; and this can only be met by actually sending gold out of the country. I need not repeat, that the risks we have run in former years, and the experience of the United States, abundantly prove, that unless a drain of gold for foreign export is accompanied by a contraction of the paper circulation, there is no security for the convertibility of the paper. The truth, however, is, that the apparent defect in the working of the Act of 1844, in this respect, is owing to a misconception of the effect which it was professed that its provisions would accomplish. No little confusion has occurred in the minds of many Gentlemen, from the difficulty of separating the two departments of the Bank from one another in considering this subject. I expressed my regret in 1844, and the right hon. Baronet, the other night, almost concurred in this view, that the function of issuing notes had not been entirely separated from the Bank of England. I admit that, at the time, there were strong practical objections to doing so; but I am afraid that so long as the two departments of issue and banking remain within the walls of the same establishment, Gentlemen will not, even in their own minds, make that complete separation which in fact exists between the issuing functions of the Bank, and what is properly its pure banking business. If the issue of notes was made by the Mint, or a department of the Treasury, this confusion would be avoided; and it would be seen that the notes issued by such a department, and which would be returned as circulation, would increase or diminish with the increase or diminution of bullion in that department. All that the Act of 1844 proposed to accomplish in this respect, was to make the paper vary as a purely metallic circulation would do; and if all that has taken place in 1846–7 might, and in the same circumstances probably would, have taken place with a purely metallic circula-
876
tion, then the Act of 1844 has, during that period, accomplished all that could be expected of it. Now, the same circumstances which have taken place in the last two or three years, might equally have occurred with a purely metallic circulation; with a free Mint, to which everybody might carry bullion to be coined, and when everybody might melt or export the coin. What, in such circumstances, determines the amount of coin? It is the amount of capital which, in the shape of precious metals, each individual, or rather the aggregate of individuals, chooses to divert from profitable employment in trade, in order to have it in the shape of coin, for the purpose of facilitating their ordinary transactions. Now, it is evident that in 1845 and 1846 there was a larger amount of bullion in this country than was required for the purposes of trade; for an immense quantity was accumulated in the cellars of the Bank of England, having been carried to the Bank, and exchanged for bank notes. The same quantity would, under a purely metallic currency, have been carried to the Mint to be coined. I do not mean to say that this would have been so to quite the same extent, for the facility of demanding paper for gold and gold for paper is greater than that of coining gold and melting coin; but, nevertheless, this would, to something like the same extent, have been the effect of the great influx of gold. There would, then, have been nearly the same quantity of coin struck at the Mint, under these circumstances, as there actually was under existing circumstances of bank notes demanded of the Bank in exchange for gold. What then would have become of this quantity of coin? The quantity of the notes obtained by carrying gold to the Bank was larger than was required, in point of fact, by the wants of the public for their ordinary purposes. It is equally evident, then, that there would have been, in this case, more coin in existence than was required for the purposes of circulation; and it must therefore, according to the ordinary mode of carrying on business, have accumulated in the tills of bankers, probably to a large amount in that of the largest establishment of the kind; that is, the Bank of England. No doubt it would not have been made evident to the eyes of the public in the same way, for there might have been no returns of bankers' reserves; but I think there can be no reason for doubting that such

877
would have been the course of things. It is equally evident, that if such had been the case, the drain since August might have been met by a diminution of the gold in the reserves of the bankers, and that the quantity which was passing from hand to hand with the public (which is now represented by the notes with the public) might have remained undiminished up to the present time. Everything, therefore, which for the last eight months has taken place under the Act of 1844 might equally have taken place under a purely metallic circulation; and it is therefore beyond dispute that the Act of 1844 has not failed in accomplishing that which in this respect it was calculated and intended to effect, that is, to make the paper circulation vary as a metallic currency would do. But this was always stated with other matters to be a secondary object of the Act—the main and primary object of which was to maintain at all times the practical convertibility of the bank note, and the complete identity of the pound in paper or in coin, with the standard pound of 123 grains of standard gold. The noble Lord has fallen into an extraordinary mistake as to the meaning of convertibility. He seems to think that there is no convertibility so long as 14,000,000 l. of notes are issued on security. But this is not what convertibility means. The meaning of the convertibility of the paper circulation is, that at all times we should be able to obtain a sovereign for a note. It is quite an error to suppose convertibility to mean that, whatever amount of notes there are, there should be the same amount of gold. In that case there would be little or no advantage in a paper circulation. But by means of the Act of 1844, grafted on that of 1819, we have an indefeasible security for the practical convertibility of paper into a coin of a certain standard, and for the maintenance of that standard as invariable as the nature of things will admit. I shall be glad to hear from the hon. Member for Birmingham, when he tells us what his pound is, how he proposes to keep it invariable in value. Every witness examined in 1840 and 1841, whatever view they took of the currency, attributed the utmost importance to doing this, even though they failed in showing how it was to be effected. The hon. Member for Warwickshire, however, differed in one respect from the hon. Member for Birmingham. The latter declined defining the pound. The Member for North Warwickshire told us what a pound was;
878
he said a pound was "a certain definite quantity of gold," but he differed as to the amount of gold at which the standard pound ought to have been fixed. I know what is meant by this standard, but I am at a loss to understand what is the meaning of the hon. Member for Birmingham (Mr. Spooner). My hon. Friend the Member for North Warwickshire has given it as his opinion that the Act of 1819 established the standard; he agreed that it was right to have established a pound of a given definite quantity of precious metal; but he would have had this quantity less than was fixed by the Act of that year. The Act of 1819 established that there should be 123 grains of gold in the pound. The hon. Member for North Warwickshire would not have had so many. But the Act of 1819 did not create the standard. It only established by law what had been established in fact two years before. The faith of Parliament was pledged to restore the old standard at the peace; and in point of fact, in 1817, two years before, the old standard was practically restored. The Bank of England, as the hon. Member for Birmingham would find, had paid, in the year 1817, according to the old standard. Mr. Tooke, a high authority on these subjects, stated that the Bank might have bought gold at 3l. 17 s. l0½d. for the ounce, and that it was only the price they fixed that kept it above that amount; and they paid, in that year, a considerable amount of gold for their notes. To have established in 1819 that the standard should be 100, or any less number than 123 grains of gold to the pound, as suggested by the hon. Member for North Warwickshire, would have been no cure whatever, no remedy, and no safeguard against the present state of things and the pressure caused by a drain of gold for export in exchange for the commodities of other countries. The hon. Member took for granted that a pound would always be a pound; and if the standard had been fixed at 100 grains instead of 123 grains, he supposed that, as a coin representing a pound's worth, the pound, containing this smaller quantity of gold, would still serve all commercial purposes. It seems to me, however, that the merchants on the other side of the Atlantic were a great deal too acute to take a pound, whatever might be its value as bullion, for a pound of the old standard; and I apprehend, that in exchange for their commodities, cotton, or

879
corn, or whatever else they might be, they would always demand, when they trafficked for a pound, that such a coin should be of the standard of 123 grains. They would require precisely as much gold in exchange for a bale of cotton as they do now, whether it was called the same number of pounds as now or not. Then, if my hon. Friend admits this, the inevitable consequence is, that the same quantity of gold will go out of the country, whatever the pound is called. Supposing, to make the matter more simple, that a half sovereign were called a pound; instead of 7,000,000 pounds which had gone now—7,000,000 times 123 grains, or 14,000,000 pounds, according to the altered denomination, would have gone—or, in other words, precisely the same number of grains or weight of gold would have gone out of the country. And therefore, really, when the hon. Gentleman argues that it would have been possible to prevent that drain of gold under which we have been suffering, merely by calling another quantity of gold, some quantity less than 123 grains, a pound, he is substituting shadow for substance, and imagining that by varying a name he can alter the reality. Gold is of no value as coin in the exchange of commodities with foreign nations. Its only value in that respect is as an article of trade, and its value, therefore, in our trade with America must be estimated not as a coin but as a commodity. There is not the least doubt that if a less quantity of gold had been put into a pound in 1819, debtors in that year would have paid their debts with much more facility. That would be the case so far as concerned all debts contracted previous to 1819; but there would be no difference as to debts contracted subsequently, if the standard remained the same, for they would be measured both at the time when they were contracted, and when they were paid, by the same standard. If now the standard was to be altered, and if a debt contracted when a pound was valued at 123 grains was to be paid when a pound had decreased in value and represented only 100 grains, it is perfectly obvious that we should be doing neither more nor less than cheating our creditors. I have gone, I am afraid, into this question at much greater length than I had intended; but it is a subject in which I have always taken the greatest interest, and on which I think it very important that the objects to be attained by the Acts hitherto passed
880
for regulating the currency of the country should not be misunderstood. The principles of the currency are indeed the subject which hon. Gentlemen, who entered into this debate, principally intended to bring into question in the present discussion, and I have attempted to express my own views on the different points which have been raised. I will now advert shortly to the present state of the country, and the causes which, in my opinion, contribute to produce that state, which no one more sincerely laments than myself. Dissatisfaction has been expressed that I have not before adverted more particularly to these circumstances; but hitherto I have not thought that it was my duty to go at any length into this subject. I have already stated most distinctly that I do not think the pressure which pervades the country generally is of a character for which anything can be done by the Government. I have adverted to the pressure on the money market; I have pointed out what I believe to be the immediate causes of the difficulty; and I have stated, at the same time, on the part of the Government, what are the measures which would be introduced with a view to alleviating that pressure. I have since shown that those measures have been attended, in a great degree, with the beneficial effect which had been anticipated from them; but I have always declared that the general pressure which extends over the country is one beyond the means of a Government to alleviate; and I have invariably expressed an opinion that any legislation, professing to interfere in such circumstances, is empirical and unsafe. The Government has not been prepared to grant the only assistance which they have been pressed to give; for, although suggestions were made by various parties in many shapes, they all came to this when the proposals were fairly sifted—that Government should repeal or relax the Act of 1844. That is the only practical course which has been urged on the Government; and I have stated from the first, as I state now, that we are not prepared to take such a step. I find, however, that, not in this House but elsewhere, Government has been accused of want of decision and want of firmness on that point. Why, the very first time that the subject was mentioned by me, and that the suggestion to which I refer was made, I stated, distinctly, that the present pressure was owing, not to the Act of 1844, but to the neglect of the real principles of that Act. I afterwards, on

881
the next occasion on which I had to express an opinion, most clearly declared that the Government was not prepared to adopt the measure then urged. And I certainly should be surprised if any Gentleman, with whom I have had interviews on this subject, should say that he had left me under the impression that the Government was about to repeal or to relax the Banking Act. My conviction is, as I have said before, that the general pressure was not caused by that Act, and that the repeal of the Act would not in any degree tend to afford relief under present circumstances. Now, the question has been raised and has been gone into by several hon. Gentlemen, as to the causes of the present distress of the country; and I will, therefore, briefly lay before the House the conclusions to which I have come as regards this most important point. I entirely concur with the noble Lord, that one of these causes is to be found in the present high price of one staple article of manufacture, viz., cotton; and that this high price of cotton is the result, not so much of the abundance of money, as of the deficient supply of the article. The noble Lord has stated truly that this high price has entailed great suffering on our manufacturing population, inasmuch as the master manufacturers have been under the necessity of diminishing the number of hands ordinarily employed by them; but certainly the remedy recommended by the noble Lord for the mischief is the strangest that I ever heard. The remedy suggested is that the laws regulating currency should be relaxed; and this is urged, though it is acknowledged the price of all articles would be raised by doing so. Such a course could only be succeeded by a rise in general prices; and thus the noble Lord would pursue a policy which would inevitably defeat his own object, by causing a rise in the price of cotton from this cause, beyond that which it already bears, to say nothing of the effect which this would inevitably have in raising the price of corn and food. Another cause—and this is more general in its operation—the absorption of capital in railway enterprises, has been frequently dwelt upon. I have stated before, that the want of capital which is now experienced, to carry on ordinary concerns, arises in some measure from parties having money locked up in railway shares; that is to say, in a description of security which the holders cannot realize at the moment when they most need the money. Let
882
not the House understand me as saying anything against railways; I merely call attention to this fact; and it is undeniable, that there is a large amount of capital locked up in securities which cannot be realized when a pressure in the money market renders it desirable to have money at hand; that, on such occasions, such capital cannot be made available for the purposes of the owners in their commercial or manufacturing business, in consequence of being so locked up. The best proof of the want of capital is the high rate of interest. Some hon. Gentlemen have remarked that the high rate of interest is a complete proof of a deficiency in the circulation. This is one of those mistakes which I should not have expected to be made in the House of Commons at the present day. It is perfectly notorious that a high rate of interest often exists when there is a large amount of notes in circulation, and a low rate of interest when the circulation is limited. If the history of the circulation were traced for the last few years, it would be found that a high rate of interest nearly as often coexisted with a low amount of circulation, as a low rate of interest with an extended amount of circulation. But the prevalence of a high rate of interest does prove that there is not ready and available at the time, for the purposes of those who need it, the capital which they want to borrow; and they are therefore willing to pay a high rate for the use of it; such has been the case from the commencement of this year. If there is, as I believe to be the case at present, a deficiency of capital available for the purposes of meeting the wants of the merchants for carrying on their trade, and of the manufacturers for the production of their goods, and also for meeting the calls on railroad shares, from too much of the floating capital of the country having been already invested in those undertakings, or advanced on railroad debentures, the House may be assured that the deficiency will not be supplied by an issue either of 5l. notes or of 1l. notes. They constitute circulation, not capital. It is capital, and not circulation, which is required, and capital is not created merely by an issue of paper. The main and prominent cause of the pressure, however, is the want of food. That is an indisputable fact; and when it is considered what quantities of food have been imported in the course of the last twelve months, to say that the pressure is not properly attributable to such a cause,

883
does seem the most extraordinary delusion under which a noble Lord or an hon. Gentleman could labour. The noble Lord talked of the importation of foreign clocks and other articles which form a comparatively insignificant part of the trade of the country, and kept in the background the immense importations of food. The loss from the failure of the potato crop in Ireland has been estimated at 16,000,000 l.; but that is far below the mark; for, besides the failure of the potato crop in that country, there has been a considerable deficiency in the crops of barley and oats. Nor was the failure of the crops confined to Ireland; potatoes have failed to a great extent in England and Scotland. So have the oat, barley, and bean crops; and I am afraid that the produce even of the wheat crop, when thrashed out, has not equalled the expectations which were entertained at the time of harvest; and the deficiency of the other ordinary articles of food must have caused a larger consumption than usual of wheat. The quantity of corn, therefore, which it was necessary to import into this kingdom, could not but be very considerable. The quantity actually imported does exceed all the calculations made by the most sanguine. But it must also be borne in mind, that not only have large quantities of grain been imported, but the prices have been very considerably enhanced by the competition of other countries. France, Portugal, Prussia, the German States on the Rhine, are all competitors for supplies of grain for food. Though in most cases this country has been first in the market, and has obtained by far the largest supplies, yet it must pay in proportion to the largeness of those supplies. Then the question arises, how is the price to be paid? It is for a time paid in gold. But it must ultimately be paid in goods, as even the hon. Member for Huntingdon admits—in the manufactured produce of the country; because every country must pay for what it obtains with its own produce. There has been hitherto payment, to a considerable amount, in gold; but there are favourable signs as to the prospect of demand for our goods, and I hope that the period of paying in our own manufactures, instead of in gold, is at hand. The exchanges are turning in favour of this country. Every packet from America brings accounts of improved quotations. By the last packet, intelligence has been received that the exchange had risen from 106½ to 107. At this rate it is not worth while to
884
send gold to America. Sooner or later, I repeat, payment must be made for the supplies of grain received in this country in its own manufactures. If that which is the commencement of the real payment is postponed, matters will only be made worse. The sooner the real payment begins the better; for then the pressure on our own resources will be lessened. It is stated that there are no large stocks of goods in this country. So much the better for the men who are employed in manufacturing goods. If large orders, as I am informed, are arriving from America, the time may not be so distant when the aspect of matters will be changed. The noble Lord talked of the men working short time. I hope this will not long be the case, and that employment will become more general. I shall indeed be sorry, if the Bill of the hon. Member for Oldham passes into a law, that the power of producing goods should be diminished precisely at the time when it is most desirable to increase our means of payment in manufactured articles. Although, however, there are these symptoms of improvement, I should not think myself justified if I said that I did not expect that we shall have hard times to go through. I should feel myself as little justified in encouraging sanguine hopes as in exciting gloomy anticipations. It is impossible that so great a visitation as has overtaken the country can occur without bringing privation upon all. I have not so little confidence in the energy and stubborn perseverance of Englishmen as to apprehend that they will be subdued and overborne. It is our duty to bear with resignation the visitation which has been inflicted on us. We must do our utmost to alleviate the distress of those who are most exposed to suffering; and above all, we must beware of doing anything which might endanger the prospect of a certain supply of food. The noble Lord indicated an opinion that we ought to prevent our corn from being exported. So fatal a mistake as that of prohibiting the export of grain could not be committed. So long as those who send corn to this country are allowed freely to export it, England will be the depôt of corn for the whole Continent; and grain will be exported from it, or not, according to the state of prices in different countries. But this great advantage we gain to ourselves by this conduct, that we ensure the possession of the supplies in our warehouses, at our own door, and can avail

885
ourselves of them to a certainty on paying the price which can be obtained in the general market. If any prohibition is imposed upon exports of grain, corn will go elsewhere; it will not be accumulated here, and we should lose the advantage of having it in the country to meet our wants when necessary. Other expedients have been suggested for the purpose of affording relief in the present state of the country, to which, however, I will not refer at this late hour of the night. The one great expedient at which hon. Gentlemen have pointed in this debate, is the alteration of the currency. I believe that we could do nothing so unfortunate as to take a step which would, in my opinion, tend to aggravate the pressure on all classes of the community. If we were to begin tampering with the currency, we should add to the causes of pressure already existing an element of uncertainty which would affect all mercantile arrangements, and which would produce the still worse effect of raising the price of food and of other articles of consumption. If we were by such a measure to alter the value of every. article in the United Kingdom, disturb the prices of goods and the wages of labour, and derange commercial transactions of every sort and kind from one end of the country to the other; if we voluntarily and deliberately add this element of confusion and distraction to all that press upon us already, we should voluntarily and deliberately increase an amount of distress and of difficulty already existing, of which it is not easy to calculate the magnitude, and which it may require all our patience to bear, and all our exertions even to mitigate.
MR. HENLEYthought the right hon. Baronet had followed the example and acted on the tactics of the right hon. Baronet on that side of the House. He had led them away from the main question, from the beginning to the end of his speech, and had brought into the discussion the value of the standard of 1819, and the question of tampering with the currency—a plan that had been too successfully employed in every discussion of this kind; in the same way, fishermen muddled the water, that the fish might not see what they were doing. He did not understand any alteration of the currency except paying 15 s. in the pound instead of 20 s. If it came to that, they had better do it openly; but it had not come to that, and he felt no wish of the sort. He must say, that on this occasion the right hon. Gentleman, as
886
well as other hon. Gentlemen, had singularly evaded the one question the country wanted to have solved. Everybody admitted there was a great demand for money in consequence of the construction of railroads and the high price of food. The noble Lord (Lord G. Bentinck) had expressly stated the failure of the supply of food as the great cause of the pressure; though he was stated by the right hon. Gentleman to have attributed it to other causes, the noble Lord only named other causes as being added to the great one, and aggravating the pressure. But men were asking themselves this—with trade admitted to be in a healthy state, with no speculative purchases, with the prices of food natural—for, though high, they were raised by the scarcity of produce—why was it, with 9,000,000 l. of gold in the Bank, business was strangled, and could not move? That was the question every one was asking, and no one who had yet spoken had attempted to answer it. The right hon. Gentleman on a former occasion said the Bill of 1844 had nothing to do with it; he denied having ever said anything against the Bank; but in his speech that night he had nearly repeated his former statement. Then he wished the House not to confound the banking department of the Bank of England with the issue department; he wished they were separated, and then there would be no confusion about them. He (Mr. Henley) thought there was some confusion in the mind of the right hon. Gentleman on this subject, as well as in those of other hon. Gentlemen. The real question was, had the fixing a certain limit to the notes the Bank of England might issue on socialities, proved satisfactory to the trading interests of the country? They had introduced into this debate every subject that could lead the mind away from the question, the convertibility of notes, the taking gold to the Mint, and having it coined into sovereigns, which had nothing to do with the matter: the question was, what ought to be the issue on securities? It was said, the Bill had secured a convertible paper currency—on what principle? The most solvent party in the State issued 14,000,000 l. on securities; but they allowed the country banks to issue 8,000,000 l. on nothing. The right hon. Gentleman spoke of the run for gold in 1825; but that run was not on the Bank of England; it was on the country banks: that run was not stopped by sovereigns; it was stopped

887
by Bank of England notes. [The CHANCELLOR of the EXCHEQUER: That is just what I said half an hour ago.] No; if he understood the right hon. Gentleman, he said the object of the Bill of 1844 was to make notes convertible into gold, and that by that Bill they had escaped the run of 1825; but, he repeated, that run was not upon the Bank of England at all: it was on the country hanks, because the public had no confidence in their notes; but they were perfectly justified as soon as they got Bank of England notes for them. A large portion of the commencement of the right hon. Gentleman's speech was occupied, not with a defence of the Bill, but a defence of himself; he said he had been censured for issuing deficiency bills, and he went at great length into the history of the transaction. He did not think the right hon. Baronet more to blame than all other Chancellors of the Exchequer; they were generally out at elbows by quarter-day; it was "a way they had," and he would say no more on the subject. But the right hon. Gentleman should not, in a delicate and insinuating manner, censure the Bank for not foreseeing what nobody foresaw. In March and February nobody suspected a pressure. Those capitalists who advanced to the right hon. Gentleman the loan, and who were quite as well informed on money matters as the Bank of England, did not foresee it, or the right hon. Gentleman would never have got it at the rate he paid for it. He would not have been so unwise as to reject the discount clauses, and now have to come down and ask for them. Another subject which had been introduced into the debate, as a sort of puzzle, was the question of circulation. What was wanted by the country was—if he might use the phrase—a sort of small change. For what was the circulation of the country? It was not the 19,000,000 or 20,000,000 of bank notes; it was the countless millions of bills. These represented the capital and property of the country; the bank notes were merely that portion of it which enabled men to exchange the other masses of capital. The question with him, and those who thought with him, was not whether the Bill of 1844 should be repealed wholesale. He believed that the evidence had fully established that the issues of the country banks wanted regulation. Now, that was part of the Bill of 1844. Men might differ whether these issues were regulated with the degree of stringency which was
888
desirable. For his part, he thought that a kind of bribe had been offered to the existing country banks to hold their tongues, by giving them a monopoly for ten years. He put it to the House, whether it was possible in such a matter as bank notes that they could take the hard and defined limit of 14,000,000 l., and say that that should be the exact quantity which the varying circumstances of the country neither more nor less should want? When it was admitted that in some cases 100,000 l. more might save the country, would they say they would always adhere to it? Suppose it should please God to inflict another bad harvest upon us, was the Government prepared to maintain this Bill in all its stringency? With our granaries completely empty—with no prospect of corn for us—so far as we knew—abroad, the right hon. Baronet looked forward to terrible times if it should please God not to give us a good harvest. Were the merchants and people of this country to be told that under no such circumstances would the Bill be relaxed? No human being could predicate what the harvest might be either here or abroad. This question must be answered—were the Government to reserve the power in their hands to relax the Bill if they should see cause, or were they prepared to stand by it under all circumstances? It had been stated by merchants in that House, that at that very moment their orders for corn were suspended because they could not negotiate their bills. The question was one from which they could not escape. The Government must be prepared to look it fairly in the face. He was one of those who were anxious to pay 20 s. in the pound. He recorded his vote in 1844, that it was an unwise thing to attempt to fix a definite limit to that which could not be closely defined. It was his firm and deliberate opinion, that if a second bad harvest should occur, they would be forced to break through this Bill; and if they looked back to former experience, they would find that it often happened that a bad harvest did not come singly; on the contrary, it frequently happened that there were two or three bad harvests consecutively. He prayed to God it might not be so at the present time; but they were never sure of what might happen. With various degrees of intensity they had quarrelled with the discretion of the Bank. They said that the Bank was not to be trusted, and that it was necessary to place its issues of paper in such a

889
position that it could not abuse it, and that the ensuring of the convertibility of bank notes was the great reason for bringing forward the measure of 1844. The hon. Member for Huntingdon (Mr. T. Baring), the right hon. Member for Tamworth (Sir R. Peel), and the hon. Member for Clitheroe (Mr. Cardwell), had all spoken of the discretion of the Bank. It seemed now that to render the measure tolerable they were to rely on the discretion of the Bank. He did not say they should not speak of that body; but if the trade of the country was to be made to depend upon a judicious exercise of its discretion, was it wise or prudent to fetter the directors in such a manner as to run the risk of their strangling the trade of the country? These views were not new to him. He felt them very strongly in 1844, and he felt them strongly still. The vast amount of authority which was brought to bear in support of the measure of 1844, and the almost unanimous assent of the House to it, carried it to the country with a great measure of favour. He did not think, however, that the evidence of the Committee had justified that Bill. He admitted that that evidence had fully established the fact, that the issues of the country banks required to be placed under control; but the propriety of limiting the circulation of the Bank of England in the manner which that measure had done, was a very different question. He, for one, had always doubted the wisdom of it; and he hoped another bad harvest would not give them another proof of its bad effects.
Bill considered in Committee to be reported.
House adjourned at half-past Twelve o'clock.