HC Deb 17 February 1848 vol 96 cc803-65

rose to move the following Resolution:— That, looking to the state of distress which has for some time prevailed among the commercial classes, and to the general feeling of distrust and alarm, by which the embarrassments of Trade have been aggravated, it is the opinion of this House that Her Majesty's Ministers were justified, during the Recess of Parliament, in recommending to the Bank of England, for the purpose of restoring confidence, a course of proceeding at variance with the restrictions imposed by the Act of the 7th and 8th of Victoria, c. 32. That this House will resolve itself into a Committee upon the said Act. In the event of the House assenting to the Motion for a Committee, it was his intention to move in the Committee the following Resolution:— That it is expedient that the limitations imposed by the Act 7 and 8 Victoria, c. 32, upon the Bank of England, and the Act 8 and 9 Victoria, c, 36 and 37, in relation to the issue of notes payable on demand, be suspended, subject to such conditions as may be provided by any Act to be passed for that purpose. He had given notice of this Motion before the recess, but having then been unable to bring it before the House, partly on account of the very urgent Irish measures which occupied it, and partly by reason of the adjournment which took place on the day before that which was fixed for his Motion, he had now taken the earliest opportunity of doing so. He was not, however, without the hope that the discussion of the subject might be more carefully, because more calmly and dispassionately, conducted now than it would have been at an earlier period, when very great excitement prevailed respecting it. The propositions he had to submit to the consideration of the House were founded upon events which had occurred in the course of last year, and which were fresh in the recollection of the House. Those events, it was well known, were of the most calamitous kind, and excited more of alarm and misfortune, more deep distress and calamity, than had, perhaps, ever before been produced in the commercial world by any antecedent shock within the memory of any man. Perhaps there never was seen a more disastrous prostration of wealth and trade than had occurred in the period to which he referred. Extensive failures happened in the latter part of the year, which were the cause of wide-spread desolation and ruin. According to a statement which he found in a publication devoted to these subjects, and which appeared to be carefully prepared from authentic sources, 220 mercantile houses of the higher class, being a portion only of the total number of failures which had occurred, had fallen within the period of a few months, or, he might say, of a few weeks only. The liabilities of 85 of these 220 firms were estimated at 12,000,000l., and the total loss occasioned by the whole of the failures was estimated at not less than 30,000,000l. Such an event as this in the history of a commercial country could surely not be passed over without exciting the utmost solicitude in every person, whether in the Government or in the Legislature, at all responsible for the administration of the public affairs, to ascertain the causes of such a monstrous calamity, and the best means of averting the recurrence of it. It was with this view that he proposed his Motion, which was of a twofold character, as it embraced two distinct propositions. But inasmuch as these separate resolutions were so interwoven by the nature of the subject with each other, that the fitness of adopting the one would mainly depend upon the grounds on which he should endeavour to establish the other, he conceived that he should best consult the convenience of the House by combining in one speech the arguments for both, and thus spare the House the inconvenience of being addressed by him a second time. He proposed therefore, in the first place, that the House should now express a distinct opinion upon the conduct of the Government when they took that important step by which the wide-spread ruin of the commerce of the metropolis was arrested, and which was announced as the most prominent topic of communication in the Speech from the Throne. He proposed that they should declare and record upon the Journals of the House, that the measure so announced was well-advised. And, surely, some distinct expression of an opinion on this point was indispensably necessary for the dignity of the House and the regularity of its proceedings. Now, what was the position in which the House was now placed? Her Majesty had been graciously pleased to announce to them that her advisers had adopted a course which was certainly a very extraordinary one, however justifiable it might be found—the course of authorising the violation of an Act of Parliament recently enacted, of the most stringent character, having for its object and its very principle that of insisting, in the most rigorous degree, on the execution of its provisions. To that announcement the House had hitherto responded only by thanking Her Majesty for the communication. Since that time nothing had been done to ascertain or record the opinion of that House upon this most extraordinary proceeding—this undoubted violation of the law. It was true that it had been asserted, that, inasmuch as the strict provision of the Act had not been literally broken through, there was no such violation of the law as might require a Bill of Indemnity. Upon that point he had much doubt; but he would not discuss the question now, as his present proposition was limited to a simple expression of the opinion of the House upon the merits of the transaction. If the House thought Ministers were justified in the proceeding, it was right they should record their opinion to that effect. He was obliged to say, that Ministers had not in this matter dealt with the House with that frankness and openness which he thought necessary to be observed in such cases. There had been from the beginning an evident desire to avoid a debate on the subject, challenged as Ministers had been, on various occasions, to come forward and give explanations. On the very first night of the Session, there was a kind of rush on the part of the Chancellor of the Exchequer to give notice of a Motion for the appointment of a Committee, with a manifest desire to supersede the necessity of any discussion. Even that Committee, however, could not touch the question which his Motion brought under the consideration of the House; they could express no opinion in these respects as to the conduct of Ministers in violating the provisions of a most stringent statute, which had not been in operation longer than two years. In the discharge of his duty, he thought it right, therefore, to bring forward this subject, that the House might pronounce its judgment upon the conduct pursued by the Government in suspending the operation of the Bank Charter Act of 1844. And, presuming that the House would, without much difference of opinion, and certainly with no opposition from Her Majesty's Ministers, adopt his first resolution, approving of the course pursued by the Government, he would now proceed to the consideration of his second resolution, namely, that the limitations of the Acts of the 7th and 8th and 9th of Victoria, in relation to the issue of notes payable on demand, should be suspended, subject to such provisions as might be provided by any Act to be passed for that purpose. If the provisions of the Act of 1844 were not the chief cause of the embarrassments felt on the 25th of October, and which induced the Government to interfere, then indeed the step taken by the Government was not justified. But he believed it would not be difficult to show that the Government was justified by necessity, and that if it had not adopted the course it did, the commerce of the country within one week would have been prostrate. He would make a brief statement of the principal facts connected with the critical condition of commercial credit at the period now under consideration, and all of which were subjects of universal notoriety. The Bank was then in possession of gold in its issue department to the extent of about 8,000,000l. Its circulation (that is, its notes in the hands of the public) was something more than 20,000,000l.; the amount at which it had stood, with little variation, for some time past. In its banking department the deposits, public and private, were about 17,000,000l.; while the notes and coin in that department—the only available means for the payment of demands upon it, or for making advances on securities of any kind—were together not more than 1,600,000l.; the former being 1,170,000l., and the latter something more than 400,000l. The very mention of these facts was sufficient to show the critical position in which the Bank was placed. A demand upon it for 1,700,000l. (at a time when the pressure for money was extreme) would have brought it to a standstill. It must have stopped its payment—pointing in vain to the 8,000,000l. of gold in its cellars. The alarm occasioned by the general knowledge of this state of things, acquired by the weekly publications under the Act, was such that credit was annihi- lated; every man locked up his money, whether notes or gold. No man would lend, and that of itself was enough to produce the effect which finally obliged the Government, whether disposed to do so or not, to take steps to give relief by restoring freedom to the operations of the Bank. He was aware it had been said that this state of things was not the necessary eon-sequence of the Act of 1844, but that it arose out of the ill-management and improvidence of the Bank of England. He thought it would not be difficult to show that this was far from being the case—that the evil was inherent in the Act itself—that experience had shown, upon more than one occasion, that the provisions of the Bank Charter Act must lead to the crisis which had occurred—and that no management, no skill, on the part of those who superintended the affairs of the Bank in times of difficulty, could avert the evil. He could not better enforce that view of the subject than by referring the House to the events of 1847, which led, at two different periods, to the same result—an embarrassment of the Bank, and the distress of the country. In the first period (between January and April, 1847), there was a great demand for the export of gold to foreign countries for the all-important object of purchasing food for this country. A considerable action consequently took place upon the bullion in the hands of the Bank, by which, however, it was not reduced to a lower point than 9,000,000l.; from which it rose again between the middle of April and the end of May to upwards of 10,000,000l. Throughout this period there prevailed no other cause for a foreign drain of gold from this country. There existed, therefore, no ground for apprehension on the part of the Bank; and if it had been left in the unfettered exercise of its own discretion it would, no doubt, have permitted the gold to go forth freely for the fulfilment of the great national purpose which could in no other manner be accomplished—well knowing that in due time it would return again to their coffers. But the Bank Charter Act forbad that salutary course. It imposed upon the Bank the imperative condition that every diminution of its stock of gold, from whatever cause it might proceed, should be counteracted by a restraint upon its issues. The Directors had therefore no choice but to put on the screw as it is called. The rate of interest was raised. A pressure upon commercial credit was created. That pressure was increased by alarm, and an action took place upon the reserve of notes and coin in the banking department which reduced it so low as to threaten a crisis such as subsequently occurred in October. On this occasion it was very narrowly avoided; and although the Bank just got through the difficulty, the commercial world suffered most severely by the efforts which it made. It had been said, and was said still, that all this danger and inconvenience had arisen from the mismanagement of the Bank Directors. Now, he had looked very carefully into the matter, and he could find nothing like mismanagement in the course they had pursued. It had been said, that the Bank ought to have increased its rate of interest more rapidly between January and April; but if that which he had now stated was a correct view of the circumstances of the case, that course would only have created greater distress and have produced a severer crisis. Before he proceeded to call the attention of the House to the second and more severe embarrassment which occurred to the Bank, and the consequent miseries inflicted upon trade, in the ensuing month of October, it was natural to consider what must have been the effect both upon the Government and the Bank of the awful monition presented by the fearful occurrences of April. It would be doing the greatest injustice to both of them to suppose, that either could for a day or an hour be unmindful of the magnitude of the danger to which, by the working of this Act, they were constantly exposed. He readily gave them credit for anxious solicitude and un-abating vigilance to avert by the application of the utmost prudence and good management the renewal of the difficulties which they had so recently experienced. But all this prudence and attention were unavailing; and it might therefore safely be affirmed as a proposition requiring no farther argument or demonstration, that the second and more formidable explosion which so speedily ensued was the effect of the faulty construction of the machinery itself of the Act, and not of the negligence or indiscretion of those who administered it. He was, surely, warranted by these facts in asserting that the whole evil was in the principle of the Act itself; and because it was in the Act and not in the Bank or the Government, he felt it to be his duty to move the House to suspend the statute, and thereby prevent the otherwise inevitable recurrence of those fearful conse- quences to the commerce of the country to which he believed it would always he exposed, while the Act of 1844 remained in force. He was extremely anxious not to lead the House into a debate on the general question of the currency. He was too well aware that if that topic were once entered upon, the House would embark upon an ocean of controversy, the termination of which it might not be easy to foretell. Such a discussion was wholly unnecessary for his present purpose, which was of a purely practical character. He merely invited the House to consider the principle and operation of the restrictive provisions of the Act of 1844, which was all that was required to convince the House that the evils which we were deploring, sprang immediately out of the working of those provisions, and were not attributable either to indiscretion in any quarter, or to mere accident of any kind. The principle maintained at the time of the passing of the Act, and which was immediately derived from the author of the theory on which it was built, was expressed in this short dictum: "The contraction of the circulation is to be made precisely coincident as regards both time and amount with the diminution of the bullion." This dictum was founded upon the assumption that the Bank possessed the power of increasing or contracting the circulation by a direct action upon it; that the variations in the amount of the circulation would increase or diminish the prices of commodities; and that, through these, the exchanges would be affected so as to regulate the export or importation of gold. In opposition to this theory he ventured positively to assert, that it was wholly inconsistent with fact, and was unsupported by experience; which showed that the extent of the circulation in the hands of the public was not directly regulated by the Bank; that prices were not governed by the amount of the circulation; and that the exchanges were not controlled by that mode of agency. On the contrary, it was now made manifest, by a careful attention to actual results, that the amount of the notes in circulation was determined by the wants and demands of the public, and that the Bank possessed no power, by a direct action upon it, to regulate the exchanges. It followed that the Bank was enjoined to do that which in reality it could not do; but in the endeavour to fulfil the injunctions of the Act of 1844, it had no alternative but to do that which in a time of difficulty and embarrassment must lead to a panic and a crisis such as they had recently experienced. The theory of the Bank Charter Act was, that the circulation ought to be regulated in accordance with the amount of bullion in the coffers of the Bank; and this point had been referred to both by the Chancellor of the Exchequer and by the right hon. Member for Portsmouth. Now, it was undeniably true that the circulation of bank notes had not conformed to the fluctuation in bullion; and the Chancellor of the Exchequer, pointing correctly to the fact, as exhibited by the published accounts, made it a subject of congratulation to the public, that even at the most trying passage of the late difficulties, the circulation had not been materially, if at all, diminished. Now, this fact was inconsistent with the theory propounded by the supporters of the Bank Charter Act. The right hon. Gentleman the Member for Portsmouth, with more ingenuousness than was displayed by the Chancellor of the Exchequer, observed, that there must be something wrong in this—something at least which he could not reconcile to the theory and proper working of the Act, when he saw that, although the stock of bullion in the Bank had been diminished to the extent of 8,000,000l. or 9,000,000l., there was no corresponding contraction in the amount of the circulation. The right hon. Gentleman was undoubtedly right in his reference to the principle of the Act; but the Chancellor of the Exchequer was equally so in congratulating the public that the result had not been conformable to it; for, the rule being that for every million of gold abstracted, an equal amount should be drawn from the circulation, and there having been 9,000,000l. of gold exported between the autumn of 1846 and April 1847, in what state would the country have been if 9,000,000l. had also been abstracted from the circulation? The 20,000,000l., or thereabouts, which it usually required, would, in that case have been reduced to 11,000,000l. This showed, if anything could show, the inherent faults and errors in the Act. In the second of the periods to which he had alluded—in October last—the Bank of England undoubtedly was brought to this absurd and lamentable catastrophe, namely, that with 8,000,000l. in its cellar, it would have been, but for the interference of the Government, compelled to stop payment. If he was told that the Bank might, in order to replenish their reserve, have taken their securities into the market, the answer was, that securities of all descriptions were then un-saleable; and even if they could have been sold, it must have been at such a price as would have broken down the property of a large portion of the community. If they had brought Government stock into the market, the Three per Cents might have been at 50. He had stated that he considered that there had been no mismanagement on the part of the Bank. He knew that they were accused of having discounted bills at too low a rate of interest in 1844; but the Act of that year, which imposed upon the Directors such severe restrictions with respect to their issues of notes, set them perfectly at liberty with respect to their banking department. They were told that while they must strictly conform to the provisions of the Act to secure the convertibility of their notes, they might and ought, as bankers, to act as prudence suggested for the advantage of their constituents. His right hon. Friend (Sir R. Peel) expressed an opinion to that effect—an opinion which, like every other opinion which proceeded from his right hon. Friend, was entitled to the greatest respect. He believed that, previously to the Act of 1844, the Bank had never discounted under 4 per cent; but although he might himself greatly doubt the propriety of the Bank lowering its rate of interest so as to run a race of competition with the private discounters for the benefit of its own constituency, the framers of the Act in question had no right to complain of the reduction to 2½ per cent, because that reduction did, in point of fact, produce no effect whatever on the amount of bullion in the Bank coffers. A very short time before the Act passed, there was 16,300,000l. of bullion in the Bank of England. From that time up to the middle of the year 1845, no material variation took place; but in June in that year, it had risen to 16,600,000l., the highest amount that ever was known. His right hon. Friend (Sir R. Peel), when in 1845 he reviewed the intervening period between the passing of the Act of 1844 and the period at which he spoke, expressed himself satisfied with the progress and position of affairs; and indeed they were flourishing in every way. If the Bank had in the meantime done wrong, and had deviated from the principles of the Act of 1844, he was quite sure that his right hon. Friend would have complained of it. Now, at what other period was it that imprudence was alleged against the Bank? If anybody would take the trouble of following up the progress of the bullion, and watch its increase and diminution, he would find that the Bank did reduce or increase their rate of interest just as the bullion rose or fell. They continued to discount at 2½ per cent till November, 1845, when there was a sensible decrease in the bullion, which only amounted to 13,700,000l., and the Bank consequently raised their rate of discount to 3½ per cent. From that period the bullion remained steady, and the rate of interest the same, until August, 1846, when the bullion rose to the imposing sum of 16,366,000l., and the rate of discount was diminished to 3 per cent. From August, 1846, till January, 1847, the bullion did not vary in a very sensible degree; sometimes it was rather higher, and sometimes rather lower; but in January, an action on gold manifestly began, the bullion fell to 13,949,000l., and the Bank raised its discounts to 3½ per cent. In the following week, seeing that the action on gold continued, and that the amount had gradually decreased until it reached 9,867,000l., they raised the rate to 4 per cent, and subsequently to 5 per cent. He thought, therefore, that if the House looked to the rate of interest charged by the Bank, and found it rising and falling as the bullion rose or sank, they would discharge the Directors from blame in respect of imprudent changes in the rate of discount. He would now advert to the very important point of the supposed security afforded by this Act for the convertibility of the bank note. He entirely denied that the Act ensured that object. He knew that it was upon the effect of the Act in this particular respect that its authors and advocates chiefly relied, and that their opinions were founded upon the theory on which it was constructed. When he avowed himself convinced that that theory was fallacious, and that the conclusions at which they had arrived were erroneous, he was aware of the great weight of authority to which he stood opposed, not only of persons of much talent and ability out of doors, but also of the large majorities of the two Houses of Parliament by which the Act had been approved of and passed. But although he was almost overwhelmed when he contemplated the magnitude of this adverse authority, his convictions were nevertheless so clear and positive that he was compelled to assert them. He would ask, then, what proof there was that the Act of 1844 had secured the convertibility of the bank note under the severe pressure of the two critical periods of April and October, 1847? It was observed that in each of those cases the Bank had still retained a large stock of gold—the best assurance of its ability to maintain the convertibility of its notes. But it ought to be borne in mind that in the year 1846, before the time at which the action on its gold had commenced, the Bank had possessed the largest stock of gold that it had ever held—more than 16,000,000l.; and although it was true that about half that amount still remained after the pressure in April and October, it was also true that the amount which had been withdrawn from it was equal to the largest quantity that had been abstracted in any former crisis of a similar character; the difference being, that on those occasions (he referred particularly to 1825) the action on the gold commenced when the stock on hand scarcely exceeded the amount which in 1847 was withdrawn, and that the exhaustion was consequently nearly completed. It was clear, therefore, that no conclusion in favour of the power of the Act to secure convertibility could be drawn from these facts. And upon what ground could it be asserted that the farther exhaustion of the gold in the Bank wag prevented by the Act of 1844? He would suppose that the Government had not determined to suspend the law in October, 1847, when the panic was in full force: what would in all probability have been the consequence? The internal drain of gold would have been increased by the increasing fears and commercial alarm and distrust in all parts of the kingdom; and the Bank might have been deprived of its last sovereign in the convulsion which must have ensued upon the discredit occasioned by the stoppage of the banking department. Such being the dangers and vicissitudes to which the operation of the Act of 1844 gave rise, he contended that the monetary system as it existed prior to the passing of it was safer, under all circumstances, than the present one. He would endeavour to show how the Bank might have acted, if unfettered by the Act of 1844 in the two critical periods of danger in 1847. In the former of these—between January and April—at the commencement of which they possessed fifteen millions of bullion, they would have looked at the causes which produced a gradual diminution of that stock. They would have observed that the Continental exchanges were not materially affected; that there was no drain in that direction, except for a supply of food; and that the principal efflux was towards America for that object. Under such circumstances, they might have exercised a sound discretion in not creating alarm or cramping commerce by too severe a counteraction of the movement of the gold. The severe pressure of April might have been avoided; and if the alarm and excitement of that period had not been created, the subsequent drain to the interior, which prevailed from the month of May to the 25th of October, might never have existed at all. In the second period (after the beginning of May), the export of bullion had ceased, and the exchanges were in our favour. The action upon the gold of the Bank was for an internal demand only, and therefore the effect of want of confidence, which would have best been restored by a readiness on the part of the Bank to give assistance to commerce, instead of withholding it, as they were compelled to do. He therefore had a right to assume that if the Bank had been in the same position as they were before the Act of 1844, they would, by the exercise of a sound discretion in the employment of all their resources, and taking a wise view of all their liabilities, have passed through the period without any shock or danger; but in consequence of that Act they were reduced to the most miserable exhibition of riches and distress which this country ever witnessed. This lamentable exhibition had occurred twice in one year, and that, too, under the joint supervision of the Government and the Bank, who had full warning of the danger, and were therefore not taken by surprise. The Bank and the Government had taken charge of the monetary affairs of the country; with a full knowledge derived from the occurrences in April of the dangerous character of the machine which they were working; and yet, with all their care and attention, within six short months it exploded in their hands. Was the House to continue to trust to the working of such an instrument, even under the wisest management? He did not intend to impute any want of skill or prudence to Her Majesty's Ministers. He believed that no other men would have done better in their places. It was the system—it was the Act—that was in fault. The Ministers had avoided a de- cision upon its merits in this House. They had transferred the matter to the investigation of a Committee—a Committee which some thought might be of endless duration; but he was inclined to believe that Ministers expected that, after a considerable lapse of time, the report of that Committee would lead to some changes in the measure, in such a way as might cover an apparent defeat, and evade a direct recognition of its fundamental defects. Now, he thought that would be a course much less satisfactory, even to themselves in the end, than at once giving some remedy such as that now proposed. He had now attempted to show what was required as a measure of relief in present circumstances; and he hoped and trusted the House would not refuse it. He asked them to place matters in this country, as regarded trade and commerce, in a position of safety. They were, beyond all question or dispute, at present in a state of great danger; they had hanging over them the possible return in a short period of renewed commercial distress, with all its lamentable consequences; and he could tell them that the apprehension of such a result was almost universal, and that it was sitting like an incubus on the springs of confidence and credit. He had still, however, great faith in the commercial enterprise and activity of this country. He could not doubt that that commercial activity and enterprise would spring again to the height from which it had so lamentably fallen; but it would not be under the provisions of this Act. He much regretted to be compelled to add, that it was not only in this part of the country that the ill effects of these monetary regulations had been experienced. He believed the representatives from Scotland would be able to confirm a belief he strongly held, that in that country there had also been great dissatisfaction with the provisions of the Act. He always regretted that the right hon. Gentleman (Sir R. Peel) had resolved to interfere with the system of banking which had so long and so beneficially prevailed in Scotland. His object, as enunciated by him, was undoubtedly to secure a larger metallic basis for our monetary system, by compelling the Scotch and Irish banks to take their part of the burden in sustaining that system; but he thought there had been a great mistake in that conclusion. He did not believe that this compulsory distribution of gold throughout the country had added anything to the amount of the precious metals in the United Kingdom. He apprehended that it only had the effect of causing a separate allocation of them, instead of their being concentrated as at present in the coffers of one bank. The gold was now distributed partly in Scotland, partly in Ireland, and in other private banks throughout the country; but that he regarded as a disadvantageous state of things, as he contended that for all the purposes of securing the convertibility of the notes it was more advantageous that the Bank of England, as the great central bank of the kingdom, should be in possession of the bullion, than that it should be spread throughout the other banks of the country. If the additional 3,000,000l. that had been thus lodged elsewhere, had been wholly available by the Bank, it would have placed them in a stronger position to meet the wants of the commercial community during the late panic. His main objection was to that provision of the Act which assigned 14,000,000l. as an impassable limit to the credit circulation of the Bank. He was convinced that any such specific limitation would be found ultimately as impracticable as it was unwise. If as had been said, nature abhorred a vacuum, political economy equally abhorred a maximum. He would not go into any further or more minute consideration of this question, nor was it his object to propound any theory. He was only asking, for the safety of the commerce of this country, labouring and prostrate as it yet was, that they should accede to his proposal of an immediate practical relief. He asked it for the sake of the industry of the country—for the sake of those manufacturing districts that were now labouring under the severest depression, and which suffered in a peculiar degree from the pressure of this Act; for without confidence and commercial credit there was no facility for the export of goods; and without exports there was no employment for the manufacturer. He asked it on behalf of all the moneyed interest—not of those who had been accumulating large fortunes through the vast fluctuations in credit and capital caused by this Act—but on behalf of the moneyed interest engaged in the commercial and manufacturing industry of the country. He entreated the House to place these various interests, at least, in that comparative state of safety—indeed, he might say complete safety—in which they were before the passing of this Act. He entreated the House to suspend of this Act only so much as might remove the positive restrictions on the amount of credit-paper which might be issued. There were many other provisions of great consequence, which at present he had no intention to discuss; but if Parliament should consider this whole measure, and determine on some new system in place of that which now existed, he, for one, would have no objection to enter at any time into the consideration of it. Before he concluded, he ought perhaps to remark that with regard to the first of the Motions which he should propose, it might be objected by some parties that they were not quite satisfied with the conduct of Her Majesty's Government—that they were not quite prepared to express an opinion favourable to the course they had pursued in regard to the suspension of the Act. Their objection might he, that Government should have interfered sooner, and that if they had done so much mischief would have been averted. He was undoubtedly of opinion that if that Act had been sooner suspended, we should have been saved much misery; but at the same time he believed that Ministers could not be expected to suspend the law till the very last extremity. As an objection to his second proposition, it might probably be urged that this subject was under investigation before a Committee, and that that Committee would report at no distant time. Of course, he could not expect those who entertained so improbable an opinion to give him their vote on the present occasion. It might be urged as another objection to his Motion, that Parliament being now sitting, might interfere in any emergency, and that Government having already interposed to suspend the Act, might be expected to do so again. But no reliance should be placed on these expectations. They had no assurance that the sittings of that House might not soon cease, and they could not tell whether Government would be disposed to take the responsibility of again putting aside the Act, while, if they did, their interference might again come too late. In conclusion, he would say that he saw no other course likely to secure the present safety of the commerce and credit of the country but that which he now proposed, and which he hoped would receive the sanction of that House.


seconded the Motion, with a feeling of the strongest conviction of its necessity. It was quite clear, that if this Act were permitted to remain, whenever we had any disturbing cause, such as a short harvest or a foreign loan, ruin to all would be the consequence, unless the Government again set aside the law by a suspension of that Act. Had not the Government stepped in to relieve the monetary system of the incubus imposed on it by artificial restrictions, no language could describe the disastrous results that would have followed. But the calamities of last year only gave a foretaste of what might be expected in coming years if those absurd and impolitic restrictions were not removed. Whenever there was a drain of bullion expressly for the purpose of importing from foreign lands food for our people, the same thing would occur that took place last year. Everywhere there would be confusion, distraction, and distrust. It was a mistake to suppose that the effects of the late panic had as yet subsided, or that they were limited to this country. In the present state of uncertainty merchants were afraid to risk their capital. So far as the East Indies, China, and America were concerned, no merchant would come under the usual acceptances at six months for the export of goods, fearing as they did a recurrence of the disasters which they had so lately witnessed. If the Act possessed any utility, as those who promoted it would have them believe, still he contended there was no occasion whatever for its continuance. It had in no degree bettered our position. Down to 1844, when the Act came into operation, the Bank of England had never reduced its discounts below 4 per cent. The Directors were then told that they had nothing to do but as bankers to attend to their own business; and therefore, having a large amount of notes in the banking department, they naturally and properly took steps to turn those balances to the best account, by reducing their rate of discount to 2½ per cent. The consequence was to bring to the Bank of England all the short bills having less than ninety days to run, while the brokers discounted the six month bills at 2¾ per cent. This produced an extension of credit and that undue speculation which succeeded. The Act of 1844 had done all this, and would do so again. When money was plentiful, it rendered it more abundant; and when money was scarce, it aggravated the scarcity. In that respect no Act of the Legislature could have a more mischievous effect on the commercial interest. The Act of 1844 created a greater fluctuation in the rate of interest than ever existed before. All fluctuations in the rate of interest were highly detrimental in a commercial country. A rise of one-half per cent in the discount of the bills circulating in this country to the amount of 600,000,000l. a year, was a charge of 20,000l. a month on the commercial interest; but the rise in the rate of discount had been not one-half per cent, but 3 and even 4 per cent. If anything could convince the House of the impolicy of the Act of 1844, it was the speech of the right hon. the Chancellor of the Exchequer in moving for the appointment of the Committee. He stated that he had seen deputations from various parts of the country, and heard the suggestions they were prepared to offer by way of remedy, some proposing the issue of 4,000,000l. of paper, and others an advance by Government on goods hypothecated by merchants; but after hearing all their plans, and giving his undivided attention to the whole subject, he had come to the resolution that nothing would do but a suspension of the Act itself. Such was the magic of that suspension that cashboxes which had been locked up, containing large amounts of notes, were immediately opened, confidence was restored, and not more than 400,000l. was required from the Bank of England. Nothing could be more condemnatory of an Act, which had already proved well nigh the total destruction of credit, and the continued operation of which would involve the ruin of half the commercial classes in the country. He had great pleasure in seconding the Motion.


The right hon. Gentleman at the outset of his speech stated truly, that although it might be somewhat inconvenient to listen to two speeches from him, yet the two portions of his Motion were nevertheless perfectly distinct in their nature, and had not necessarily any connexion with each other. Certainly no person reading his resolutions could entertain any doubt on this subject. One of his propositions is an expression of approval of the course which the Government took in October last; and the other pledges the House to an opinion that the Act of 1844 and the Act of 1845, for regulating the issue of bank notes in the United Kingdom, should forthwith be suspended. No doubt it is perfectly possible that we may have been right in suspending the Act in October, and yet it might be wrong to suspend it now; on the other hand, we may be blamed for what we did then, and nevertheless it may be right to suspend the Act now. I shall, however, follow the course of the right hon. Gentleman, and refer to both resolutions in one speech, because I think it would not be expedient to have a separate discussion on each. The right hon. Gentleman said that we evaded the discussion of this subject on a former occasion. I really don't know what he meant by that assertion, because we certainly gave the fairest opportunity for discussion when this subject was last under the consideration of the House. I stated at considerable length—greater, I am afraid, than the House was disposed to think altogether agreeable—the views which the Government entertained, and I invited discussion on the subject. For three nights was the question debated—twenty-two Gentlemen expressed their opinions upon it—and simply from the unwillingness of other parties to speak, the discussion was brought to a close. The debate might have gone on to any length to which hon. Gentlemen were willing to prolong it. With regard to the resolution of the right hon. Gentleman, expressing approbation of the conduct of the Government, of course I cannot say that we were wrong in what we did. My opinion at the time was, that we were right; and, upon subsequent reflection, I remain of the opinion, that, in the circumstances in which the country was then placed, the course we adopted was the proper one. We did not, and do not, think it necessary to ask for any expression of approval of our conduct. During the former discussion on the question, no person blamed the conduct of the Government. So far as I remember, during the whole of the debate many hon. Gentlemen expressed their approbation of what we did; but no one blamed us. I might ask, then, Quis vituperavit? We were perfectly content with that general opinion, and do not seek any more formal expression of approbation from the House. If it should be thought necessary to pronounce the approbation expressed in the first resolution, we of course shall receive it with gratitude; at all events, I cannot oppose a resolution approving what the Government has done. With regard to the second resolution, I cannot express the same opinion. I think it an ill-timed and in some respects a mischievous resolution. I consider it would have been advisable not to move it. I hope the right hon. Gentleman will not persist in his Motion. If the right 'hon. Gentleman withdraws the second, Her Majesty's Government will be well content that he should withdraw both his resolutions together; and I will not complain of his not persisting in his approbation of our conduct. The right hon. Gentleman proposes to suspend the Acts of 1844 and 1845, that is, those laws under which the issue of bank notes throughout the country is at present regulated. That suspension may of course be either temporary or permanent. The right hon. Gentleman left us in doubt which of the two he intended. Taking them separately, it does not seem to me that the slightest case has been made out by the right hon. Gentleman for a temporary suspension. The right hon. Gentleman has stated very fairly that the alarm both in April and October last arose from the state of the reserve in the Bank of England. I entirely concur with him in that opinion. I believe that in April the restrictive measures which the Bank took were rendered necessary by the low state of the reserve; and although the alarm and failures which took place in August and September, were, as I formerly stated, neither caused by the conduct of the Bank of England nor by the operation of the Act of 1844, still, a larger reserve in the Bank might have rendered the issue of the letter of October 25 unnecessary. I do not wish to advance any controvertible position; but there can be very little doubt that the commercial distress was caused to a great extent by the want of that accommodation in the shape of discounts which the merchants had previously enjoyed. There was a great abstraction of floating capital, partly for the purchase of food and partly for the construction of railways, and to that extent the available means of discount had been curtailed. In the course of the autumn more than one bill-broker either stopped payment or suspended operations, and the consequence was that demands for discounts were made on the Bank of England, quite unexampled in former years. The amount of bills discounted by the Bank of England in October last was double that of October preceding. In the two or three months previous to October the Bank of England increased the accommodation to the public to the extent of between 6,000,000l. and 7,000,000l.; they reduced their reserve to the point stated by the right hon. Gentleman; and great apprehension prevailed on the part of the London bankers and other parties that the Bank of England would no longer be able to extend to them further accommodation. In that state of things they apprehended that discounts could neither be had at the Bank of England nor from the bill-brokers. A panic was thus produced by the low state of their reserve; and the real effect of the letter of the 25th of October was to place the Bank of England in the same position as if there had been a larger reserve. Confidence was restored, parties believing that they could obtain assistance from the Bank if they asked it. In point of fact they did not want it, the whole amount of assistance asked for being under 400,000l. I do not mean to blame the Bank for reducing its reserve, or say that parties were justified in looking to the Bank for assistance. I wish to avoid all points which can be disputed; all I say is—and that, I believe, no one is disposed to deny—that it was owing to the low state of the reserve that apprehension was entertained. Now, what is the state of the reserve at the present moment? According to the return which appeared in the Gazette last Friday, the notes and coin amounted to 8,685,000l. I received just before coming into the House the weekly account sent into the Treasury on Thursday, which appears in the Gazette on Friday, and I find from that statement that on Saturday last the notes and coin amounted to 9,686,000l. The most timid merchant—the most timid man in England, can be under no apprehension that the Bank will be unable to meet any demand that can be made upon it. Though very slowly, yet I believe trade and commerce are gradually reviving, and there is no probability of any demand being made which a much lower reserve would not be able to meet. There cannot, therefore, be the slightest need of any temporary suspension. The Motion of the right hon. Gentleman first stood for the 14th of December. If there had been a very low reserve, great pressure, and an improbability of the Bank being able to meet the demands upon it, there might have been at that time some cause for moving such a resolution as this. On the 18th of December, however, before Parliament separated, the Bank had a reserve of eight millions and a quarter; and I think it will not be said that there was even then any probability of any immediate demand for bullion; but certainly at the present time, with a reserve of above 9,600,000l. in its coffers, we cannot contemplate the possibility of any demand upon the Bank which it would not be perfectly able to meet. If such a case should arise, it is competent to Her Majesty's Ministers to come to Parliament and to ask for such powers as they may think necessary; and if they did not do so, it would be competent to the right hon. Member for Stamford, or any other Member of this House, if they thought fit, to move resolutions condemnatory of the course pursued by the Government. I think, then, that not the slightest case has been out for the temporary suspension of the Acts of 1844 and 1845, and that there is no need to call upon the Government to provide against a danger which appears to be of the most problematical character. But the right hon. Gentleman indicated more than a mere temporary suspension of these Acts; and I must say, I think it would have been much better if he had moved at once for the repeal of the Acts, instead of asking for a permanent suspension, which, if it means anything, means repeal. I think he ought at least to have moved for the repeal of so much of the Acts as he conceived ought not to remain the permanent law of the land; but under the guise of suspension the right hon. Gentleman proposes a virtual repeal of the law. I must say that to move for a virtual repeal of the existing currency laws, when a Committee which was unanimously appointed by the House to inquire into the operations of those laws, and to consider whether any alterations or amendments should be made in them, is at this moment pursuing its investigations, appears to me to be a course which completely stultifies the proceedings of the House. In our schoolboy days we read of a judge who decided first and heard the case afterwards; and this seems to be pretty nearly the course proposed to be adopted by the right hon. Gentleman. Many Gentlemen consider that alterations may be made in these Acts with advantage; but various opinions are entertained on the subject, and various amendments in them have been suggested. I may here observe, however, that the right hon. Gentleman was in error when he stated that numerous deputations have waited upon the Government to recommend amendments in the law. The fact is that we received only two deputations—one from Liverpool, and the other from Birmingham. The opinions entertained with reference to the proper substitute for the Acts of 1844 and 1845, differ most widely. The right hon. Member for Stamford might be satisfied with the mere suspension of those Acts; but I see an hon. Gentleman near him, who, I believe, would consider that no substantial benefit was gained unless we meddled with the Act of 1819. It has been said that the Act of 1844 was the necessary complement of the Act of 1819; and that opinion is entertained by many Gentlemen, who consider that unless we repeal the Act of 1819 as well as the Act of 1844, we shall effect no substantial good. The Committee to which I have referred, and which was recently appointed by the House, comprises Gentlemen entertaining various shades of opinion on this question; and I hope that from their inquiries we shall obtain much valuable information; but the right hon. Gentleman calls upon us before we receive that information—before we know even what the facts are in many respects—to decide the matter at once. Of course the right hon. Gentleman will follow up this Motion by another to rescind the resolution of the House under which that Committee was appointed; for it would be a useless waste of labour for that Committee to continue their inquiries when the House had adopted a decision which would render them useless. The right hon. Gentleman observed that it was essential that we should know correctly what was the state of the Bank of England at the period which has been referred to, and for some time previously—that we should know what had been the conduct of the Bank, and its position, during the preceding eighteen months. Well, before the Committee we are to examine the Governor and Deputy Governor of the Bank of England; and I doubt not that we shall obtain, from those able and intelligent Gentlemen a full and complete statement of the conduct of the Bank for years back. But, when it is admitted that these disclosures are necessary, in order to enable us to form a just opinion of the conduct of the Bank, and of the value of the Acts of 1844 and 1845, it does appear a most premature proceeding to call upon the House to come to a decision upon those subjects before we are in possession of this information. The right hon. Gentleman stated that he was very anxious to avoid a general discussion on the currency, and upon that point I entirely agree with him; for I think, to use his own metaphor, that to commence a discussion upon that subject at this period of the Session would be to embark upon an ocean in which I know not where we should find a haven or reach a shore. If the discussion on the currency had been continued before Christmas, no particular inconvenience might have been occasioned, for at that time there was no heavy pressure of business; but now, when it is absolutely necessary that public business should be proceeded with, very great inconvenience would be occasioned by a currency debate, which might be protracted, as currency debates usually are, for four or five nights. To-morrow my noble Friend (Lord J. Russell) makes his financial statement; the time has arrived when the estimates must be voted, and when the proposals of the Government with respect to taxation must be submitted to the House; and it is most important that we should proceed with this business without delay. I do hope, therefore, that the House will not encourage the commencement of a long debate on the subject of the currency. There are, however, one or two points in the speech of the right hon. Gentleman to which I wish to advert, merely to correct any misapprehension which may exist with respect to them. He has said, that the promoters of the Acts of 1844 and 1845 blamed the Bank for having reduced the rate of discount to 2½ per cent in 1844. I do not know who the promoters of those measures are to whom the right hon. Gentleman referred; for, to the best of my recollection, none of the promoters of the Acts of 1844 and 1845 did blame the Bank on that ground. I know that several opponents of the measures have laid down the doctrine that the Bank ought at all times, and under all circumstances, to discount at one uniform rate. That position is maintained certainly by one great authority on monetary matters, who is opposed to the Act of 1844, and is not maintained, so far as I know, by those who supported it. Let the right hon. Gentleman blame persons for holding such extravagant opinions, if he will but at least let him put the blame upon the right shoulders. The right hon. Gentleman also stated, that the effect of the Acts of 1844 and 1845 was to entail upon the country bankers in England, Scotland, and Ireland, the necessity of holding from 3,000,000l. to 4,000,000l. of gold. Now this was not the case. Those measures did not entail upon the country banks of England the necessity of holding a single additional sovereign. An issue of 8,000,000l. was given to the English bankers, without the necessity of holding a single pound more than they did before. Nor did those measures entail upon the bankers of Ireland the necessity of holding a single sovereign more than they previously did. Why, last October the circulation in Ireland was actually 1,000,000l. below its authorised amount. The Irish banks might, last autumn, have issued notes to the amount of 1,000,000l. more than were actually in circulation, if it had been necessary to meet the wants of the country, without the slightest deviation from the Act of 1845, and without holding a single additional pound. With regard to Scotland, the case was, no doubt, different. The actual circulation of the Scotch banks, last autumn, was higher than the authorised circulation by about 470,000l., and they were under the obligation of holding gold to this amount. The real fact was, then, that at that time it was only necessary, in the three countries, that an additional sum of less than 500,000l. in gold should be held by the bankers, under the requirements of the existing law. The right hon. Member for Stamford (Mr. Herries), also stated that I had said that there had been no great diminution of the circulation at the time when my right hon. Friend the Member for Portsmouth (Mr. F. T. Baring) said, that there had been a great diminution of the circulation. Now, substituting for the expression "circulation," the expression which I think ought to be used, namely, "notes with the public," it is true that I did state, that in the course of the last autumn there was no great diminution of notes with the public, but on the contrary a slight increase. But that was not the period to which my right hon. Friend referred. What he said was, that between August, 1846, and April, 1847, there was a diminution of 9,000,000l. of bullion, and no diminution of notes with the public, while under the operation of the law there ought to have been a diminution. My right hon. Friend's remark applied to the autumn of 1846 and the spring of 1847, while my observations applied to the autumn of 1847, so that we were referring to totally different periods. I thought it my duty to notice these two or three points, because I wish the House not to remain under any misapprehension as to the facts. With regard to any general discussion of the currency, I do not think this is the time when we ought to enter upon such a debate. I have stated my opinions on that subject at great length on former occasions, and I do not now wish to obtrude them again upon the House. I think the right hon. Gentleman has made out no case whatever for the temporary suspension of the Acts of 1844 and 1845; and the House will have a future opportunity, when they have all the facts of the case before them, of judging calmly and deliberately upon the more permanent operation of those measures.


said, that, if he correctly understood the argument of the right hon. Gentleman the Chancellor of the Exchequer, he rested his opposition to this Motion upon three points, namely, that the present condition of the Bank of England, as compared with its condition in October last, was so improved, and there being no appearance of pressure, there could be no danger of any difficulty in that quarter; his second objection to this Motion was, that Parliament was sitting; and thirdly, that a Committee of the House had been appointed to inquire into the cause of the commercial distress which prevailed in the country. With regard to the first statement, namely, the improved condition of the Bank, he had the satisfaction of entirely agreeing with the right hon. Gentleman; but he begged to be permitted to remind the right hon. Gentleman what the condition of the Bank of England was about this time last year. He would remind the right hon. Gentleman that the bullion in the Bank of England in January, 1847, was within a mere trifle of 15,000,000l.; that the reserve on the banking account was upwards of 8,000,000l.; and by the month of April, the bullion was reduced to the extent of 5,000,000l., and the reserve to the extent of 6,000,000l. It might be said that at this present time there was no prospect of an export of bullion, or an unusual importation of corn; but that, in his humble opinion, was not a sufficient answer. He might ask the right hon. Gentleman if he felt perfect security with regard to the state of Italy and France? Might not Europe be so involved in war and strife as to cause a large drain upon the bullion in the Bank of England? Therefore they could not trust to such arguments as the right hon. Gentleman had used. With regard to the other point, namely, that Parliament is sitting, he would remind the House of the manner in which the late Parliament had treated the petition of the merchants of the city of London, which was presented by his hon. Friend the Member for Huntingdon in June last. That petition pointed out the dangerous position in which this country was placed; but did Parliament listen to it? No such thing. And what ground had the commercial and manufacturing interest for supposing that this Parliament would pay more attention to any representations they might make? The third objection of the Chancellor of the Exchequer was founded on the fact that a Committee of this House was now sitting to inquire into the operation of the currency laws. He hoped he was not divulging the secrets of the Committee of which he was a Member, when he stated that it met on the 4th of February; he was speaking on the 17th of February, and they had examined two witnesses! Considering what the suffering of the country had been, and still was, did they think it would satisfy the country to wait for the report of that Committee? He would say, that if the House of Commons entertained any such expectation, he was afraid it would end in bitter disappointment; and he would further say, that those who had the opportunity of witnessing the calamities that had taken place, could come to no other conclusion than this—that it was utterly impossible for this country to endure a second time such a financial pressure on its mercantile and manufacturing interests. It was impossible for any man who was acquainted with the state of the country to think that they could go through, in the year 1848, the same trial as they had to encounter in 1847. The right hon. Member for Stamford had told them that during the pressure of last year, 220 houses had failed, whose obligations amounted to 30,000,000l. But, though we knew how many houses had fallen, we did not know how many had been ruined. At no former period in the history of this country had the loss of capital been so great. It had been truly remarked by the hon. Member for Paisley, that the trade between this country and India—one of the greatest and most important branches of our commerce—had been laid prostrate. There was no longer an adequate capital in India to carry on the great commercial transactions of that empire. Bills to the amount of 7,000,000l. or 8,000,000l. had been returned upon Calcutta. Without the intervention of the East India Company, the produce of India could not be sent forward to England. The right hon. Baronet the Chancellor of the Exchequer had told the House that there was certainly a great deal of pressure in the commercial world last autumn, but that the pressure was caused principally by the failure of the large bill-brokers, which failure cut off the resources of all the houses that depended upon their discounts for the carrying on of their trade. He would, however, remind those hon. Gentlemen who happened to be in town last November, that the failures and embarrassments were not confined to the bill-brokers and their customers. He would ask hon. Gentlemen if the alarm was not so general—if the rate of discount was not so wide—that there were few establishments, bankers as well as others, whoso credit was not then labouring under great suspicion? They could hardly pass the corner of a street without hearing doubts thrown upon the solvency of the first houses in the world. At that time it was utterly impossible to negotiate bills upon foreign countries drawn against actual shipments of produce. Bank notes could not be found wherewith to cash these bills. Parties said, "We will take your bill, but we have no bank notes to pay for it. If you can wait for fourteen days, we will endeavour to accommodate you." And what was the feeling on the Continent with respect to the state of things in England? Foreigners believed that all London was bankrupt. Those who owed money to parties in this country would not remit; they would not go into the market and purchase bills on England, as they would gladly have done under ordinary circumstances; they expected that the parties upon whom the bills were drawn might be bankrupt before their acceptances reached maturity. What was the state of things at Newcastle-upon-Tyne? But for the prudent intervention of one excellent individual, whom he (Mr. Alderman Thompson) was proud to acknowledge as a personal friend, Mr. Grote, the manager of the branch bank, the whole town of Newcastle, and the densely populated district by which it was surrounded, would have been in a state of barter in less than twenty-four hours. He very much doubted whether the peace of the district could have been preserved under such circumstances. What was the state of the whole country from the east to the west? In Liverpool, in Manchester, in Yorkshire, discounts were as difficult to procure as they were in London. And what was the cause of all this difficulty? The Chancellor of the Exchequer had told them to-night—although the right hon. Gentleman had used other and contrary language on a former occasion—that he did not attribute the commercial crisis of 1847 either to the conduct of the Bank of England, or to the operation of the Act of 1844. Then to what cause or causes did the right hon. Gentleman attribute the fearful crash? The right hon. Gentleman was of opinion that it was owing mainly to speculation and miscalculation. In answer to the deputation from Newcastle, who waited upon him at his seat in Yorkshire, the right hon. Gentleman said there were plenty of bank notes in the country—that there was no scarcity of money for the legitimate purposes of trade. The right hon. Gentleman could not have foreseen the extent of the mischief which actually occurred between the 23rd of September (the day the deputation waited upon him), and the 23rd of October, or he would never have made such an observation. No; the right hon. Gentleman never dreamt of a necessity for writing the letter to the Bank of England. He entirely subscribed to the necessity which then called for so decided a step on the part of the Government. The letter had the immediate effect of stopping the alarm, and mitigating the pressure of the panic. Money at the present time was abundant, and might be had on good security, on very easy terms. And yet the public were actually in possession of 2,000,000l. less of notes now, than they were on the 25th of last October—when every one expected ruin in consequence of the difficulty in obtaining discounts. One solution to this apparent anomaly readily presented itself—panic and alarm caused the hoarding of gold and notes to the extent of 6,000,000l. The increase in the issue of notes by the Bank of England, between the 25th of September and the 30th of October, 1847, amounted to 2,754,000l.; within the same period there had been an increase in the gold in the issue department to the extent of 2,202,000l., making a total of 4,956,000l. With all that money in the Bank, and in the hands of the public, bills at long dates could not be discounted under 17 or 18 per cent. Merchants holding eight and ten months' bills on India and China, would cheerfully have paid even higher rates than 18 per cent; but they could not raise money on such long-dated paper at any rate. In such a state of things, all calculations of profit and loss were necessarily put aside; and the enormous losses entailed by these high rates of discount were not all the merchants had to contend with. As the value of money increased, as the rates of discounts rose, the value of all kinds of produce fell. With regard to the charge of speculation, he would beg to remind the right hon. Gentleman the Chancellor of the Exchequer, that, with the exception of the single article of sugar, there Lad been an almost total absence of speculation. And there was a special reason for that. The House would recollect that an alteration had been made in the duty upon sugar. The Chancellor of the Exchequer, in bringing forward his measure for the alteration of the duty, told the House that the consumption of sugars could be immensely increased in this country. An opinion to that effect, coming from so high an authority, induced merchants to import more largely than they would otherwise have done. Then with regard to the speculations in corn. In the early part of 1847, the Government were themselves importers. He did not blame them for taking that step—it was forced upon them. Every week during that period, hon. Members were getting up in the House and asking why the ships of war were not pressed into the corn trade. Some hon. Gentlemen asked whether Ministers were not prepared to offer a bounty on the importation of bread-stuffs. Then, had they not a day of public humiliation—the general fast? All these circumstances led merchants to embark their capital, and apply their energies to the corn trade. They ransacked the whole world for grain, and they saved this country and a portion of the Continent from the horrors of famine. Instead of being abused and stigmatised as speculators and miscalculators, those merchants were entitled to the gratitude of the country. The average price of wheat in London in the month of May was 105s.; in August it had fallen to 51s. per quarter. What calculation could have availed against so sudden and so unexpected a change? He did not consider any man to be a speculator who was an importer of goods. That was the legitimate enterprise of merchants—that was not speculation. The man who went into the market and bought up articles of general and necessary consumption, in order to raise prices, was a speculator. The merchants who imported the corn, calculating upon the market prices, and the probability of their still continuing to range high, did not deserve that name. Theirs was a legitimate commercial enterprise, and it was not right to stigmatise them as speculators. The House had been told by the promoters of the Bill of 1844, that, although it might not have the effect of preventing commercial panics, it would certainly mitigate their effects. He took no blame to himself for the Bill of 1844. He was one of the few Members who opposed the Bill; and at the time of its passing, he offered his humble but sincere opinion that it would prove a mischievous measure. He was then told that as the bullion came in, the Bank would increase its issues; and that as the bullion went out, the Bank would contract its issues; and that the foreign exchanges would be rendered more steady, and that discounts would be maintained at a more uniform rate. Experience had proved the impracticability of the measure, and the complete fallacy of such predictions. Under the operation of the Bill, discounts had varied from two to twelve per cent. Under the operation of the Bill the country had encountered the evil of adverse foreign exchanges, coupled with increased discounts and panic at home. Experience had shown that it would be utterly impossible to maintain the Bill in its integrity. The promoters of the Bill told the House that after the measure became law, the Bank Directors had only to raise the rate of interest, and they would at once stop the efflux of bullion and lessen the demand for discounts. But experience had proved that the more the Bank raised the rate of interest, the more widely-spread were the dismay and alarm, and the public procured notes in larger quantities and sooner than they would otherwise have required them. Hence the raising the rate of interest increased the demand for discounts. He had alluded to the state of credit in this country during the months of September and October last, and he had told the House the opinions held on the Continent with regard to the then existing state of England. By the permission of the House he would read them the opinion then entertained and expressed by the people of the United States. [The hon. Gentleman read an article from the New York Herald of November 20, to the effect that the scarcity of provisions and subsequent panic in England, had thrown into the hands of the American Government that supremacy which they had long been striving for—that the resources of England were nothing as compared to those of the United States—that the pressure for money in England would revolutionise the Government, destroy the nobility, and work out organic changes in the state of society. It concluded by stating that the manufacturers of the United States were never in a more prosperous condition.] What was the state of public credit at that period? Exchequer-bills were at the enormous discount of 40 per cent, and continued so for some time. On Tuesday, the 5th of October, the difference in the price of Consols for money and Consols for account indicated a rate of interest equal to 50 per cent per annum. He might not consider it absolutely necessary to repeal the whole of the Bill, but he was anxious that the House should go into Committee on the Bill. He should like to see the House strike out that portion of the Bill which limited the discretional issue to 14,000,000l.; and he was anxious also to strike out the clause which limited the amount of silver coin upon which notes can be issued. He was entirely opposed to the doctrines of what had been termed a domestic currency. Domestic currency, in his opinion, was only another name for a depreciated currency. As in Russia they had their silver and paper roubles, so we in England should have our Bank of England notes, payable in gold at the rate of 31. 17s. 10½d. per ounce, and another kind of note payable in nothing at all. To the latter sort of currency he was decidedly opposed; but he had heard no valid reason urged against the right of the Bank Directors to issue what amount of notes they thought proper on the security of silver. The circulating medium of the Continent is silver; and when the exchanges are unfavourable to this country, the Bank first losses its silver, and then the gold follows. In his opinion an increased stock of silver would act as a protection to the gold. With respect to the issues of the country bankers, in spite of the Chancellor of the Exchequer—in defiance of his threatening circular—he could tell the right hon. Gentleman that that part of the Act of 1844 was evaded, and would be evaded if the want of a sufficient circulating medium in the country required it. In conclusion, he would implore the House to adopt the resolution of his right hon. Friend (Mr. Herries), and not allow the credit and character of the commercial interests of this country—in- terests which he had always looked upon as of the highest importance—to be sullied by an obstinate adherence to a policy which had already proved so mischievous.


I never rose to address the House with more anxiety, considering the great importance of the subject, and how much the prosperity of the nation depends on having our monetary affairs well managed. I am, however, encouraged to offer my opinion from the nature of my pursuits in life, for the last forty-seven years having been more or less connected with business and money transactions, which have naturally turned my attention to those subjects. Although I am not so presumptuous as to think that the views I entertain must necessarily be right, and those of Gentlemen who differ with me wrong, still I feel a deep interest in our monetary affairs being well managed, as anything and everything that prevents disturbance in them is not only a benefit to the merchants, but to every individual in the country. It is therefore most important, as far as it is practicable, to prevent those extreme fluctuations, and to mitigate the intensity of those panics, which too frequently occur; but I do not believe that in any active, enterprising, commercial country it is possible to prevent them altogether. The famine was certainly the primary cause of our distress: it was one of those dispensations of Providence which no human foresight or prudence could control, and which has drawn from us 33,000,000l. to buy food from other countries to relieve the sufferings of a starving people. But it was the means of affording an additional proof of the advantage of commercial freedom, for the merchants would not have dared, with the risk of ruin to themselves, to have ransacked every quarter of the globe for supplies, if a high fixed duty or sliding-scale had been added to the risks of a falling market. In addition to this there was the great demand for money for the railroads, which raised its value so much as to bring down many houses depending on discounts which could not be obtained. Some of these must sooner or later have fallen; but the more those misfortunes could have been spread over time, the less severe they would have been on the general trade of the country, and less injurious to solvent houses, many of whom have made sacrifices to sustain themselves that have all but brought them to the verge of bankruptcy. Then comes the Bill of 1844. I do not attribute to it, as many do, all the guilt of its being the sole cause of our sufferings; but its promoters thought it would do everything for us, as may be seen by reference to their speeches in Hansard at the time it was under discussion. It was to be ballast for the commercial ship; but to the period of the money pressure it was a dead letter. Any frail bark can get along with safety in a glass smooth sea; but we want a vessel that can breast the storm and ride out a gale of wind in safety; but the Bill of 1844 foundered the very first sea that struck it. What has it done for us? It has not prevented imprudent speculations in railroads to a frightful extent: although some of these are valuable acquisitions to the country, others are as worthless as the South Sea bubble of 1721. It has not equalised the price of money; that has been lower and higher since its enactment than in modern times. I have obtained the rate of interest charged in the London money market every year since 1824; and if this is any criterion to judge of the severity of the pressure (which I think it is), taking the years of the greatest difficulty, they stand thus:—1825, lowest rate 3½ per cent, highest 4½, difference 1 per cent; 1832, lowest rate 2¾, highest 4 per cent, difference 1¼ per cent; 1837, lowest rate 3¼, highest 5½, difference 2¼ per cent; 1839, lowest rate 3¾, highest 6½, difference 2¾. Now, let us look at last year, the lowest rate being 3¾, the highest 10 per cent; but in addition to this 10 per cent, there was in many cases a commission charged, making the interest equal to from 15 to 20 per cent; and at two periods, April and October, discounts to any extent worth notice could not be obtained at all on the very best description of paper. I think you will agree with me that we have encountered one of the most disastrous panics on record, for the price of money proves it to be so; and many of the most practical and independent men I know agree with me in considering it greatly aggravated by the Bill of 1844. Was not the discount branch of the Bank of England on the very verge of stopping payment on the 25th of October, when the Government letter was sent to their relief? And that letter virtually annulled and condemned the Bill of 1844. Without this guarantee of indemnity, the bank of discount had it not in its power to draw one sovereign from its copartner the bank of issue, under the same roof, without cancelling an equal amount of notes, although there was upwards of 7,000,000l. in its vaults. On all former occasions, an export of seven to ten millions of specie was found sufficient to pay off foreign balances and turn the exchanges in our favour. The very consternation that this Bill produced by its iron rule—its arbitrary maximum—when it was found to begin to act on the money market—without the power in any quarter to relax it or give relief unless by violating an Act of Parliament—made bad worse. I cannot see where this Bill has a single redeeming feature: it puts an unnecessary shackle on commercial freedom, and it has induced very extensive hoarding. Hon. Gentlemen may not understand why hoarding took place to so great an extent as has been stated when all was tranquillity at home. Merchants, who in the course of their dealings were passing bills through their hands, when any want of confidence in those bills being paid at maturity took place, found it necessary for them not only to see that they had available means to pay their own engagements, but to retire any bills of others that might be thrown back on them dishonoured. I have little doubt that 1,000,000l. to l,500,000l. in Liverpool alone was held back from the ordinary pursuits of trade to meet those contingencies; and Bank of England notes answered this purpose so long as we had no internal disturbances; but events might have arisen that they could not answer at all. A million or two handed over from the issuing department to the banking department, in time to have enabled it to discount all good legitimate paper at a fixed price, would have greatly decreased the intensity of the panic, and allowed export orders to be more freely executed, which, until the Government came forward, were almost at a dead lock. By their letter, bills of an unquestionable character were made available, which for some time previous were literally useless: without this relief some most respectable houses must have stopped; we would have had something like a national bankruptcy. Although failures and much want of confidence would have taken place, my firm conviction is, the Bill, without forewarning men of their danger, and making them cautious, only lulled them into the fatal security that it would keep all right and prevent credit from being shaken, as it would secure the convertibility of bank notes into sovereigns. But let me ask, would that have prevented the utmost consternation and increased distress, if the bank of discount bad been so far pressed as not to be able to meet the checks of its depositors? And such would have been the case—as 11,000,000l. of their capital was lent to Government, 3,000,000l. locked up in the bank of issue, and the other public securities they held could not have been made available in time to meet the exigency without an enormous sacrifice, if they could have been sold at all—had not the Government letter restored confidence, so that the funds immediately rose, the demand for discounts rapidly decreased, and the hoarded money was let loose. Can we want further proof of the injurious effects of the Bill of 1844? I see nothing to shake my confidence in perfect freedom in banking with secured convertibility; and I entertain strong doubts of the advantages of a great banking concern like that of the Bank of England, which, by the way, I think, is very unfairly expected to serve two masters with different and conflicting interests—the stockholders and the public—and to hold gold to meet the reserves of other banks of issue, without having the profit of their circulation. But its standing and position are such, and so bound up with the feelings and opinions of the nation, that it is now of no use discussing its eligibility or ineligibility. There it is, guarded by special privileges; and it ought to be made the most efficient instrument possible for public good. But the Bill of 1844 has relieved the Bank from all responsibility as to their being the conservators of public credit; they now stand in the position of a private bank, and have only to consult the interest of their stockholders. When the interest of money materially advanced before the Government letter made its appearance, there was no danger to the Bank in discounting freely all the good business paper that offered; for the pressure was to pay bills that were due, and not for new operations—so that if bank notes went out at one door, they came in at another. Unquestionably the Bank Act of 1819 was good, so far as it brought us back to cash payments, and confirmed our standard of value in weight, viz., that 3l. 17s. 10½d. in bank notes should represent an ounce of gold. If we had either decreased the standard in weight, or debased the coin, the exchanges of the world would have immediately responded to it; for instance, if we had made half an ounce of gold to be represented by 3l. 17s. 10½d. in notes, which are quite con- ventional—valuable only on the strength of the security that gives them value—a bill negotiated on England in any foreign country, would only sell for half the value it now does. It is therefore clear, that would not benefit us with other nations, but be a fraud on all our creditors. I know that some Gentlemen argue, that inasmuch as a large amount of our national debt was negotiated in a depreciated paper currency, that the debt, or the interest of it, should be settled in a currency of the same value. Those Gentlemen must lose sight of the fact, that when those large contracts were negotiated with Government, an Act of Parliament existed, pledging the Bank to resume specie payments six months after a definitive treaty of peace was signed. The contractors never dreamt—no one even supposed—that the depreciated bank notes were to be redeemed or paid in a less weight of gold than the acknowledged and known standard. Had any fear existed on the part of the contractors, that the Bank would be authorised by Government to pay in less weight of gold of the same fineness, they might not have got the loan at all, or at prices that would have been ruinous, and we might at this moment have been a colony of France. National faith should ever be maintained at all sacrifices. A steady standard of value is of the first importance to a commercial country, to secure the integrity of contracts: what confusion would the having of an unsettled standard lead to; wheat for instance, sometimes worth 2l. per quarter, and sometimes 5l. If we had a standard of value for the first time to fix, I should discard the word "value," and say "weight;" it would be of very little importance what weight we assumed, but having fixed it, it should be rigidly adhered to, to preserve the integrity of contracts. Buyer and seller—borrower and lender—agree to take their chance of the increased or decreased value of the weight of gold contracted for: we know of no article, at present, so nearly of the same relative value all over the world. As to a double standard of gold and silver, I see no great benefit that would arise from it: silver will buy gold, and the latter has the advantage of being less subject to variation; and it is, besides, the most easily transportable merchandise in the world, valued and prized by all civilised nations, and hence well suited to adjust the balances of a commercial country. Thus far I go with the Bank Act of 1819: by that Act, the Government permitted the Bank to issue 14,000,000l. of notes on Government securities; and, so far as the home trade goes, and while we are free from internal disturbances and panics, it may answer every purpose; but notes are valueless in foreign markets to pay for grain or anything else. At that period, we had in round numbers about 14,000,000l. of inhabitants; now we have about 21,000,000l.; and the trade of the country is probably increased something in the same proportion; a sum in specie, which at that time was considered sufficient to secure convertibility, might be totally inadequate now. I am most anxious to press this consideration on the House, that it is extremely dangerous to allow the credit and prosperity of this country, to rest upon 14,000,000l. of notes based upon the security of a mortgaged estate; for 11,000,000l. of the capital of the Bank is lent to Government at 3 per cent, and 3,000,000l. of their public securities are locked up in the bank of issue. The banks have literally no available capital, for their rest (about 3,500,000l.) is partly in buildings and mortgages, and in the dead weight. Their deposits must be considered as part of their circulation, as they are totally out of their control, and may be called for any hour; it is not likely they will be called for all at once—still it is the capital of others they are trading on, and unsafe to depend on to any extent; for in times of pressure the owners of those deposits may want to use a large amount of them; and an efflux of gold may soon carry off the amount that has been hitherto considered a sufficient reserve to meet them, secure convertibility, keep all safe, and give confidence. How severely merchants are censured for basing their operations on fixed property, locked-up funds, or the capital of others! Is not this the position of the Bank? Who is to blame here? To put the transactions of the nation on a more stable footing, Government should pay off this debt, or a great part of it, or the Bank increase its capital, convert it into specie, and allow it to remain in the vaults of the Bank to meet any contingencies. I know this would be a great loss to the stockholders; but as it is a national object that this great banking-house of the world and the country, should stand on a more solid basis than it does, let the nation sustain that loss: it is a drop in the bucket, compared with the suffering and depreciation of property below a price at which it could be produced, that we periodically go through. The Bank, with a greater amount of specie, need never refuse to discount good bills: they might more gradually and not suddenly raise the rate of interest, if they found speculation running wild, and always be in a position to mitigate the distress which is felt in such times from the lowest to the highest. You must leave a discretionary power somewhere. Who would think of governing a merchant's counting-house by Act of Parliament? Neither can you govern a great national or any other bank by such a rigid rule. There may be an influx or efflux of gold—good trade or bad—a foreign or domestic loan—foreign war or domestic difficulties—a good harvest or a bad one—or possibly a few deficiency bills to discount, all of which must be met, as far as practicable, by the judgment and foresight of the parties managing our monetary affairs. I feel strongly that if the monetary affairs of this country are to be placed on a footing that will decrease the intensity and frequency of panics, the Bank of England must at all times have sufficient specie to make it impossible that any demand on her to pay her notes will compel her, in order to save herself from stopping payment, suddenly to decrease her accommodation, and add to existing distress, as was the case last October. I deprecate all Parliamentary maximums or minimums, sliding-scales or restrictions—more or less demand for money should regulate the interest—and the Bank, as a great trading company, should deal with it accordingly. It should never permit itself to be in a position of alarm from any quantity of specie leaving its vaults—it should always have enough and to spare. There is no guarantee that any Government can give that will make their notes equal to gold but a certainty of their convertibility under all and every conceivable circumstance. I want to see the Bank of England in the same position that the Bank of France was when the Allied armies entered Paris in 1815. Having only granted discounts and accommodation to the amount of their available capital, no one could make a run on them, and their business went on as uninterruptedly as if no foreign foe was in the country. The Bank of England would not have felt, under similar circumstances, quite so much at ease, with their capital locked up in unavailable securities. This great institution should be put on a different footing. The right hon. Baronet the Member for Tamworth admits that in some respects he was disappointed in the working of the Bill of 1844. In his speeches at that time, when this measure was under discussion, he raised an argument in favour of it, on the ground that, as a great number of American banks had stopped payment, although guarded by the personal liability of partners, that this was no security for convertibility. Certainly not; but the right hon. Baronet has fallen into an error in this, for there is no individual responsibility in any American bank that I am aware of; therefore, any argument in favour of the Bill of 1844, based on this error, must fall to the ground. The hon. Member for Westbury's suggestions for circulating one-pound notes and calling the sovereigns in, would no doubt save capital, and might do very well if we were sure of no panic or run on the banks; but in that event, it would only aggravate the evil. I therefore think it better for the country to lose the advantages he points out, rather than adopt his plan. My views go no further than to call in sovereigns as a temporary measure to purchase food in the absence of alarm, and to send them into circulation again at the earliest possible period of their return. Although we have had no internal disturbances, and although the Bank has been enabled to stand firm by the aid of Government, yet as it is believed that the internal drain on it for gold was 3,000,000l. or 4,000,000l., that gives us a foretaste of what we might suffer if we were more dependent on a paper currency, and had any internal disturbances or alarms to contend with.


was not going to trouble the House with many observations; but he could not help commenting upon some of the observations made by the right hon. Gentleman the Chancellor of the Exchequer. That right hon. Gentleman had complained that the question had been forced upon the House after a sufficient opportunity had been given, upon a previous occasion, for the full discussion of it; and he had added, that the former debate had terminated in consequence of there being no hon. Member left who was prepared to take a part in it, or offer any further arguments upon the question. Now that was not so. The right hon. Gentleman had forgotten the facts and circumstances of the case. The right hon. Baronet the Member for Tamworth rose upon that occasion at a very late hour of the night, and did not conclude his speech until about one o'clock. The hon. Member for Newark moved an adjournment of the de- bate, which was resisted by the right hon. Gentleman opposite: thus the debate was unfairly terminated. There were, besides, many hon. Gentlemen who had no objection to the appointment of the Committee of Inquiry, but who wished to have the Bank Charter Act repealed, and not merely suspended. For his own part, he regretted that the right hon. Gentleman (Mr. Herries) had not brought forward his present Motion at an earlier period. The country expected that something more than the mere appointment of a Committee of Inquiry into the causes of its commercial distress would have been done; and nothing could have been more disappointing to the country at large than to find that the Government was unable to legislate upon the subject. The appointment of the Committee was in fact a mere subterfuge to get rid of the question without incurring the responsibility of either adopting it, or rejecting it altogether. He knew it was very convenient for the Government so to act; but the real question which the House ought to consider was, whether the Bill of 1844 was or was not entitled to the approbation of the country? That question was attempted to be kept out of view. They had been asked, were they going to repeal the Bill of 1819? But that was altogether beside the question. And he hoped, that no more hon. Gentlemen would attempt to pull or force the question of the repeal of the Act of 1819 into the one really under consideration. If any hon. Gentleman wished to repeal the Act of 1819, let him by all means try to do so. Let him propose a measure for the purpose. But the simple question at present before the House was whether they were prepared to repeal the Act of 1844 or not? But the Chancellor of the Exchequer wanted to carry the House away from the real question. He had alleged that if those discussions were to be thus raised, they might be carried on for months. He (Mr. Hudson) had no desire that the debate should last for months; but he wished to see the question dealt with, because he thought the measure of 1844 was fraught with evil to the country. On the former debate, the right hon. Baronet the Member for Tamworth had asked the opponents of the Bill of 1844 whether they wished to return to the state of things which existed when the Northern and Central Bank was in being? If it were a question of going back to former periods, they might as well go back further. Thus much he thought, or rather he might say he knew, that the effect of the Bill of 1844 was the curtailment of the benefits which the country derived from the banking system. As to what had been said about the joint-stock banks, his belief was, that if they had been let alone, they would have recovered themselves, and the country would have had a sound system of banking finally established. It had also been said, that the making of railways had, to a great extent, involved the country in its difficulties. He denied that. They could not shut their eyes to the fact, that the calls had been going on, and that the amount of calls made on account of railway shares in January, 1848, was larger than that made in January, 1847; and yet they found money plentiful: they were told that at this moment it was not worth more than 3 per cent in Lombard-street. If railway calls were the cause of the pressure, why did not money fetch the same high rate of interest now as it commanded at the close of 1847? Why was it to be had on easier terms than in October last? Hon. Gentlemen ought likewise to look at what the amounts of the private deposits in the Bank of England were. They would see that they were the same in October, 1847, as they were in October, 1846. The deposits in the Bank of England, in fact, had not been intrenched upon at all, and the money had all found its way back again into the coffers of the Bank, though he would admit that some private bankers had suffered by having their deposits drawn out. This admitted of a very easy explanation. There was now money to be obtained; but that was explained by the fact that it was no longer necessary to export gold to furnish food. The Chancellor of the Exchequer had said, that upwards of 6,000,000l. of notes were in the hands of the public more than at former periods. That might be; but by the operation of the Bank Charter Act of 1844 insecurity was generated, and people, instead of putting their money into circulation, hoarded it. This was owing entirely to the restrictive powers of the Act. The present system imposed such hardships upon the commerce of the country, that, at a time of panic and alarm, it was utterly impossible to obtain means to meet the undertakings and commercial engagements of the day. In the month of October last, the bank at Newcastle was in a position of the most imminent danger. Representation was made to the Government that if money was not forthcoming, the Government must send troops to keep the peace in that district. Assistance was rendered to the bank. If that had not been done, no person could say what amount of disaster would have occurred in that part of the country. But when he and those who were opposed to the restrictions inflicted by the Bill of 1844 complained of the check given to trade by it, and pointed to the number of houses that had failed, they were told that they ought to have failed long ago—they were told to look at the condition of those houses, and look at their balance-sheets, and wonder that they had so long remained erect. For the sake of the argument, he would admit that they were insolvent. But what he contended for was, that solvency was not protected in consequence of the measure of 1844. No matter how high the character of any commercial house, no matter how solvent it were, the consequence of the Bank Restriction Act was to have its solvency brought into question, and its position rendered doubtful. The most solvent houses had been spoken of in consequence of that Act as being in a tottering condition. If, then, it had not preserved solvency, why should it be retained? They had already virtually repealed it. Why not repeal it altogether? He objected to its being left to the Government, to the Chancellor of the Exchequer, or the First Lord of the Treasury to decide when it would or would not be right to suspend its operation temporarily. They had not interfered soon enough to effect that suspension. He repeated it: they had not interfered soon enough; and those parties who had to pay 50 or 60 per cent for the accommodation they had received before that suspension had been directed by the Government, had good cause to complain of the loss inflicted upon them by the delay, and of the unfair advantage given to those who had subsequently profited by it. The Chancellor of the Exchequer might defend the Bill of 1844; but where was a commercial man to be found who would undertake to defend it? He knew of none. By the common consent of all commercial men, the part of the Bill which enacted those restrictions was condemned as most obnoxious and unwise. Why then should the House wait until the Committee should have reported before venturing to repeal the Act? He thought the Government were bound to prove that they were justified in retaining it. On the previous occasion, when the question had been debated, the Chancellor of the Exchequer had thrown some blame on the Bank of England; but that night he had withdrawn his censure. If the Act were still to be retained, he (Mr. Hudson) hoped that some measure would be introduced to prevent the Directors of the Bank of England from being obliged to lend money to the right hon. Gentleman the Chancellor of the Exchequer, to the prejudice of its other customers. It was notorious that on one occasion the Chancellor of the Exchequer had gone to the Bank and had swept away the entire of the reserve; and the consequence was, that the Bank had to send to all its agents throughout the country directions to limit their accommodation to commercial houses to one-half of what they had been accustomed to grant, because the Bank had been obliged to lend the whole of its reserve to the Chancellor of the Exchequer. The corn merchants also had been blamed for having by their indulgence in over-speculation caused a great deal of the pressure and commercial distress that had arisen. But the circumstances should be remembered. There was a very fair prospect of success being attendant upon their speculations; but they had turned out less successful than the speculators had calculated. It was altogether impossible to lay down a fixed rule on which they could act on all occasions, without any deviation. It was impossible that they could at all times have the same amount of money at command. No private individual in the management of his affairs could lay down any fixed and inflexible rule for their management. He thought it desirable that the country should know what the Government was prepared to do, and should plainly understand the principles on which the Government were prepared to act in matters so gravely affecting the most important interests of commerce and the country. Without great consideration he would not venture to say that he would give unlimited powers of issue; but at the same time it was with him a matter of grave doubt whether the restrictions which they at present maintained tended to any right purpose. This was at all events a circumstance very remarkable, but at the same time indisputable—that in those parts of the country where the bankers issued their own notes less commercial distress had prevailed than existed in those parts of the country where the issues were uncontrolled under the operation of this system. He would assert as his opinion that the princi- ple on which the Chancellor of the Exchequer acted in his letter so the Bank of England, in fixing the rate of interest at eight per cent, was most unwise, for he thought that that proceeding had had a greater effect in raising the interest of money throughout the country than any other measure whatsoever. He knew that in those parts of the country where bankers issued their own notes, the rate of interest had been very little raised, if at all. He thought that the simple question which the House had to consider was, whether they should not repeal that part of the Bill of 1844 which operated most injuriously on the commercial classes. He did not say that this Bill had been the entire cause of the recent distress; but its operation had aggravated the pressure—had increased the distress—and made it almost intolerable. It was quite impossible that they could keep the circulation of the country under control, in the manner laid down by this law; it was generally agreed that they could not keep the circulation of the country under this inflexible control, and if that was the case, would it not be better to put an end to this law altogether? Would it not be better for them to repeal the Act at once? He thought it would, and he had great satisfaction in supporting the Motion.


said, that he presented himself to the consideration of the House under circumstances of great disadvantage, and would willingly have abstained from doing so, but that he felt it his duty to state his opinions briefly to the House, representing as he did a great commercial community. It was his opinion at the time, and his opinions had not changed, that the Bank Charter Act of 1844, was not at all suited to the wants of a great commercial country like this. It was not an Act suited to the commercial wants of an empire situated in every respect as the British empire was. By the Act of 1845, the provisions of that Act were extended to Scotland and Ireland; but, unfortunately, the operation of that law was not at all adapted to those kingdoms. He believed that it was as impossible for Parliament to regulate the prices of money as to regulate the contraction and expansion of the mercury in the barometer. In fact, a law of this kind was not at all adapted to any kingdom or country whose resources were expansive. He did not know any country in Europe to which a law of this kind was applicable, unless to some village in Holland, where the population had not increased for the last six hundred years. Many had attributed the commercial calamities of October and November 1847 to improvident speculations on the part of our merchants and capitalists. He did not join in the blame of those who had so suffered. He believed it to be impossible that the commerce of this great country could ever be carried on without, in some degree, the speculations of her merchants being attended with risk. He believed that our merchants could not carry on the commerce of this great commercial country with all the nations of the earth, carrying out our manufactures, and bringing back the products of every part of the world—he believed that in carrying on a commerce so extensive as this, that our merchants must enter into many speculations which must necessarily be attended with risk. But he denied that the failures of individual speculations could affect the prosperity of the country. The history of this country, and of all countries which had risen by means of commercial enterprise, proved that this country and countries similarly circumstanced had become rich and had thriven notwithstanding the occurrence of individual failures and calamities. When failures were announced of various large houses throughout the kingdom, it had been said that those houses were unsound—that they ought to have given up long ago. For his part, he lamented the fall of those houses, for the sake of the individual partners, many of whom were so circumstanced as to be entitled to sympathy. He regretted to hear observations of this kind made with respect to those houses. He thought that they acted most beneficially on the trade of the country. They gave the required impulse to our commerce, carrying our goods to distant parts of the earth, and bringing back the products of those distant countries in return. The great commercial power of this country gave her a preponderance in the world which was universally admitted. There was an anecdote mentioned of Napoleon, that some days before the battle of Leipsic, when a proposition was made to him, based upon an expectation of crippling the power of England, he replied that he must give up all hope of crippling or destroying the power of England so long as she maintained her vast commercial credit. So long as England maintained her vast commercial credit and superiority it was impossible that any power could injuriously affect her. Now, the question which they had to con- sider was, how should they best be able to maintain the credit of the country? With respect to the Bank Charter Act of 1844, he thought that it was imperfect in itself, and that it was not calculated to answer the purpose for which it was intended. It had not had the effect of preventing excessive speculation, neither had it prevented fluctuations in the exchanges; and in 1847 they had seen a most extraordinary variation take place in the rates of interest. He (Mr. M'Gregor) was prepared to contend that the Bank Charter Act of 1844 was a measure in which the country at large had no confidence—in which, in fact, no great interest in the country—neither the landed interest, the commercial interest, nor the shipping interest—had any confidence. He believed that the confidence of the country had been totally withdrawn from that Act; and he was convinced that the time was not far distant when the House would be obliged either totally to repeal that Act, or, at all events, to take the whole subject into consideration, with a view of producing a measure free from the most pernicious provisions which the present measure contained. Now, looking to the history of banking in Scotland, from the year 1695 down to 1847, he found that the whole amount of loss suffered by the public from Scottish banks did not amount to 10,000l. That was a proof how well that system worked. What the people of Scotland complained of was, that they were not allowed to go on in their own way—in the way they had found beneficial; but that that House came and prevented them from continuing to do their business in their own way. They had been told, in reply to their remonstrances, that one of the reasons of this interference was that the Bank of England was obliged to keep cash for the use of Scotland. There was one security against over-issue in Scotland—namely, the system that prevailed amongst the Scotch banks of exchanging their notes amongst each other. This operated perfectly as a check against over-issue. For the reasons he had stated, he felt bound to say that he could not see that the Bank Charter Act of 1844 was at all applicable to the circumstances of Scotland; and although he regretted to differ with the right hon. Gentleman the Chancellor of the Exchequer, he felt himself altogether unable to concur with him on the present occasion.


felt desirous to express his thanks to the right hon. Gentleman (Mr. Herries) for the Motion which he had brought before the House. He believed that the right hon. Gentleman who had originally brought forward this measure was not aware, with all his knowledge and with all his practical experience, that it was not at all practicable to limit the circulation of this country. When this measure was first brought forward by the right hon. Member for Tamworth, in 1844, he expressed his objections to the measure. On that occasion he brought forward a Motion to express his opposition; but which, as it was not in accordance with the forms of the House, he felt himself obliged to withdraw. He well recollected how he was taunted on that occasion by the right hon. Baronet the Member for Tamworth, for having expressed those objections to this measure which were now so generally entertained. Many hon. Gentlemen who were not so conversant with commercial affairs as he was, were not aware of the difference that existed between the issue and the banking department of the Bank of England. He believed, that the right hon. Gentleman, with all his good sense and his practical knowledge, was greatly mistaken with respect to this measure. His proposition was, that in order not any further to disturb the circulation or credit of the country, the Government should have the opportunity of taking from the issue department what money they required; and that that money should be replaced by the growing revenue of the country. That was his proposition, and he felt assured that it was a measure which, if adopted, would be found attended with the most beneficial effects.


said, it was a matter worthy of inquiry how it happened that those crises and those panics which they had so recently witnessed, occurred so often in this country, and in this particular department—banking. When the Motion was made for the appointment of a Committee to inquire into the commercial distress, he (Mr. Hume) foresaw what would be the result, and he endeavoured to persuade the House not to consent to the appointment of that Committee. He foretold, that when they sought to probe and discuss this question, they would be told by the right hon. Gentleman that they should have patience until the Committee should have inquired into the subject, and should have made its report, It appeared, however, that the right hon. Gentleman and his Col- leagues, without any inquiry—without the production of any correspondence—undertook for a certain period to repeal this Act of Parliament. The causes that led to that proceeding sufficiently showed the inadequacy of this Act to meet the purposes for which it was intended. He was sure that this proceeding had been undertaken by the right hon. Gentleman with the sincerest intentions; but when the right hon. Gentleman and the noble Lord undertook to suspend that Act, might not he ask, were they not in the situation of that bad judge to whom that right hon. Gentleman alluded, and who postponed inquiry till after he had adjudicated? He contended, that a measure or operation which affected the property of every individual in the community ought not to be subject to the caprice of any individual. This was a matter for the most grave and serious consideration. He would venture to say, that the losses incurred by the commercial interests of this country, arising out of the late commercial embarrassments, could not amount to less than 150,000,000l. It was impossible to estimate the extent of the injury that had been suffered in this way. Under these circumstances—seeing the extent of the evil that had arisen, and the extent of the injury that had been suffered—he thought that it should have been the first act of the Government to have brought this entire subject before the House, instead of referring it for inquiry to a Committee upstairs. During the late commercial crisis, men looked on with astonishment at what was taking place—nobody knew where it would end. During that period, an individual called on him and stated, that he had been obliged to pay 23 per cent, to relieve a bill of his, and that he should have to pay twice that amount of interest the next day to avoid ruin. With all due deference, he submitted that it was the duty of the Government to have taken the whole subject into consideration, and have brought it under the notice of the House. With but one exception, all hon. Gentlemen who had spoken that evening, were agreed that this Bill, which had worked so injuriously, ought to be repealed; for it was impossible to believe that the country would submit to have its monetary and commercial affairs placed in this state of jeopardy again. His own opinion was, that protection and interference had proved injurious to every interest in this country that had been protected. Protection and monopoly went hand in hand, and those interests which they were applied to were invariably distressed; for instance, let them look at the effects of the system on the West India interest, the shipping interest, and the silk trade. In tracing every panic from 1793 to 1823, he found that every branch of business which was the most protected Buffered the most, and was the most distressed. He attributed the commercial panics to the circumstance of the currency being on an improper basis, founded on false principles, and fostered by monopoly; and every attempt to palliate the evil effects had been a failure. He would do the right hon. Baronet (Sir R. Peel) the justice to believe, that in bringing forward his measure in 1844, he was actuated by the best intentions. However, there was only one part of that measure of which he (Mr. Hume) could approve, and that was that part of it which fixed the standard of Value. The first operation of the Act was, that every bank in England, Scotland, and Ireland, knowing that the Bank of England could not assist it, was compelled to keep a much larger reserve; and the consequence was, that 7,000,000l. or 8,000,000l. of capital was thus locked up. Was not that a valid ground of complaint, even were there no other? All that had been predicted of the effects of the Act had now been realised, and the country was no longer in a condition to countenance the maintenance of it. The Act ought to be repealed at once. If the Motion of the right hon. Gentleman were carried, as he (Mr. Hume) hoped it would—that would amount to a virtual repeal. He could not understand how the Government could have the face to propose that it should be continued, after they had been compelled, as they themselves admitted, to suspend its operation for a short period, in consequence of its evil influence upon the trade of the country. He thought there ought to be an inquiry into the subject. Let them, then, with the experience they had had on this subject individually, both in and out of the House, supported by the experience which the right hon. Gentleman the Member for Stamford and the Chancellor of the Exchequer had gained by their official position—let them inquire into this matter, and he believed the result would be to satisfy them that the Bill ought not to continue in force. But if Her Majesty's Ministers did not choose to act consistently with themselves, let the House act. He thought it was the unanimous opinion that this Motion ought to be carried. He thought that they should judge the Bill by those principles which were now generally admitted as the leading principles that ought to govern the trade of this country; although there was a time, which he well recollected, when he could scarcely mention the name of free trade without exciting at least a smile upon the countenances of many hon. Members; but the time was now changed, and very few hon. Gentlemen stood up in that House who did not advocate that principle, unless it were that small number of hon. Gentlemen who called themselves Protectionists. He wished they were all quite unanimous with him. But seeing that the Government had been proceeding upon the principle of free trade—seeing that they passed every measure that they could to extend our connexions with foreign countries, to the extension of our own trade and the reception of foreign produce—seeing that they had opened every possible market for our manufactures—it was extraordinary to him that the right hon. Gentleman (Sir C. Wood) should still propose to continue this Bill, which all agreed was. a restriction upon the trade of the country. Nothing could be more certain than that the feeling in Scotland was opposed to the principle of this Bill; at least every person with whom he had had any opportunity of communicating on the subject was perfectly convinced that the Bill of 1844 was a restriction upon the trade of the country; that it increased the difficulty of obtaining discounts, multiplied the difficulties of carrying on business, and of course caused great loss to the public. The public at large, of course, desired to benefit by the employment of their capital; and his Scotch friends all agreed that it was useless and unnecessary to retain so large an amount of bullion lying idle as this Act of necessity required. It was well known that in Scotland very little gold was in use. If gold were offered in payment to a Scotchman, it was looked at, turned over and over, and, in fact, the Scotchman would rather take a piece of paper than a sovereign. Was it not, therefore, extremely unsatisfactory to have this measure forced on an entire nation against their will, against their wish, and against their best interests? It was well known that in times of monetary pressure, both Scotland and Ireland had been of considerable assistance to their neighbours, and had been able to relieve them of a portion of their difficulties. He was rather surprised to hear the Chancellor of the Exchequer say that the people of Scotland had no right to complain. What had been the actual result of the Act in that country? What was the amount of bullion generally in use in Scotland? He found that on the average of the two years, 1842 and 1843, the amount of gold in the banks of Scotland was 428,843l.; while in the two years, 1846 andl847, the amount was 1,119,000l.—showing an increase of 800,000l. of bullion in the banks of Scotland upon the years 1842, 1843. With regard to the notes in circulation in the same periods, he found that in the years 1842, 1843, the amount of notes was, on the average, 2,700,000l.; while in the years 1846, 1847, it was 3,325,000l. And although the banks of Scotland during the latter period had been so pressed for advances, they had not issued notes for all the gold in their possession. But for this Act, they might have employed the whole of their capital; and yet they were told that the Bill did not tend to restrict the trade of the country. On this ground it was he complained that Scotland was crippled by this Act. At the time it was proposed, he had endeavoured, though he did not succeed in his opposition, to prevent its being passed; he divided the House upon every occasion, because he felt certain that with regard to Scotland it would prove highly injurious. Why should the people of Scotland be restricted in their trade, as it had been proved before Committees of that House they were, by this Bill of the right hon. Gentleman the Member for Tamworth (Sir R. Peel)? As to the loss that had been spoken of, he could not find that any had occurred. In 1840, Mr. Kennedy, in the evidence which he gave before a Committee of that House, declared that no loss had taken place in any Scotch bank, chartered or unchartered, since 1825. They must have free trade in banking; they must leave every bank free from restriction, except that which no doubt would be thought necessary—a deposit sufficient to guard against ultimate loss. He would have only one bank of issue, and that should be under the control of the Government, and every other bank should be allowed to carry on its own trade as might be deemed advisable by the proprietor. He would ask the right hon. Baronet (Sir C. Wood) whether he were prepared to bring in a Bill to limit the number of bakers, butchers, or tailors in any one town? He held it to be trifling with the great interests of the country, and he did not think the House ought to submit to the chance of the recurrence of such crises as those from which they were just now emerging. They would again occur if this Bill were allowed to continue. The Directors of the Bank of England had, no doubt, a very difficult duty to perform, and he did not mean to cast any blame upon them; they had to protect the interests of their proprietors as well as those of the public, and Parliament ought to relieve them from their difficulties. Let them trade on their own capital, and not upon that of the public. As the matter now stood, they were in a false position between applying their capital to serve the trade of the country, and supplying the wants of the Government. The free-traders proposed that every man should be allowed to help himself, to go to the cheapest market and to sell in the dearest, without the interference of the Government in the matter of banking, which, of all others, had the most important effect upon the interests of the trade and commerce of the country. It was not the banker or the merchant, it was the workmen and artisans, who suffered most by their interference in these matters. A witness had declared only a few days ago on a Committee that was still sitting upstairs, that he could not describe the loss and injury that was inflicted upon the poorer classes by the Act of 1844. He thought the House ought in justice to support the Motion of the right hon. Gentleman, and to compel the Government to bring in a measure which should place the banking system upon a proper footing—which would prevent the recurrence of such a crisis as that under which the country was now suffering. In conclusion, the hon. Member thanked the House for their attention, and hoped that ere long they would coincide in the opinions he had expressed.


having for thirty-seven years been something like an amateur student on this question, thought he might be considered as having an average right to give his opinion upon it on the present occasion. He understood it had been settled that there should not he any attempt to get up a currency debate, and that there was no idea of mooting the question of an inconvertible currency. Neither of these points, therefore, would he attempt to touch. The question, as he understood it, then, was, whether the Government was or was not bound to keep an office for utter- ing Bank of England notes to accommodate traders who found themselves in need of assistance? It might be a rude comparison he was going to utter, but it struck him as a forcible one:—if any trader or many traders who found themselves in danger of appearing in that awful list which was published in the Gazette, conceived the possibility of taking 1s. a head from every passenger on the Great Northern Railway, and carried it out into practice, was it not clear that the assistance which they thus received was taken from the community? So was it, he was afraid, when a trader meditated obtaining assistance for the relief of his wants from the purse or chest in the Bank of England. That was the ground on which he was disposed to rest the success or non-success of this measure. The Act of 1844, if he understood it aright, was an Act for fending off, if he might use the word, all the demands of this kind which should pass beyond a certain rule considered by the Government to be one of discretion. The question was, whether that rule should be given up or not? He had heard it asserted that the Government had conceded the point, and that they had given up that rule. He doubted that statement, however, because he could see reasons besides an approbation of the law that might have guided them. It was somewhat difficult for a Government to resist the demands of men in distress. The present Government was not the only one that had been engaged in this practice. They were not responsible for its commencement, and therefore they were only to a partial extent responsible for its consequences. He had heard the words "free trade" and "monopoly" used in the course of the debate; but he wanted to know what that free trade was, and what that monopoly. There was a great want of clearness of ideas on this subject, for sometimes they were told it was one thing, and sometimes another. When free trade was advocated in that House, what were the arguments used by those who were called Protectionists? Whenever those Protectionists—if the term was lawful—attacked the rule of free trade, they were let down by the fact that all that they professed to give to one portion of the industrious classes was taken from another portion, so that the only result was that the consumers paid a higher price for the article, whatever it might be. Now, what part of this argument was applicable to the discounting of bills by the Bank of England? If Gentlemen on the other side saw any comparison between the two things, let them say so, and enlighten his darkness. In advocating free trade, his side of the House had been met with many taunts—they had been told they would next demand freedom of trade in the contents of other men's purses; and it was even said—he was not answerable for the applicability or decorousness of the saying—that they would demand free trade in females. They could only defend themselves from these taunts by demanding proof of how the argument for freedom of trade applied in the cases with which they were taunted; and they would demand the same proof now. If there was any applicability to the case of banking in these taunts, let it be proved, and he would yield his judgment to it. On the subject of Scotch banking, an hon. Gentleman said that 10,000l. was the only sum at issue. Now, the circulating medium of Scotland was stated at 3,000,000l; and he would ask whether that 3,000,000l. was to be placed to the account of the Scotch people, or carried off by their bankers? He should wish, like the hon. Member for Montrose, to see but one bank of issue, and to let the others confine themselves to what appeared to him to be the legitimate objects of banking. But the great question was, whether the Government were right in endeavouring to maintain those barriers that now existed against every man who, finding himself in difficulties, should think it right to apply to the public purse for help.


said, that he, like the hon. and gallant Member who had just sat down, (Colonel Thompson) was quite at a loss to understand what was meant by a free trade in banking; but he had now some hopes of his hon. Friend below, the Member for Montrose (Mr. Hume); he evidently had become wiser from experience, for he had stated that this country was subject to frequent crises of distress and panic; and he had truly said, that this was owing to our unsound and improper currency laws. The right hon. Gentleman in the chair might possibly recollect, as well as many hon. Members of that House, that in 1844, when the right hon. Baronet the Member for Tamworth introduced the Bill now complained of with all that pomp of circumstance which he so well knew how to assume, even when doubtful of the soundness of his proposals, he (Mr. Muntz) had then told him that he was confident he could never carry out the Bill, but that there was one satisfaction in the measure, which was that it tied up both the right hon. Baronet himself and the Bank of England, and for the future prevented those relaxations of the system which had been resorted to for many years, and which had prevented the 1819 Bill from being carried out and understood. In future times of pressure, the soundness or impracticability of the system must be proved. The House might judge of the mortification he therefore felt when, last year, at the moment such proof was at hand, the Government interfered, and suspended the Bill of 1844. No doubt by such interference they prevented a crash, and saved many from ruin; but he (Mr. Muntz) was confident that a greater crash, and more ruin, would be caused by the re-enactment of that Bill, at a future period, than had been averted by the late suspension of it. But the extraordinary manner in which the Government acted ought to be noticed. Their very letter to the Bank described the Bill as perfection itself, and required that it should be put in force again with as little delay as possible: it seemed difficult to understand, if it were so perfect, why it had been relaxed. He, however, thought that hon. Members must have very short memories, or they would recollect that we had had many panics before the Bill of 1844 was enacted. He might refer to 1839, 1837, 1825, and others. It was therefore clear that that Bill was not the cause of the present difficulties, but the Bill of 1819, which was not yet half carried out. Why the Bill of 1844 was stated by its father, Sir R. Peel, and by its godfather, Sir Charles Wood, to be the complement of the 1819 Bill, and to be introduced because the 1819 Bill would not work alone; it was therefore too much for the hon. Member for Sunderland (Mr. Hudson) to say that this debate should be confined to the Bill of 1844. Then it was said by Ministers that the law had not been infringed by their letter to the Bank. But this was untrue; for although the Bank had not in a legal sense infringed the law, it had virtually done so, as when the Bank was protected by the Government letter, they could, and did, reduce their reserve of notes two millions lower than they otherwise durst have done, which produced the desired effect and reaction. The fact, however, was, that the theory upon which the right hon. Baronet the Member for Tamworth and the Chancellor of the Exchequer based their measures, was unsound, and therefore no good result could arise from their proceedings. And what was their theory? Why, they said that they never could reduce the circulation of Bank of England paper below fourteen millions without producing a reaction, and therefore if that sum was issued on securities, and the rest against gold, the whole circulation of paper and gold was together of the same value as if it were all gold coin. Now he (Mr. Muntz) denied this in toto; and he believed that no man in that House would have the assurance to get up and affirm, that the gold coin in circulation being fifty to sixty millions, and the banknote circulation of the United Kingdom forty millions, the said joint circulation of paper and gold, being together one hundred millions, was of the same value as if it were all gold coin. If it were so, what was the advantage of having any paper? The only way to prove that it was of the same value would be to buy up the paper with gold, and thereby settle the dispute. But did the House know what had been the state of the circulation during the last 150 years? Why, from the establishment of the Bank of England till 1717, the notes in circulation had only reached two millions; in 1785 it had only increased during seventy years, to six millions; but in 1791 it was eleven millions; in 1795 it was thirteen millions; in 1796, sixteen millions; now, it was nearly forty millions—yet the same value of the coins and the same rate of the exchanges existed at every period he had named. Was not this proof enough that the coins and the circulation were of very different values? The truth was, that the circulation of metal and paper together had been depreciating for more than a hundred years, and there had been no standard of value; neither had there been more than a nominal convertibility, for whenever an attempt to convert was made, not twenty-five per cent could be effected without ruin, stagnation, and paralysis. That was a point of convertibility which really only regulated the quantity of paper in circulation, and that point or value of gold would not keep in circulation enough paper to support such a range of prices as was required to enable the country to pay its rents, taxes, and liabilities: the question which now wanted solving, therefore, was, what was the convertible value of paper with the precious, metals, which would enable us to keep in circulation that quantity of paper which was required for the prosperity of the country? It was clear to any one who looked minutely into the subject, that the circulation had been depreciated, as compared with the coins, upwards of thirty-three per cent, for a number of years, and therefore that the greater part of the debt and other liabilities had been contracted at such value. And how was it that such variation in value between the coins and the circulation caused the panics and ruin which we had repeatedly suffered from? Why, because the coins fixed the par of the exchanges, and thereby the selling prices of our manufactures in all other countries; such prices being lower than our taxes, rents, and liabilities would allow us to sell at without loss; and, therefore, when any circumstance arose which enabled our labourers to emancipate themselves from such loss, they raised their wages and prices above the price of their foreign competitors, and contracted the export trade; but the same circumstances increased the import trade, making a balance of payments against us which could only be paid in gold, and it needed then no bank screw, as it was called, to make money scarce; the natural effect was, that notes must go into the Bank to get the gold out, which of course reduced the circulation. And how did the reaction take place? Not by the legitimate course of trade, or the alteration of the exchanges, as was pretended, but because the pressure here reduced the value of Government securities and other property till foreigners were thereby induced to send gold here to buy them, and also because paper on England was at such discredit that no one would buy it, but would send gold instead. What had caused the late importations of gold? Certainly not improved exports, for trade had been constantly worse; and as to the discredit on drafts upon England, he (Mr. Muntz) need not refer to others for authority upon that subject, for he could assure the House that during the panic he had received letters from his correspondents in all parts of Europe, stating that the credit of English merchants and bankers was at such a low ebb, they could not, and would not, risk buying paper negotiable upon them, but that if he would draw upon them at ten days' date they would pay. He (Mr. Muntz) had heard it said in that House, during a late debate, that England was not in a disgraceful state; but he could fancy nothing more disgraceful for a commercial country than such a state of her merchants and bankers. He did not be- lieve that the present state of trade would long continue; money would be abundant for want of employment, and when men had forgotten their late troubles they would speculate again, as they had before, perhaps in railroads, although they had been said to be the cause of the late panic; how they were so he (Mr. Muntz) could not well understand, for nearly all they were constructed of was obtained at home. But it was said that the labourers consumed so many articles of importation that they thereby deranged the monetary system. Why, what did that prove but that the system would not allow of the people being properly remunerated and fed, and therefore must be altered? The truth was, that with free trade, and the present so-called standard of value, or point of convertibility, panics must constantly recur, and each one would be more injurious than its parent. The following night he had no doubt would show them that if revenue was reduced by unnatural legislation, it must be made up in another way. No doubt an increase of property-tax would be again resorted to, and perhaps other means also. It had long been evident to him (Mr. Muntz), that in that House the dishonesty of extracting money out of men's pockets was not determined by the quantity extracted, but by the plan upon which it was done. For example, if any alteration of the system was proposed which might in a slight degree reduce the income of the public creditor, or annuitant, the proposer was designated as a thief; but if three times the amount is extracted from them upon what is called a principle it was said to be justifiable. He (Mr. Muntz) could not learn that the fundholder had lent his money expecting to pay property-tax, under all its inquisitions, and vexations, or that the small annuitant had ever heard of such intention; but it not unfrequently happened that those most ready to do unjust things were prompt in making charges against others. That he was then speaking in advance of the House, he felt assured; and that because hon. Members did not generally come in contact or collision with those circumstances which enabled them to judge upon such subjects. But the time would come when they would understand the question, and then he (Mr. Muntz) would go minutely into it; when they found a reduction in revenue with an increase of taxation, an inability to pay the dividends, and a population unemployed, they would think seriously upon the subject; and when the Gentlemen opposite, from the effects of Continental prices of their agricultural produce, found their rents impaired, their land thrown out of cultivation, and their labourers in the overflowing workhouse, they would agree with him that a System which produced such results Could not he honourable or justifiable. He could assure the House, such was the state of the export trade that he had entirely lost the sale of not one or two articles, which he used formerly to export in large quantities, but he had lost ten such trades, and was losing more, although such articles were consumed in larger quantities than ever, but were made elsewhere than in England; and unless some steps were taken to remedy the evil, the export trade would become valueless. With respect to the Motion of the right hen. Gentleman, he would with pleasure vote with him for the repeal of the Act of 1844; not that he believed that such repeal would prevent future panics, but because he considered it childish and absurd to keep upon the Statute-book a law which could never be carried into effect by any Government.


said, the right hon. Gentleman who had brought the subject before the House had urged them, with great earnestness, not to allow themselves to be drawn from it into a general discussion of the currency question, and had entreated them to confine their attention to the definite and distinct propositions he laid before them. The course the debate had taken had, no doubt, convinced the right hon. Gentleman that there was a great deal of danger in his plan of proceeding; and the speech of the hon. Member who had just sat down must more especially have shown him how difficult it was to keep within the exact question at issue, and not to wander into a wide field of inquiry into which the right hon. Gentleman had no intention of entering. In the few words he should address to the House he should confine himself strictly to the proposal immediately submitted to the House, and would seek to offer some reasons why they should not assent to the course proposed for their adoption. It had been admitted universally by every hon. Member who spoke on the question, that it would be unwise to make a reversal of the decision of the House to appoint a Committee. ["No, no!"] Hon. Gentleman denied this; but almost everyone who had addressed the House in support of the Motion had had the candour to admit that it would be unwise to demand, not the mere suspension of the enactment till the Committee investigated the subject, but that it should not be called upon to pronounce the opinion that the present limitations and restrictions on the Bank to issue notes payable on demand should not continue. He considered that the Government, in moving for this Committee, had entered into an engagement to consider, maturely and fairly, the laws which now regulate banking in this country; and he, for one, was not so far prepared to prejudge the question as to pledge himself to the opinion that, after due inquiry, it might not be safe in some degree, and with certain restrictions, to relax the limitations placed upon the Bank of England. Holding the position he had the honour to fill, and connected as he was with the Government, he should think it wrong to prejudge a question which deserved such deep consideration; at the same time, he objected to the House pronouncing a decision on the subject after delegating the inquiry to a Committee. Such a course, without any change of the circumstances under which the Committee was appointed, would have no other effect than that of lowering the opinion of the country as to the wisdom of the House, and the value of their deliberations. The right hon. Gentleman who brought forward the question had admitted—and it had been forcibly shown by the right hon. Chancellor of the Exchequer—that if they looked to the circumstances which had occurred since the appointment of the Committee they would find anything but reason to alter the course they had determined to pursue. No one could affirm that there was anything in the present position of the Bank to inspire alarm, which did not exist when the Committee was appointed; on the contrary, the aspect of its affairs had improved, and it was more secure now than it had been then. It was quite true, as they had been told that night by an hon. Member, who was a Bank Director, they could not be sure this state of things might not alter; but when the hon. Gentleman, in order to point out good cause for apprehension, was obliged to go into questions of foreign policy and to enlarge upon the reasons which gave rise to his fears of disturbances in Europe, he saw no reason to join in the apprehensions of the hon. Gentleman, and could not believe that the hon. Gentleman would induce the House to depart from the de- termination to which it had so recently arrived. Some hon. Members said that the law, as it stood at present, was condemned by all, and especially by the Government, because they had suspended some of its provisions; and the hon. Member for Montrose had urged that argument against it. But he denied the soundness of the assertion; for in his mind it was quite different in an emergency and for a temporary purpose, to suspend the operations of an Act of Parliament, and to pronounce condemnation upon its principle. On matters of this kind, let them frame laws as they pleased, it was utterly impossible that they could guard against the occurrence of circumstances which might call for the interference of the officers of the Crown. It was not, therefore, a just argument to say that, because, under circumstances of the most extraordinary pressure, and at a time when a variety of circumstances combined to undermine the commercial and financial affairs of the country, they had modified its provisions—they had condemned it. As to what had been said by the hon. Gentleman during the present discussion, with respect to the recent commercial distress—a distress which, although the panic had passed away, was only to be removed slowly and gradually—he was sure he could not speak without feelings of the deepest sympathy for individuals, nor without the strongest sense of the distress of the country at large. They had heard from his hon. Friend the Member for South Lancashire (Mr. Brown), a statement of the causes which, in his opinion, had produced that distress, and in two of them he entirely agreed. In the first place, he believed the importation of corn had very much to do with it; and in the next place, he agreed with his hon. Friend in attributing a part of the distress—though not so much as his hon. Friend—to the absorption of money to pay for railways; but he could not concur with him in thinking that the Banking Bill had produced any part of that melancholy state of affairs. Something had been said of over-speculation and overtrading, and great blame had been thrown on those who had expressed the opinion that the rash speculations of particular merchants was one of the causes which had led to embarrassment and distress. One hon. Gentleman went so far as to say that he would not call a merchant who imported to a very large extent on the chance of the market a speculator; but surely it was impossible to deny that he was a speculator, and might be a rash speculator in his importations, as well as any one else in a different line. He should be surprised to hear any one acquainted with the mercantile transactions of the country deny that the importing trade had not carried on their operations in a rash and imprudent manner, extending them far beyond the capital at their command; or that over-speculation had not largely produced the distress which had recently prevailed. That expression of opinion was, however, he hoped, perfectly consistent with the most sincere sympathy for the honourable men who had become victims; but, at the same time, he thought it would be shutting their eyes to the real facts of the case if they did not say that a very widely-spread spirit of speculation had added to those difficulties they all deplored. Let them adopt whatever system of banking they pleased, it would be impossible to have such a one as would enable merchants to go to the Bank and get credit when they wanted it. Speculation could only work its own cure; and if by fictitious and artificial means they had administered food to that spirit, it would only have protracted the evil, and the crash would at last have been more severe, and the ruin more widespread. He hoped the House would not, upon the present occasion, adopt a course which appeared to him entirely inconsistent with that unanimous vote by which they had appointed a Committee to inquire into the whole matter. He was told that to appoint a Committee was a mere farce—a mere way of getting rid of the whole question. All he could say was, that no step, with respect to the banking and monetary affairs of this country, had ever been taken yet, without the House thinking it necessary that all the circumstances of the case should be sifted and investigated by a Committee. He believed that there was great wisdom in that course, and that the details of these things could be better examined by a Committee upstairs than by the whole House. He hoped the House would not now depart from that wise and prudent course, nor take the subject out of the hands of a Committee so recently appointed, and thus adopt a precipitate step which might lead to the most unfortunate result.


had only a few words to say in reply. The discussion had been almost exclusively upon one side of the House; but he believed the result would be in favour of the Motion he had had the honour to make. In all sects and parties there had been a growing feeling and conviction that the system established by the Act of 1844 was defective, and must be modified by new legislation. The only semblance of objection which had been brought against his Motion was, that there was a Committee now sitting, and that it was the general rule for the House not to judge of questions consigned to the deliberation of a Committee upstairs. Certainly he had never meant his Motion to constitute an exception to that rule; but the Committee had not under consideration all the topics embraced in the propositions he had submitted to the House. The object he had in view was, that the stringent and dangerous parts of the Act of 1844 should be suspended until the Committee could make its report, and Parliament pronounce definitively upon the question, with a view to prevent the recurrence of such evils as they had recently witnessed.

The First Resolution moved by the right hon. Gentleman was agreed to.

On the Second Resolution being put,

The House divided:—Ayes 122; Noes 163: Majority 41.

List of the AYES.
Anderson, A. Crawford, W. S.
Anstey, T. C. Davies, D. A. S.
Arbuthnott, hon. H. Deering, J.
Bagshaw, J. Disraeli, B.
Bailey, J. Dodd, G.
Bailey, J. jun. Duff, G. S.
Baldock, E. H. Duncan, G.
Bankes, G. Dundas, G.
Baring, T. Edwards, H.
Barrington, Visct. Ellice, E.
Bell, M. Farrer, J.
Bennett, P. Floyer, J.
Bentinck, Lord G. Forbes, W.
Blewitt, R. G. Fordyce, A. D.
Bouverie, E. P. Glyn, G. C.
Bremridge, R. Granby, Marq. of
Broadley, H. Greenall, G.
Broadwood, H. Greene, J.
Brown, W. Gregson, S.
Bruce, C. L. C. Grenfell, C. P.
Buck, L. W. Grenfell, C. W.
Buller, Sir J. Y. Gwyn, H.
Burghley, Lord Hall, Col.
Burrell, Sir C. M. Hamilton, G. A.
Caulfield, J. M. Hamilton, J. H.
Cayley, E. S. Harris, hon. Capt.
Cholmeley, Sir M. Hastie, A.
Christopher, R. A. Henley, J. W.
Codrington, Sir W. Herries, rt. hon. J. C.
Cole, hon. H. A. Hildyard, R. C.
Coles, H. B. Hildyard, T. B. T.
Compton, H. C. Hodgson, W. N.
Conolly, Col. Hood, Sir A.
Corbally, M. E. Hope, Sir J.
Cowan, C. Hope, H. T.
Hotham, Lord Perfect, R.
Hudson, G. Plumptre, J. P.
Hume, J. Renton, J. C.
Humphery, Ald. Rufford, F.
Ingestre, Visct. Sandars, G
Law, hon. C. E. Scholefield, W.
Lookhart, W. Scott, hon. F.
Long, W. Seeley, C.
M'Gregor, J. Sibthorp, Col.
Manners, Lord G. Smith, M. T.
Masterman, J. Smith, J. B.
Maunsell, T. P. Spooner, R.
Meux, Sir H. Stuart, J.
Miles, P. W. S. Sullivan, M.
Miles, W. Thompson, Ald.
Moody, C. A. Tollemache, J.
Morgan, O. Trelawny, J. S.
Morris, D. Trollope, Sir J.
Mowatt, F. Urquhart, D.
Muntz, G. F. Wawn, J. T.
Mure, Col. Westhead, J. P.
Neeld, J. Williams, J.
O'Brien, W. S. Williamson, Sir H.
O'Flaherty, A. Willoughby, Sir H.
Osborne, R.
Ossulston, Lord TELLERS.
Packe, C. W. Beresford, Maj.
Pattison, J. Newdegate, C. N.
List of the NOES.
Abdy, T. N. Drummond, H.
Adair, H. E. Duncuft, J.
Adair, R. A. S. Dundas, Adm.
Anson, hon. Col. Dunne, F. P.
Anson, Visct. Ebrington, Visct.
Armstrong, Sir A. Ellice, rt. hon. E.
Barkly, H. Elliot, hon. J. E.
Baring, rt. hon. F. T. Fitzwilliam, hon. G.
Bellew, R. M. Foley, J. H. H.
Berkeley, hon. H. F. Fox, R. M.
Birch, Sir T. B. Gardner, R.
Blake, M. J. Gibson, rt. hon. T. M.
Bowles, Adm. Cower, hon. F. L.
Bowring, Dr. Graham, rt. hon. Sir J.
Boyle, hon. Col. Greene, T.
Bramston, T. W. Grey, rt. hon. Sir G.
Brockman, E. D. Grosvenor, Lord R.
Brotherton, J. Hall, Sir B.
Bunbury, E. H. Hamilton, Lord C.
Busfeild, W. Hay, Lord J.
Campbell, hon. W. F. Hayes, Sir E.
Cardwell, E. Hayter, W. G.
Carter, J. B. Headlam, T. E.
Cavendish, hon. G. H. Heathcote, Sir W.
Charteris, hon. F. Heneage, G. H. W.
Chichester, Lord J. L. Henry, A.
Childers, J. W. Heywood, J.
Christy, S. Hindley, C.
Clay, J. Hodges, T. L.
Clay, Sir W. Hollond, R.
Clements, hon. C. S. Howard, hon. C. W. G.
Clerk, rt. hon. Sir G. Howard, hon. E. G. G.
Clifford, H. M. Hutt, W.
Cobden, R. Jackson, W.
Cochrane, A. D. R. W. B. Jervis, Sir J.
Colebrooke, Sir T. E. Jervis, J.
Corry, rt. hon. H. L. Keogh, W.
Cowper, hon. W. F. Keppel, hon. G. T.
Craig, W. G. Kershaw, J.
Currie, R. King, hon. P. J. L.
Davie, Sir H. R. F. Labouchere, rt. hon. H.
Deedes, W. Lascelles, hon. W. S.
Devereux, J. T. Lemon, Sir C.
Lewis, rt. hon. Sir T. F. Sheil, rt. hon. R. L.
Lewis, G. C. Shelburne, Earl of
Lindsay, hon. Col. Sheridan, R. B.
Locke, J. Simeon, J.
Lockhart, A. E. Slaney, R. A.
M'Naghten, Sir E. Smith, J. A.
Mahon, The O'Gorman Somerville, rt. hn. Sir W.
Marshall, J. G. Spearman, H. J.
Marshall, W. Stanley, hon. E. J.
Martin, C. W. Stansfield, W. R. C.
Martin, S. Strutt, rt. hon. E.
Matheson, Col. Stuart, Lord D.
Maule, rt. hon. F. Stuart, H.
Mitchell, T. A. Talbot, J. H.
Monsell, W. Talfourd, Serj.
Moore, G. H. Tancred, H. W.
Morpeth, Visct. Tenison, E. K.
Mostyn, hon. E. M. L. Thicknesse, R. A.
Nugent, Sir P. Thompson, Col.
O'Brien, T. Thornely, T.
O'Connell, M. J. Towneley, J.
Ord, W. Townshend, Capt.
Paget, Lord A. Traill, G.
Paget, Lord C. Turner, G. J.
Pakington, Sir J. Vane, Lord H.
Palmerston, Visct. Verney, Sir H.
Parker, J. Walmsley, Sir J.
Pearson, C. Ward, H. G.
Peel, rt. hon. Sir R. Watkins, Col. L.
Pigott, F. West, F. R.
Pilkington, J. Willcox, B. M.
Power, Dr. Wilson, M.
Raphael, A. Wood, rt. hon. Sir C.
Ricardo, O. Wood, W. P.
Rich, H. Wrightson, W. B.
Romilly, J. Wyld, J.
Rutherfurd, A. Wyvill, M.
Sadleir, J. TELLERS.
Seymer, H. K. Tufnell, H.
Seymour, Lord Hill, Lord M.

House adjourned at a quarter before Twelve o'clock.