HC Deb 11 December 1857 vol 148 cc580-672

The House must, I think, consider itself indebted to the right hon. Gentleman opposite (Mr. Disraeli) for having suggested an arrangement by which the discussion on the Indemnity Bill has been disengaged from the question which is now about to occupy its attention. Undoubtedly, it has been for the convenience of the House that the former subject should have been considered without reference to this further question; and I may, perhaps, be permitted, now that the Indemnity Bill has been read a third time, and been sent to the other House of Parliament, to express my sense of the fair and candid treatment which that question has received on both sides of the House. Gentlemen in all parts of the House have, as it seems to me, shown a disposition to avoid all captious criticism, to treat the question on its merits, and to make due allowance for the difficult position of the Government, called upon to decide on a matter which necessarily involved prompt and immediate action. Nothing can more encourage responsible Ministers in the proper performance of their duties than a consciousness that their conduct will he viewed by equitable and impartial judges. Having adverted to the Indemnity Bill, I may perhaps be allowed to call the attention of the House to the fact that, although I did not venture to give any positive assurance that the commercial crisis had reached its termination, nevertheless I expressed confidence that the Bank of England was steadily recovering its position. In support of that statement I will mention what I am informed was the state of the Bank yesterday evening. On the 11th of November the bullion in the Bank was £6,666,000. On the 13th, the day the letter was issued, it was £6,524,000. Last night I understand the amount of bullion was £8,200,000. The figures are not precisely accurate, but for all practical purposes it may be taken to be correct, and that the amount of bullion in the Bank last night was £8,200,000. On the 11th of November the reserve of the Bank, including both notes and coin, was £1,462,000. On the 12th of November it was £581,000. Last night it was £4,680,000. Therefore, if we deduct £2,000,000 of over-issues, there still remains in reserve £2,080,000, a sum by which it is possible to work the banking department. The Motion which I am now about to make is for the re-appointment of the Committee of last Session, and I will again call the attention of the House to the fact that the Committee, after concluding the exami- nation of evidence last Session, agreed unanimously to recommend its re-appointment in the present Session. These were the words of the Resolution:— Your Committee have agreed to report to the House the evidence which they have received, and, as their investigation of the subject referred to them is still incomplete, they beg leave to recommend that a Select Committee be appointed to resume the inquiry in the ensuing Session of Parliament. My right hon. Friend (Mr. Gladstone) and the right hon. Gentleman opposite (Mr. Disraeli) were both members of that Committee, and they did not object at the time to that Resolution. The question, then, to be considered to-night is whether circumstances have since arisen which render it inexpedient for the House to adopt the recommendation of the Committee. My right hon. Friend (Mr. Gladstone) on a previous occasion spoke with some ridicule, or at least with some want of appreciation, of the evidence taken by the Committee of last Session, and seemed to doubt whether any advantage would accrue from a re-appointment of the Committee to inquire into the question of the currency. Having been a Member of that Committee last Session, I must be permitted briefly to vindicate its proceedings. I cannot see that the evidence taken is in any degree inferior to the evidence taken by similar Committees on former occasions. Gentlemen of very great eminence, both from their position and from their experience and acquirements, were examined. We examined my hon. Friend the Member for Southampton (Mr. Weguelin), formerly Governor, now a Director of the Bank. We examined the present Governor and Deputy Governor. We examined Mr. Hubbard, a very able and intelligent witness, also a Bank Director. We examined Mr. Norman, whose character, I am sure, I need not eulogize. We examined Lord Overstone, whose authority stands so high before all Committees on this subject; and we also received the evidence of Mr. New-march, a writer of ability, who was associated with Mr. Tooke in the completion of his work "On Prices," and who represents the school of opinions to which Mr. Tooke belongs. We also examined Mr. John Mill, whose merits and ability as an economist need no encomium from me. I think that list of witnesses exonerates the Committee from the charge of hav- ing laid worthless evidence on the table of the House. I do not mean to say that my right hon. Friend (Mr. Gladstone) meant to treat these witnesses with disrespect in the allusion he made to the evidence; hut my right hon. Friend spoke of the evidence as being the result of long leading questions put to the witnesses. Now, I cannot see that the practice of putting leading questions has interfered much with the value of the evidence taken by the Committee. It very often happens in Committees that Gentlemen, wishing to elicit an opinion from a witness, are obliged to put long questions. It is not like examinations in a court of justice, where the object is to extract matters of fact; but in order to carry on an argument between the witness and the Committee, it is sometimes necessary to put questions of a rather inconvenient length. I am not aware, however, that the Committee of last Session can be justly charged with an abuse of that practice. I must maintain, therefore, with great, deference to my right hon. Friend's character of that Committee, that it did materially promote the understanding of the subject which was referred to its investigation, and that those gentlemen who wish to understand the present position of the currency question with reference to the Act of 1844 will derive, as I confess I have myself derived, great instruction from the opinions and the information of the witnesses examined before it.

Sir, I now come to the Amendment which is to be moved by the right hon. Gentleman the Member for Buckinghamshire. In order to see what would be the effect of that Amendment, I must call the attention of the House to the course which the Committee actually pursued. What the Committee did in the last Session was to examine into the general operation of the Act of 1844 with reference to the Bank of England. It confined itself to the question of the issues of the Bank of England alone, and the law as affecting the limitation of those issues. That part of the inquiry appears to me to have been completed by the Committee. What I understand the Committee to have intended to do, if reappointed, was to inquire into the country issues in England, and also into the banking system of Scotland and Ireland; because the Acts referred to that Committee were not only the Act of 1844, but also the Acts of 1845 with respect to Scotland and Ireland. Therefore, if the commercial crisis had not occurred, the Committee, I apprehend, when re-appointed, would have treated the question of the Bank of England as disposed of, and would have taken evidence upon the English country issues, and also upon the Scotch and Irish issues, and then they might have agreed to a Report. But how does the Amendment of the right hon. Gentleman affect this state of affairs? He proposes, as an Amendment to my Motion—which would, of course, get rid of it altogether—to resolve "that, in the opinion of this House, no further inquiry is necessary into the operation of the Bank Act of 1844." If the commercial crisis had not occurred I should have been prepared to assent to that Resolution, for I do not think that any further inquiry is necessary into the operation of the Act of 1844 so far as the Bank of England is concerned; and if he would have inserted the words "with the exception of the question of the country issues," I should not have objected to his Resolution. But how does the matter stand? The right hon. Gentleman says that no further inquiry is needed; but is the Committee to be precluded from reporting upon the operation of the Act of 1844? It has collected very valuable evidence in reference to the Act of 1844, but has not hitherto even considered any Resolution founded upon it. As I understand it, the effect of this Resolution would be to preclude the Committee from coming to any Resolution upon the evidence taken last Session with respect to the Bank of England, and it would also preclude them from taking evidence with respect to the English country banks of issue, and the Scotch and Irish banks. Upon the latter point the right hon. Gentleman is altogether silent. Under these circumstances, I confess it appears to me that the Amendment altogether fails to meet the exigencies of the ease. It renders the labours of the Committee of last Session comparatively useless, it stops an inquiry at present incomplete, and it prevents any Resolution being founded on the evidence already taken. But, Sir, we do not stand now as we expected to stand at the end of last Session. Since the Resolution of the Committee was agreed to we have had a commercial crisis, and it is, I think, a fair subject for the con- sideration of a Committee how far the general operation of the Act of 1844 has received any light from the events of last month. At all events, Parliament might wish to institute an inquiry into the causes of the commercial distress, and to see whether any connection can be traced between the operation of those causes and the Act of 1844. It is on that account that I have proposed to move that it be an instruction to the Committee "to inquire into the causes of the recent commercial distress, and to investigate how far it has been affected by the laws for regulating the issue of bank-notes payable on demand." By adopting this course the Committee, if it pursued the inquiry of last Session, in accordance with the views of the Committee of last Session, would abstain from any general inquiry into the operation of the Act as regards the Bank of England; it would take any additional evidence requisite in consequence of the commercial crisis, and it would also inquire into the subject of the English country banks of issue, and into the operation of the Scotch and Irish Acts. In that way, as it appears to me, a complete and satisfactory inquiry would be obtained.

But, Sir, it is by no means true, that no light has been cast on the operation of this Act in the course of years, and that we are able, with the evidence taken by previous Committees, to form a complete judgment on our present system of banking. I would only direct the attention of the House to a fact well known to all persons who are at all acquainted with this class of subjects—namely, the great expansion which the system of holding money "on call" has received within the last few years. It is undoubtedly, to a great extent, to the abuse of that system—which I believe is in the main a wholesome and beneficial system, tending to collect together and to turn to good account the scattered resources of the country, but, nevertheless, eminently liable to abuse, and containing within it elements of danger—that many of the evils of the recent crisis may be attributed. It is the system of giving interest upon bankers' deposits—formerly almost unknown in this country, but for many years generally practised in Scotland—which has made a great practical change in the working of our banking system. Every one must see that there is a great difference between deposits placed with a banker for the sake of safe custody and the convenience of drawing where the depositor keeps only the smallest sum which is sufficient for ordinary payments, and where he draws it out in small sums, as was formerly the case in England,—and the deposits which are almost in the nature of investments, where the depositor receives a high rate of interest, where he seeks to augment instead of to diminish his deposit, and where (particularly if he is a banker) he has occasion to draw out large sums at the shortest possible notice. The difference between the two is manifestly great, and it is not dependent on the law, but it has a great effect on our banking system. With reference to this subject I will take the liberty of directing the attention of the House to a passage in a letter from Mr. Cotton, addressed to me in October, 1856—more than a year ago—which is printed in the Appendix to the Report of the Bank Committee, and which, I think, shows some foresight as to the operation of this system. Mr. Cotton says: The system of banking in Scotland which has lately been introduced into London—namely, to allow interest on deposits at call, or on short notices—has given, and will give, rise to serious inconvenience, as the depositors!, in the event of a monetary crisis, will demand payment when they would not sell their own securities. This, I think, shows a foresight and a consciousness on the part of Mr. Cotton, of what was likely to be the effect of this system.

Sir, the question which was in fact referred to the Committee of last Session, and which was to a great extent exhausted by them in their inquiries, was that to which my right hon. Friend the Member for the University of Oxford adverted the other night when he spoke of the policy of developing the Act of 1844. There can be no doubt that Sir Robert Peel, when he introduced that Act, had a sanguine expectation that before the time came for renewing it the provisions which he had embodied in it for the extinction of the country bank issues would have taken effect, and that over the whole of England there would only be Bank of England notes in circulation. There are some words in a clause of the Act which seem to me to point clearly to the expectation that before the year 1854 it was not impossible that all the country bank issues of England should cease. These are the words of the 25th section of the Act:— And be it enacted that all the compositions payable to the several bankers mentioned in the schedule hereto marked (C), and such other bankers as shall agree with the said Governor and Company to discontinue the issue of their own bank-notes as aforesaid, shall, if not previously determined by the act of such bankers as herein before provided, cease and determine on the first day of August, 1856, or on any earlier day on which Parliament may prohibit the issue of bank-notes. These words of the Act clearly show that the entire prohibition of the issue of bank-notes by private banks of England was in the contemplation of its author. The plan which Sir Robert Peel must be considered to have contemplated was that of a single bank of issue for England—that was unquestionably within his immediate contemplation. How far he looked to an entire extinction of the Scotch and Irish banks of issue is less certain; but we may consider it as not improbable that he and others who were the promoters of that Act looked as a probable event to the existence of a single bank of issue for the United Kingdom. This was one of the questions investigated by the Committee of last Session, and I will shortly state to the House some of the opinions given by very competent witnesses upon it. My hon. Friend the Member for Southampton (Mr. Weguelin), who was lately Governor of the Bank, disapproved of the compulsory extinction of the country banks of issue, and thought that there was no great practical evil in their issues, except that they were not made on securities. Mr. New march was of opinion that the country issues ought not to be discontinued. Mr. Hubbard thought that the right of issue of the English country banks should be bought up,—that is to say, that they should be extinguished by law, but that the bankers should be compensated for the loss of their right of issue. Mr. Norman, a witness of great authority, also disapproved of interference with the private issues, and I will take the liberty, as his opinion is given very clearly, of reading it to the House. He is asked— What is your own view at present? having the advantage of experience, and having seen what has actually taken place since 1844, do you think it desirable to make any change with regard to the issues of the country banks in England, or of the Irish and Scotch banks?—I think, speaking generally, they have worked far more satisfactorily since 1844 than they ever had done in any previous period during my recollection, or in any previous period that I have heard of; and, considering the habits and feelings of the country, and the interests involved, I doubt whether it would be expedient to attempt by any direct legislative action to interfere further with private issues. I must add, however, this—that, although the action of private issues has been improved, still there have been failures among private issuers, even recently; therefore, they are not altogether in a perfectly satisfactory state. Do you attribute that improvement to the limit which has been imposed by law on their issues?—I do mainly. Therefore, the effect of Mr. Norman's opinion is that it is not desirable to interfere with the private issues. Lord Overstone also gave his opinion on this question. He approved of the gradual absorption of the country issues, but not by means of any strong measures for their suppression, or for the suppression of the Scotch and Irish banks of issue. With regard to the question of requiring security for the country issues, he entertained a doubt as to the expediency of any such provision. Those are the opinions of some of the most competent witnesses on the question of the English country banks of issue, and of the Irish and Scotch banks of issue, and they do not point to the expediency at present of doing what my right hon. Friend called "developing the policy of the Act of 1844," by converting the Bank of England into the sole bank of issue for the United Kingdom.

There is another point which has been raised in connection with this part of the subject—namely, that if that central bank be not the Bank of England it should be a Government bank, that the Government should assume to itself the right of issuing paper over the whole of the United Kingdom, and should prohibit the issues of paper either by the Bank of England or the Bank of Ireland, or any other chartered or private bank. It is, I think, undoubted that when the Act of 1844 was under consideration some plan of this sort was in contemplation, although Sir Robert Peel did not think it desirable at that time to attempt its introduction. A letter from Mr. Goulburn to the Governor and Deputy Governor of the Bank of England, dated 20th of April, 1844, contains this passage:— It appears highly desirable that any new arrangement should be founded on the basis of an entire separation of the business of the issue of notes from that of banking. This measure might be effected by the establishment of a public department for the issue of notes, independent altogether of the Bank. These words clearly contemplate some public establishment either having a Parliamentary organization, or being directly subject to the Crown—a public department unconnected with the Bank. He goes on to say:— But Her Majesty's Government are willing in the first instance to consider whether this can be effected by a division of the Bank into two distinct and separate departments, to conduct exclusively, one the business of issue, the other that of banking. This shows that the notion of a Government bank of issue for the entire kingdom was considered when the Act of 1844 was prepared, and therefore we may hold it as part of the development of that Act to place the currency of the country on that footing. But the first question which naturally arises on that proposition is, "By what means are the Government to supply the country with the paper currency? is it merely to have a central office in London, and by the payments of dividends to contractors and other modes by which the Government makes payments, to trust to the diffusion and dissemination of notes; or is it to keep up an agency of branch banks all over England, Ireland, and Scotland?" If the latter plan were adopted, I question whether such a system would be found to come up to the views of economy entertained by some of the supporters of the Act of 1844. On the other hand, if no such system were followed, it might be doubted whether serious inconvenience would not arise from the action of such a bank of issue wholly unconnected with an establishment carrying on the ordinary operations of banking. On this question Lord Overstone has expressed an opinion in the Committee of last Session which will, I am sure, receive the attention of the House. The objection to putting it (the issue of notes) more avowedly and distinctly in the hands of the Government than it is at present, I think, is of this nature, that so long as there exists in the public mind an impression that pressure upon the trading world is associated with the management of the monetary system of the country, it might be very inconvenient to place that monetary system more avowedly in the hands of the Government; and I must also observe that I think the interposition of some responsible body between the Government and the management of paper issues might be exceedingly convenient in strengthening and assisting the Government to resist pressure which might come upon it at certain periods to do that which it ought not to do. We may therefore consider the result of Lord Overstone's opinion, as delivered to the Committee of last Session, to be unfavourable to the assumption by Government of the exclusive right of making paper issues. Another most experienced Bank Director entered a little more fully into this question, and showed rather more in detail some of the consequences which that system would give rise to. This is Mr. Hubbard's description of the consequences which would ensue on an entire separation of the functions of issue from those of banking. He says:— The larger proportion of the public dividends are now paid by a mere stroke of the pen; the amount of dividends due to each banker, not only for himself, but for all his constituents, is carried in one line to his credit, and in a few hours £3,000,000 or £4,000,000 of public dividends are in that way disposed of, and transferred from the audit roll to the different corporations and banks who are entitled to receive them; so that the economy of labour and avoidance of risk are great and marked advantages of these two functions being performed by the same corporation. Still in their essence they are, of course, distinct functions. In fact, at present the dividends are paid with a very small use of bank-notes?—A very small use. But still it is conceivable that the Government might, for the purpose of making issues, pay dividends in notes?—Certainly; it is one of the most obvious means of issuing notes. It might pay salaries, and contractors, and others in notes, might it not?—No doubt it might, and that would be a means by which those notes would be periodically thrown into circulation; and, on the other hand, the payment of the public revenue through the Customs and Excise would be a means of bringing those notes back again, so that there would be a gradual passing out and in of notes through the medium of those two operations. But I may observe that if the Government were to attempt to discharge those two operations in its own person the amount of currency required would be enormously larger than it is now. It is owing to the circumstance of the Bank having as customers the various large dividend holders that it is enabled to perform all those operations with so small an expenditure of currency. If the Government were to establish a bank of issue of its own that would have the effect of counteracting some of the most effectual instruments for economizing the currency now in use?—It would occasion a very much larger amount of currency to be required. There would be a greater amount of notes in circulation?—A much larger amount of notes in circulation at particular times, and it would be subject to very considerable variations, whereas the operations of the Bank of England have the effect of reducing, by its expedients, the variations in the amount of notes. Although they have to pay £6,000,000 at each of the four quarters, the average variation is very little more than £1,000,000. These answers must, I think, satisfy the House that a great economy of the currency is effected by combining in the Bank of England the operations and issues of the Bank with the payment of dividends; whereas, if the Government were to assume to itself the exclusive function of issuing, it would be forced to keep a larger amount of paper in circulation, inasmuch as the Government notes, no less than the notes of the Bank of England, would be required to be supported by a reserve of bullion; and the cost to the public of increasing the reserve of bullion would more than compensate any economy which might be derived from any other source. Therefore, notwithstanding my right hon. Friend's remark about the antiquated relations of the Bank of England with the Government, I confess that I see great advantages in the present state of things with respect to the management of our currency, and I doubt whether any economy to the public or any security to the holders of notes would arise from an entire subversion of the existing system, from a prohibition of the issue of notes by the Bank of England, by private banks in England, by the banks in Ireland and Scotland, and from the assumption of an exclusive right of issue on the part of the Government.

There is a point as to which it seems to me there is some misunderstanding in the public mind, and to which I will call the attention of the House. It is often used as an argument in favour of this measure that the right of making coin is one of the Regalia Coronœ, and that the power of issuing paper money bears a close analogy to it, and ought, therefore, to be exclusively exercised by the State. What is the fact with regard to the issue of coin? There is no doubt that the right of issuing coin is a part of the prerogative of the Crown; but the Crown is in fact nothing but a manufacturer of coin. The Crown never purchases bullion, and never takes any step for supplying the public with coin. Bullion is brought to the Bank of England, the Bank of England sends it to the Mint to be coined, the Mint coins it and returns it to the Bank of England, the Bank issues it to its customers in the form of sovereigns or any other denomination of coin. The entire business of the receipt of bullion and the issue of coin is managed by the Bank of England, as much as is the issue of paper, and in truth the only function with respect to the coinage which the Crown performs is that of impressing the die upon the bullion which is sent to the Mint to be coined, that bullion being in fact the property of the Bank or of private individuals. Therefore, those who imagine that the country would receive great advantages from a Government bank for the issue of paper because the exclusive right of making coin is vested in the State will find, when the case comes to be examined, that their idea is altogether fallacious.

Looking, therefore, to the present state of our paper currency, to the issues of the Bank of England, to the issues of the English private banks, and to the issues of banks in Ireland and Scotland, I cannot see that there is anything which, according to our own observation of the facts, or the opinion of competent witnesses, calls upon us to resort to any compulsory measures for a suppression of all issues except those of the Bank of England—to vest that right exclusively in the Bank of England—or still more to abolish the right of issue by the Bank of England itself, and invest that right in the Crown. Therefore I am not prepared, whatever may be the result of this Motion, either to submit to the House a measure for the development of the Act of 1844 in the manner which I have described, or to assent to the alteration if it were proposed by others.

But then the right hon. Gentleman (Mr. Disraeli), if I rightly catch the spirit of his Motion, says—" Inquiry is exhausted; you have done everything that Committees can accomplish; you have now arrived at the time for legislation; the Government is bound to have a policy; we call upon you to state what is your policy with respect to the currency, and to bring forward some new and extensive measure of legislation founded upon that policy, which you are bound to declare." Well, in answer to that appeal I would in the first place remark that, by common consent, this late commercial crisis out of which, as I understand, this demand upon the Government has grown, has been caused, not by any derangement of the currency, but by a derangement of capital and of credit. If that be so—if the present crisis has not grown out of any defects in our currency laws—why upon the occurrence of this crisis is this demand made upon the Government? Why are we now called upon peculiarly to legislate on our currency laws? Why is it that at this moment we are told to declare a currency policy? I confess that I am totally unable to see why there is any exigency for such a profession of faith on the part of the Government on this 11th day of December which did not exist at the end of last Session. Well, but even if we admitted that the late commercial crisis imposed upon the Government the duty of declaring a policy, I could not admit that it affords any reason for an immediate alteration of the Act of 1844. I can comprehend the arguments of those who object to the Act of 1844 upon general grounds. I understand the arguments of Mr. New-march and Mr. Tooke, who say—"We rely upon the convertibility of the note, not indeed as a security against the insolvency of a bank, but against over-issues of its paper." No doubt there are arguments of considerable weight to be urged in support of that view; and, in fact, unless such arguments could be urged, I need scarcely say that men of such eminence as Mr. Tooke and others who agree with him would not adhere so stedfastly to it. They are not men to be deluded by shallow sophisms, or to found a theory upon a very narrow induction of facts. There is something undoubtedly to be advanced by those who say we are to carry the principle of free trade to its fullest extent, and to have a free currency—we rely exclusively upon the convertibility of the note, and we will not ask for any limitation made by an Act of Parliament. I do not myself agree in that view; but I mention it as a view which is entertained by persons entitled to the highest respect from their ability and knowledge of the subject. That view is capable of being supported by arguments of considerable weight; but such arguments are in no way applicable to a commercial crisis, nor are they in any degree strengthened by the occurrence of a commercial crisis. Their view goes to the very root and foundation of the Act of 1844. It is an objection, not to the failure of that Act under circumstances of extraordinary pressure, but to its unsoundness in times of ordinary operation. Therefore I cannot for a moment admit that the occurrence of an extraordinary crisis, in which all the ordinary laws with regard to the currency must be considered as suspended, affords any ground to call upon us to legislate upon the subject of the currency. Take, for instance, the obvious case of the policy of the Habeas Corpus Act, or protection against arbitrary imprisonment. We all know there have been periods of great disturbance—times when there has existed a state of things approaching to anarchy, in which the greatest sticklers for constitutional forms would admit that the suspension of the Habeas Corpus Act was a less evil than its enforcement. But I will refer to a case of the present day, about which, no doubt, Gentlemen in this House will be divided. I mean the suspension of the freedom of the press in India. I am not now going to argue that question, but everybody will see that there may conceivably be reasons to justify the measure of Lord Canning during the existence of a military mutiny that has nearly become a general revolt, which might not in the smallest degree justify such a step in the ordinary state of India. It is therefore impossible to allow that, because we have passed through a commercial crisis—because that commercial crisis may have rendered it necessary to suspend the Act of 1844—that circumstance affords any ground for the appeal made by the right hon. Gentleman to the Government to bring forward new legislation on the subject of the currency. There appears to me to be an excessive disposition to expect benefit from legislation at a period of commercial crisis; whereas there is no time, in my opinion, when it is more incumbent on a prudent Legislature to be upon their guard in respect to legislation on commercial matters than at a moment of that sort. During a commercial crisis the Executive Government may perhaps be able to do something; but I believe it will in general be found that the Legislature is comparatively powerless, and that it must wait the return of a more normal state of things before it can apply any remedies with a prospect of effect. No error in legislation, it seems to me, can be greater than that of supposing that it is in the power of Parliament to devise some sudden panacea for the evils engendered by commercial discredit, or that such a period as that which we have just passed through constitutes any ground for calling upon the Government to come forward with some code of laws to regulate our currency and place it upon a new foundation. Least of all can I admit that that demand is in any way justified when no distinct and precise proposition is submitted to the House, and when a mere vague and general appeal is made to the Executive, unaccompanied by any statement of the remedies which it might be expedient to adopt.

Supposing that we descend from these lofty considerations, and that, according to the phrase of the Scotch lawyers, we condescend upon particulars, it will naturally occur to the House to inquire what specific alterations of the law would suggest themselves for consideration at the present time, independently of that other change of system which I have described for the development of the Act of 1844. One question is whether there should be a relaxing power engrafted upon the Act, to be called into activity at moments of commercial crisis. The plan which seems to have been ultimately acquiesced in after the debates of 1847 was that the matter should be left to the discretion of the Executive Government, to be exercised in cases of emergency. Now, the power of relaxing the legislative limit might either be vested in the Executive Government, or, as has also been suggested, in the Directors of the Bank of England. As to the latter alternative it really seems to me that to impose certain restrictions upon the Bank of England and at the same time to give them the power of dispensing with those restrictions, is almost equivalent to making no law at all. Therefore if there is to be a relaxing power, we are driven, I think, by the necessity of the case to vest it in the Executive Government. The course recommended by the Committee of the House of Lords which reported on this subject in 1848, after the inquiry consequent upon the commercial distress of the previous year, was described in these words:— To leave these cases when they do arise to be dealt with by the irregular exercise of the mere authority of the Crown, and its advisers, setting aside 'once in five or six years,' or even at periods more remote, the express provisions of a distinct statute, appears wholly inconsistent with that fixity and order which it is or ought to be the object of all law to secure. The Committee are of opinion that the principle on which the Act of 1844 should be amended is the introduction of a discretionary relaxing power; such power, in whomsoever vested, to be exercised only during the existence of a favourable foreign exchange. Such was the conclusion of the Committee of the Upper House. The Committee of the House of Commons came to a directly opposite conclusion. They say:— Your Committee have had under their consideration whether it is advisable that powers should be conferred by law upon the Government to enable them to meet the occurrence of any circumstances which may call for extraordinary interference; but they have come to the conclusion that, looking to the impossibility of foreseeing what the precise character of the circumstances may be, and also what may be the measure best calculated to meet them, it is more expedient to leave to those with whom the responsibility of the Government may rest at the time to adopt such measures as may appear to them best suited for the. emergency. I will now trouble the House with the opinions of two very eminent witnesses on this subject. The one is Mr. Hub-bard, who, when examined before the Select Committee on the Bank Acts in June last, gave the following evidence:— At present it is the established practice of the Government not in any way to interfere to control the discretion of the Directors with regard to the management of the Bank?—Not at all. Assuming that this is the rule, and also assuming that it is conceivable that some extraordinary circumstances might arise in which it might be desirable for the Government to release the Bank from the restrictions that are imposed upon it by the Act of 1844, would you prefer that the Government should interfere upon their own responsibility, as they did in 1847, or that the power of interfering in certain cases should be conferred upon them by Act of Parliament?—I think that to introduce any provision to meet a contingency would be highly undesirable, because it would have the effect of detracting from the moral influence which the Bank Act now has in enforcing the prudent conduct of all banking and commercial operations. Therefore with respect to the question of power being given to the Government to interfere in extraordinary cases, you would rather that the law should remain in its present state?—If any events were to occur, from whatever cause, which suspended the whole action of credit throughout the country, the Ministers of the day would, no doubt, hold it to be their duty to apply some immediate and powerful remedy; but I think it undesirable to enter upon the contemplation of events which in the ordinary course of things are not likely to occur, and the entertaining of which can only, I think, be detrimental to the proper consideration of the Bank itself. Does it not appear to you that such a crisis, if it ever were to occur, would be of so extraordinary a nature that it almost lies out of the domain of the law to provide for it?—Exactly so. Therefore Mr. Hubbard's opinion is in favour of leaving the law in its present state. The next witness whom I shall quote is Lord Overstone—but I am afraid that I am wearying the House with extracts. ["No, no!"] In the evidence given by that high authority before the Committee of the House of Lords in 1848 he is asked:— Assuming that the Act of 1844 is to continue to be the law of the land, and assuming that it is necessary that a discretion should from time to time be exercised, under possible circumstances, to suspend the action of that law, in what way are you of opinion that that discretion can be most safely lodged, with the view to ensure as little as possible a departure from this statute? Lord Overstone replies;— I think it important to render a recourse to the suspending power extremely difficult, and such as will be resorted to only under the last and most extreme necessity. I think that by leaving the Government to do it upon its own responsibility, and as a violation of an existing Act of Parliament, we obtain a better protection against too easy and ready an exercise of the power than by lodging the discretion with any other parties. At what period of pressure do things become not amenable to principle?—When the actual conduct of parties becomes such that you cannot bring it under the test of any ordinary principle. When people act not from any reasonable motive, but under the blind influence of panic, I consider their conduct as not amenable to principle. This last answer marks with tolerable distinctness the circumstances under which the noble Lord thinks the Act of 1844 ought to be departed from. Lord Overstone is next asked:— Do not you think that if the discretion is only to be exercised under circumstances so extraordinary, it is almost impossible to anticipate them by legislation?—The circumstances under which it would be necessary to exercise the discretion cannot be defined beforehand. There is also this difficulty—the very knowledge that such a measure may be resorted to tends to cheek the introduction of the natural and proper correctives. Therefore, though you cannot altogether get over the difficulty, I think it is obvious that the true policy is to do nothing that shall in any way whatever strengthen the feeling in the public mind that under pressure they will have this relaxation; for in proportion as they anticipate it, in the same degree they will abstain from the proper and natural correctives; and to whatever degree they abstain from resorting to those, in the same degree the ultimate pressure will be augmented. These opinions are in favour of not interfering with the existing law. Now perhaps, I may be permitted shortly to express my own opinions, intimated as they have been on a previous occasion to the House. I confess that, looking at the precedent of 1847, and having regard also to the manner in which this House has agreed to the Indemnity Bill lately passed, I do not believe that if any commercial crisis should hereafter occur any great practical difference will exist in the position of a Government between their view of the effect of these two precedents and the conduct which they would pursue if they had legislative authority to suspend the Act, but were called upon to assemble Parliament within a fortnight or three weeks after exercising that authority. If the suspending power were, as it ought to be, treated as one proper to be exercised only on extraordinary occasions, my belief is that the practical difference between the two states of things would not be very important. My inclination would, therefore, be to let matters rest as they do at present. At the same time if it were the general opinion of Parliament that it is an unconstitutional exercise of power on the part of the Executive to suspend the law, and afterwards to come for an indemnity—although I confess it seems to me that the passing of an Indemnity Bill condones whatever constitutional offence may have been committed—if that view should prevail, I should feel no insuperable objection to the adoption of such a course. At the same time, as far as my own opinion is concerned, I see no reason for disturbing the present state of things.

There is another remedy which may be employed in extraordinary cases, which has sometimes been resorted to in periods of commercial distress, and which I have heard suggested as a substitute for a temporary suspension of the Bank Act. I mean an issue of commercial Exchequer bills. Of course, if Parliament were sitting, and such a remedy were thought advisable, it would be in the power of the Executive Government for the time being to ask Parliament for a power of issuing such Exchequer bills, and of lending them to firms which might be in temporary difficulties. But let me observe that Exchequer bills are not money—they are securities—and that what houses in difficulty require at a moment of commercial crisis is money itself, and not merely securities. Therefore, although commercial Exchequer bills would be of some advantage, nevertheless they are not the most convenient or appropriate remedy for the evil. It has likewise been suggested to me that, instead of the Bank making issues in excess of those which the law authorises, a power might be vested in the Government on such an occasion to issue Treasury notes in the nature of bank-notes, and to make them a legal tender. That, it is said, would be doing by legal authority what has been done, as it were, surreptitiously and under a cloak by the letter recently written to the Bank. I have heard this suggestion from a gentleman whose name would, I am sure, command great respect if I mentioned it to the House; but it seems to me to be open to this objection,—I should be sorry to authorise the Government by Act of Parliament to issue inconvertible notes. If these notes were payable on demand it is clear that the Government at a moment of crisis has got no gold; it possesses no means of paying notes on demand; and therefore the only way by which it could discharge its obligations would be to place itself in the hands of the Bank and say, "Be good enough to allow our notes to be presented to you, and we will borrow the use of your bullion, and will pay you a certain price for the notes which you may be called upon to cash." Knowing the disposition of the Bank to do everything by which they can promote the public service, I think it probable that an arrangement of that sort might be effected if the Bank reserve of bullion would admit of it. At the same time it appears to me that the difference between that state of things and what has actually taken place would be in name rather than in reality; because if these over-issued notes, called Treasury notes, were payable at the Bank of England with their bullion reserve, I do not see what we should gain by calling them Treasury notes. It seems to me to be much simpler to do as we have done—authorise the Bank to increase their own note circulation. If, therefore, the appeal for another currency policy and for some grand scheme of legislation is founded upon any notion of that sort, I cannot admit that any great public benefit would arise from it.

Then we come to the question of the enlargement of the limit of £ 4,500,000, or, as is sometimes proposed, the substitution of either £16,000,000 or a larger number of millions of notes to be issued by the Government in place of the credit-notes of the Bank of England; and it is alleged that in that manner, if the quantity were sufficiently increased, the difficulties now experienced in times of commercial panic might be removed. This plan of making a large issue of inconvertible notes was brought by several witnesses before the attention of the Committee of last Session; and on a former occasion I happened, erroneously as it seems, to ascribe to my hon. Friend the Member for Warwickshire (Mr. Spooner) the opinion that he was in favour of inconvertible notes. Now, he altogether disavowed that opinion, and there is no Member of this House whose opinion I should be so unwilling to misrepresent as his. I think, however, he will admit that my error was not an unnatural one, when I recall his attention to the evidence given before the Committee of last Session by one of the witnesses (Mr. Twells), who, as I understand, represented the opinions of my hon. Friend. This is the last extract with which I shall trouble the House, but it contains opinions altogether different from those which I have previously adduced, and I therefore feel it is but fair that I should give an example of witnesses of all classes of opinions who were examined before that Committee. Now, these are Mr. Twells' opinions with respect to the policy of enabling the Government to issue £ 20,000,000 instead of £14,500,000 of bank-notes of the character which he describes in his answers. In order to avoid the possibility of misrepresenting my hon. Friend's opinions, I desire, if the House will allow me, to quote Mr. Twells' answers in his own. words. He is asked:— You recommend the issue of £20,000,000 of bank-notes not payable in gold on demand, but receivable by the Government in payment of taxes?—Yes. Of course it would be necessary to omit the words, 'I promise to pay,' because these notes would not, in fact, be promises to pay on demand?—Quite so. Do you think that that currency would run the risk of ever being depreciated in value—that is to say, that inconvertible £5 notes would not exchange for five sovereigns?—I do not know as compared with sovereigns; that, I think, is of no consequence in the world. We want it for our internal commerce, and we want it to pay Government their taxes. I thought you said you could conceive that it might happen that under the system which you recommend the £5 note would not exchange for five sovereigns?—That I think is not material. A bank-note, I conceive, is convertible into everything. If you wanted to convert it into gold, you would go to a bullion merchant, and he would give you the market value in gold, as he would in any other commodity; it might be more or it might be less than five sovereigns. The House will see that this is rather an interesting question to those who have the collection of revenue, if the notes should not be exchangeable for five sovereigns. Then the witness is asked:— What do you conceive to be the advantage of making those inconvertible notes received in payment of taxes?—The advantage is, that it keeps them at a steady price. I go by experience, and I am looking at the twenty years when we had no gold. If you make those notes receivable in payment of taxes, is not that a violation of the principle of inconvertibility?—No, I conceive not. You compel the Government to take one of these £5 notes for a sum of five sovereigns, do you not?—For five pounds. If they tax me they do not say, we require you to pay live sovereigns, but five pounds. It is a term of account, and I give them five pounds. Then you think that a pound is something independent of the value of the gold which it represents?—Quite; we had the term ' pound' in account when we had nothing to represent it; it is only recently that we have had the sovereign, which represents the pound. Do you think that a pound then meant a piece of paper with certain words printed upon it?—It had a superscription, which gave it a value in the country payable for all taxes. Then your view of a pound is that it is something quite independent of any value in metal?—In gold; as completely now as it was in the early part of my experience. And you think it desirable that a currency should be established upon that principle? Now here is the important point. His answer was— I would have it established upon that principle; but, as I have stated, if there can be any amendment suggested it will be very desirable. I think, bearing that evidence in mind, the House must see that my error in supposing my hon. Friend to be in favour of an inconvertible currency was not an unnatural one; but of course I don't dispute the accuracy of the statement he has since made. If, however, we do not adopt the recommendation of Mr. Twells—if the principle which he lays down is not to be made the foundation of the new currency legislation which the Government is called on to produce in this current month of December, perhaps it maybe said that a more limited proposition should be adopted, such, for example, as that the issue permitted under the Act of 1844 should be increased by one or two millions. Now, I admit that there is nothing in the principle of the Act of 1844 which requires that the amount should be exactly £ 14,500,000. There is no magic I know of in that particular amount, which was fixed on grounds repeatedly stated at the time; and I admit that a person who is friendly to the principle of the Act may fairly suggest any amount more than £14,000,000. That is a matter for the consideration of the House; but I confess that I doubt extremely whether the advantage which many gentlemen anticipate from such an alteration would be derived from it. So far as I understand the matter, there are two objects in view. One is from that school, in which I must not number my hon. Friend (Mr. Spooner), represented by Mr. Twells. They consider that the simple augmentation of the paper currency is an advantage to the country and increases the wealth of the nation; that by increasing the limit of Bank issues £ 2,000,000 you would add £2,000,000 to the amount of notes in the hands of the public. That I take to be an entire delusion. I do not believe that the Bank of England would induce the public to use more notes than they use at present, and if the power were given, unless some stronger occasion than we have yet witnessed were to occur the present number of notes in the hands of the public would not be increased; therefore I hold that opinion to be an entire delusion. But it is said the Bank of England would have a larger reserve in the banking department, and that in a moment of crisis the necessity for resorting to extraordinary measures on the part of the Executive Government would be avoided. It would not be avoided, however, if the Bank of England diminished its bullion reserve in proportion to its increased power of issuing notes, which it would have an undoubted right and would in some degree be driven to do. The Bank would have a right to keep £ 2,000,000 less of bullion in reserve, and the only difference would be that there would be £ 2,000,000 of notes issued on securities instead of upon that amount of bullion; and the banking reserve when a crisis arrived would be exactly what it would have been if such an arrangement had not existed. But the resources of the Bank would be less, inasmuch as the bullion on which its strength rests would be £2,000,000 less than before. If the Bank were to act in that state of the law exactly in the same manner as it did in the present state of the law, then, undoubtedly, on the occurrence of a commercial crisis its bullion would be the same, and it would have £2,000,000 more in the banking department to work with; but we are not entitled to reason on a state of things so uncertain; it would be hazardous to form any expectations of that kind, and therefore I am not in favour of altering the amount specified in the Act of 1844, though it is a fair question for the consideration of the House and the Committee which I propose we should appoint.

There is another question which may be properly considered at the present time, and that is whether it would be expedient to require some additional guarantee for the issues of country banks in England and of the Scotch and Irish issues in the form of a deposit of Government securities. This subject has been imperfectly investigated by the Select Committee of last Session, and therefore when the proposed Committee comes to the subject of the condition of issues it will be one deserving of their consideration.

Another point is whether Bank of England notes shall not be made a legal tender in Ireland and Scotland. The circumstances out of which the present law has grown were fully and accurately stated by a noble Lord (Lord Monteagle) in another place in the course of yesterday. He stated that the original enactment by which the Bank of England note was made a legal tender except at the Bank itself, was general in its terms, and apparently included both Ireland and Scotland; but, inasmuch as doubts arose as to the construction of the Act, which was an Act renewing the charter of the Bank of England only, it was held to be confined to England, and in 1845 an express enactment was passed by which the operation of the clause relating to legal tender was limited to England. It seems to me that no good reason can be alleged why that clause should not be modified, and why we should not revert to what seems to have been the design and intention of the original enactment.

There is another question, too, which has been raised by the hon. Member for Dublin (Mr. Vance), and that is whether it would not be proper that in Ireland the notes of the Bank of Ireland should be made a legal tender. That seems to me a fit subject also for the consideration of the Committee.

I have been forced most reluctantly, after the indulgence which the House showed me last week, to trespass at considerable length upon their time. I have seen the interest that the general question has excited, and, having necessarily paid much attention to it, I thought it my duty to state my views thus fully to the House. It appears to me that if the House should adopt the Motion I have made, accompanied with an instruction to inquire into the causes of the commercial distress—if they appoint a Committee that will follow up the inquiry of last Session and report on the general principle of the Act of 1844, which will investigate the subject of provincial issues in England, and also in Ireland and Scotland, and which will, so far as they think it expedient, report on the causes of the recent commercial crisis, they will make the best provision for legislation that this House can possess, and, the exigencies that called for the Indemnity Act having passed away, they will have done all that the circumstances arising out of the late crisis required. The right hon. Gentleman concluded by moving the appointment of a Select Committee.

Motion made, and Question proposed, That a Select Committee be appointed to inquire into the operation of the Bank Act of 1844 (7 and 8 Vic. c. 32), and of the Bank Acts for Ireland and Scotland of 1845 (8 and 9 Vie. c. 37 and 38).


It seems to me that the argument of the Chancellor of the Exchequer rests on a rather inconsistent basis. The right hon. Gentleman acknowledged without any qualification that the present commercial distress originated in a disturbance of capital and. credit. Why, then, says the right hon. Gentleman, is our attention directed to the subject of the currency? One would suppose that the right hon. Gentleman had forgotten for a moment the circumstances under which Parliament is assembled, and the reason of our meeting at this inconvenient time of the year. If currency has nothing to do with this question, why did the right hon. Gentleman and his colleagues violate the law which regulates the circulation of bank-notes? When, therefore, the right hon. Gentleman tells us to-night that he cannot understand why criticism is offered on that law, I can only suppose that while he was speaking he had inadvertently forgotten the cause of the present Session of Parliament. Considering what that cause is; considering that this commercial country found itself in a state not merely of distress and distrust, but of absolute convulsion; considering that we are assembled together in consequence of that condition, and that it has been announced from the Throne that that commercial condition has already injuriously affected the state of our manufacturing districts; considering that the Government, in consequence of that state of affairs, had recommended the Directors of the Bank of England to violate a law, I could scarcely have supposed that there was one Member on either side of the House who did not expect that the first duty of Parliament was to express some opinion on such events, and perhaps to express some sympathy with incidents of so disastrous a character. But, Sir, instead of that, it seems to be considered that we are assembled merely to register a Bill of Indemnity for Her Majesty's Ministers, and that we are to express no opinion upon what has taken place—to offer no suggestions of a remedial character—but that we are to allow the startling incidents that have occurred to pass unnoticed and uncriticised, merely expressing our opinion that the violation of the law by the Government was a politic and proper act. Let hon. Gentlemen cast their memories back to a few months ago, when we were all candidates upon the hustings for the votes and the confidence of the people of England. What fervent declarations were not then listened to of devotion to our constituents! How vigilant we were then to guard their interests! How devoted we were then to the maintenance of their rights! Events have since occurred which have materially affected those interests. An amount of distress seldom before equalled already exists; and yet we are to express no opinion upon the subject. We are expected to pass from this House in silence, and when we meet our constituents we are to give an account of our labours, briefly thus:—Summoned by our Sove- reign to be informed that the country was unexpectedly in a state of almost unparalleled confusion, and that Her Majesty's Ministers had, in consequence, been obliged to violate a law of paramount importance, we assembled, we made no inquiry on the subject, but sanctioned the act and returned to our respective counties and boroughs. I do not think that a course which will conduce either to the public welfare or to the honour of Parliament, and I therefore anticipated from the very first day of our meeting, that there would be a discussion upon a subject which now so much engrosses the attention of the country. If I avoided mixing up such a discussion with the debates upon the Indemnity Bill, it was because I thought I read aright the feelings of the House, that it would be more convenient that the two subjects should be separated, and that it would be less invidious, in every sense of the word, that a discussion upon the causes of the present distress should not be mixed up with the Act of Indemnity, as to the necessity of which both sides of the House were agreed; but with a clear understanding, as I apprehended, on the part of Her Majesty's Ministers, that such a discussion would certainly take place. With reference to some remarks which have fallen from the right hon. Gentleman opposite, I think he has rather misconceived some observations which were made at the commencement of this Session. He seems to suppose that I, or some one else, made an attack upon the labours and character of the late Committee which inquired into the Bank Charter, and of which I had myself the honour of being a member. The right hon. Gentleman says the evidence taken before that Committee was not inferior to the evidence taken before former Committees, although it appeared to have been referred to in a derisive spirit. I certainly never said that the evidence taken by that Committee was inferior to the evidence taken before former Committees. That was impossible, for the evidence was the same: upon all these occasions we have the same witnesses, we have the same information, we have the same facts adduced, and the same arguments urged. Let the Chancellor of the Exchequer, therefore, understand distinctly that, so far as I am concerned, I fully appreciate the labours of the recent Committee. It is because their labours are invaluable, and because, by the evidence they have obtained, and the knowledge they have elicited, they have completely exhausted the subject, that I think any further investigation unnecessary. The Chancellor of the Exchequer said that when the Committee separated they recommended the re-appointment of a similar Committee during the present Session. I am not answerable for that recommendation; I was not present when it was made; but I do not wish to avail myself of such an excuse as that. Surely the Chancellor of the Exchequer will not pretend for a moment that the events which have occurred in the commercial world since that recommendation took place will not justify any hon. Gentleman who might have agreed in the month of August last that it was expedient to recommend the House in the usual formal manner to reappoint the Committee—the right hon. Gentleman will not for a moment contend that the events which have since occurred with respect to the Act of 1844 may not fully justify any hon. Gentleman in coming to the conclusion that the subject requires no further investigation, but demands on the part of this House a distinct and definite determination. I cannot collect from the right hon. Gentleman why he is in favour of any further inquiry on this subject. So far as I can follow his observations, he seems to have made up his mind upon every point connected with the circulation of bank-notes that could possibly be submitted to the consideration of a Committee. There is only one point upon which, in my opinion, his declarations have not been perfectly satisfactory. I understand from him that on the whole he would leave the law exactly in its present position, but how is he to restore to that law the moral influence which all laws ought to possess? He may approve the arrangement by which an arbitrary discretion is vested in the Minister, but he cannot forget that the law has been twice violated; that, if left in its present position, the people of this country will look upon it practically as an obsolete law; that no human being will now ever believe that it can really be practised; and the right hon. Gentleman must know as well as any hon. Member of this House, that the moral influence which all laws ought to possess is, so far as this statute is concerned, absolutely dead. It is, in my opinion, the duty of the House to arrive at some definite conclusion upon this subject; and when I am told that by the Motion of which I have given notice I avoid any definite conclusion, and that I cannot be prepared to attempt any hasty legislation in December, permit me to say that the Amendment I am about to propose is the only proper and efficient Motion that could be made, and that it is one which, if assented to, will put the House in a clear and intelligible position. What I want the House to agree to is, that we should not stop future legislation, for we shall stop such legislation if we agree to further inquiry. In submitting to the House my Amendment I wish to induce them to say, "We will not now appoint a Committee of inquiry, because in that case we shall be stopped when we meet again from discussing this question, and arriving at some practical result." Every one knows that if now, in the month of December, a Bill on this subject were prepared, it would be impossible for any one except a Minister of the Crown to introduce it; but, under the circumstances in which we find ourselves, it is in the power of independent Members to induce the House to come to this practical conclusion—that we will not assent to a Motion on the part of Her Majesty's Government which, when we return to real business on the 4th of February, will be a padlock on the mouth of every hon. Member who wishes to express his opinions upon this subject, and an obstacle to any party or combination of men who desire to recommend legislation on a question of so much importance to the country. I wish the House to recollect what has occurred in the commercial world—if one may use so limited a phrase—during the last month or two. I sat in this House when the crisis of 1847 took place; I was also here when the commercial convulsion of 1837 occurred; I have read, as all of us have done, of what took place in 1825; but nothing that took place in those years at all resembled in variety and extent what has occurred in this country within the last month. In 1825 there was a great deal of what is called overtrading and speculation, but it was chiefly excited by the fact that commercial relations with the Spanish American States were for the first time opened to this country. In 1837 you had very extended relations with the United States of America. In 1847 you had a famine coincident with an immense investment of the ready and floating capital of the country in public works. On all these occasions, great as were the distress and distrust, great as was the convulsion, you could place your finger upon one or upon two main causes which brought about a suffering which, however vast, was in a certain sense partial. But what do we find now? This disturbance of credit is not limited to this country, nor is it limited to some other foreign nation with whom we have intimate relations of trade; it is in a manner general. You have suspension in the United States. You have another commercial republic, which bases all its operations upon a metallic currency, in a state of bankruptcy. There is no country in Europe in which there is not a disturbance of credit; in many credit is prostrate. The whole of the Baltic trade is destroyed. The disturbance extends even to Spain, and is found throughout the south and to a great extent in the north of Germany. The consequences to England are infinitely more serious than they were in any of the other cases to which I have referred. In 1847 a document was published which produced a great effect in this House. It was a list of the mercantile firms which had failed, and the amount of their liabilities, and it was whispered with a sort of dread that these liabilities reached £ 17,000,000 sterling. That was in the great year 1847, the terrors of which are still fresh in the memory of this country. The liabilities of the houses which failed between August and the end of November of that year reached £ 17,000,000 sterling. But, Sir, to what was it my painful duty to advert the other night? I called the attention of the House to a list of the houses which had up to that moment suspended. Other failures have occurred since that mournful catalogue was drawn up, but the least amount of their liabilities is £ 45,000,000. Why, that is much more than double the amount of the suspensions which have engraven upon the memory of the year 1847 such a character of terror, of panic, and of alarm. Under these circumstances it seems to me that it is the duty of Parliament to inquire into the causes of this strange convulsion. And, Sir if the right hon. Gentleman had come forward and proposed the appointment of a Committee to inquire into the causes of commercial distress, I should have been perfectly willing to support such a proposition; but when I find a Committee proposed to inquire into the causes of commercial distress, and how far that distress has been occasioned by the circulation of bank-notes, I know from experience what is preparing for this House and for the country. Why in 1847, when feelings similar to those which now influence us in so great a degree were very fresh and prevalent, the Government proposed a Committee to inquire into commercial distress, and the effect upon it of the circulation of banknotes. That was the very proposition they made, and what happened? Thirty-seven days did that Committee sit, and it was from first to last a mere wrangle about the circulation of bank-notes. It was a Currency Committee, and never performed those functions which the House intended it to discharge. It merely diverted the attention of the House from the Act of 1844, as this Committee will, and the consequence is that the occurrence, after the expiration of ten years, of a commercial convulsion, produced by a derangement of the capital and credit of the country, but aggravated by a Currency Act, finds you just as much advanced as you were in 1847. If you agree to the appointment of this Committee, you will find that when another year has elapsed you will have obtained no accurate knowledge upon the subject—you will have arrived at no decision which can guide you; and when another commercial convulsion occurs—which may happen sooner than you expect; this is a rapid age, and the period may not be decennial—you will find yourselves in the same hopeless position which you occupy at present, and the only remedy which will be proposed will be a Committee to inquire and to examine what influence bank-notes produce upon commerce. Now, Sir, it is not, I am sure, with any feeling of presumption that I will endeavour to state briefly what I think are the causes of the present commercial distress, and I shall be very glad if hon. Gentlemen who follow me, and who believe that my statements cannot be supported by evidence, will correct me. I am quite certain that we shall have a better chance of arriving at some practical result by discussion in this House, than by consigning this affair to the investigation of a Select Committee. Now, Sir, I believe that the primary cause of the present disturbance of capital and credit throughout the world is the great discoveries in the precious metals which have taken place of late years. I take the year 1852 as the culminating point. In the year 1851–2 we had in the Bank of England an immense treasure—I think £22,000,000 of bullion; and we bad an extremely low rate of interest, certainly not more than 2 per cent. Nor were these circumstances peculiar to England. They prevailed in every great country in Europe, and also in America, which had been earlier acted upon by the Californian discoveries. From 1848 to the present time not less than £180,000,000 or £190,000,000 of gold have been brought into the market. What has been the consequence of this state of affairs? An idea prevailed in every city that the time had come when a great change in the value of money would take place, and when the increase of capital would afford the opportunity of executing those public works which had in many countries long been desired. In the first instance you had the construction of railways throughout Europe. France, which had before constructed with difficulty only one or two extremely necessary lines, now made those railways in the centre and south, with the vast works of which hon. Gentlemen are all familiar. France did more than this. She entered upon the erection of public buildings which even Louis XIV. and the first Emperor Napoleon, whatever might be their will, had never been able to execute. You had a new Paris built. In the centre and the south of Europe you had public works on a still more extensive scale. In fact, there was hardly any country, either in Europe or in America, in which there was not a great investment of capital in this way; and upon this immense investment there was a superstructure of speculation in the shares of companies, which was the necessary consequence of the first investment. A new class of houses, a new class of monetary institutions, were established, in order to collect the savings and the superfluous cash of the world and invest them in these undertakings. That was the time at which was established the Credit Mobilier, which pressed its affiliated institutions upon every city in Europe. Now, hon. Gentlemen are perfectly acquainted with the character of these institutions. We have criticised them a good deal in this country; we have impugned the principle upon which they were founded; we have expressed our suspicions of the large dividends which they distributed to their shareholders; we have denounced their investments of capital and their advances as unscrupulous, reckless, improvident, and unprincipled; but from what has recently occurred in this country, I think that while we were so conscious of the mote in our neighbour's eye, we were not sufficiently aware of that which was equally, and perhaps more, embarrassing to our own sight. Well, Sir, these great undertakings stimulated consumption, and this great stimulus to consumption increased the price of all produce. But just as gambling in shares rose upon the construction of public works, so gambling in produce rose upon fair but stimulating consumption, and you had that extraordinary rise in the price of produce which astounded and perplexed the world, and which was, without sufficient consideration, attributed entirely to the increase of our metallic treasures. What was the consequence of this state of things? Both in this country and in Europe you have before had overtrading, speculation, and reckless investment, but the thing never lasted more than a couple of years at the outside; but in this case it went on much longer. It was considerable in 1852, and year after year it greatly increased. Year after year these undertakings, these operations, and these engagements throughout the world were carried on by the application of capital and by combinations of credit which were never equalled in extent. Now, in some inquiries I made only three days ago into the general mercantile movements of late, I became acquainted with an instance which appeared to me—and I think it will also appear to the House—remarkable, but I am told that it is by no means a singular instance of the manner in which credit has been brought into play throughout the world. A merchant at New York drew on a merchant at Hamburg, but the latter declined to accept the bills unless he received an invoice. This was acceded to, and the invoice was sent. Now what was the invoice? The invoice was for a cargo of wheat bought at San Francisco, in California, and despatched to Melbourne. The merchant at Hamburg then accepted the hills, and the moment he did so he drew upon a merchant in London, who accepted his bills, when the Hamburg merchant, converting these last bills into capital, took up the bills which the merchant had drawn in America. Therefore the result of this transaction is, that the merchant in London supplies the capital for a commercial speculation from the capital of California to Melbourne, totally ignorant of the circumstances of the transaction, knowing nothing of the persons from whom the cargo was purchased, or to whom it was consigned, unaware whether the speculation was justified or the cargo a good one and whether it was purchased or supplied by a fair dealer. And then you are surprised that firms in London and Hamburg should fail. Now during these five wonderful years since 1852, you have had the occurrence of a variety of incidents each of which in ordinary times would have brought about a convulsion: you have had a European war, the two greatest States in Europe have negotiated large loans, you have had three successive bad harvests in France. Any one of these circumstances in ordinary times would have thrown the whole fabric down. You have, likewise, had a failure in the silk crop, which in extent has never been equalled in that branch of trade. Any of these cases, I repeat, would in ordinary circumstances have brought about this convulsion long ago. What, then, has retarded it? The most serious thing for the House to consider is, why has all this gone on to such an extent and for such a duration? I think I can point out to the House the cause. For the last three years we have been on the eve of a great crash, and exactly at the moment when the exchanges were turning, when accommodation was getting refused, when the crisis was at hand, and when all those acquainted with these affairs were looking about with terror and alarm, came those golden galleons every autumn from Australia, and those rich Californian argosies. You had an immense mass of capital thrown on the market, and for the moment relief was given. But the thing had gone on to that vast extent that it was not in the power of even the addition of £25,000,000 or £30,000,000 of treasure any longer to prevent that crash which has now occurred. The most surprising thing of all is that we are suffering in this manner at a time when not only in this country, but throughout Europe, we have enjoyed an exuberant harvest. No doubt the panic which prevailed in this country and the calamities consequently in a great degree to be attributed to it, have been mitigated by the circumstances, as well as by the recollection that in 1847 the suspension of the law was authorised by the Government of the day in order to assist and relieve the suffering. Still, with all these advantages, with an exuberant harvest, with the consciousness that the law, the severity of which had before created such alarm, would be relaxed, the degree of calamity which occurred in this country alone is testified by the amount of suspensions to have been infinitely greater than double the amount of suffering in 1847. The right hon. Gentleman the Chancellor of the Exchequer tells us that in his opinion the commercial distress is occasioned by the derangement of capital and credit. I accept that opinion of the right hon. Gentleman, but he will allow me to remind him that he is the first Minister who ever made such an admission in a commercial crisis. He is the first Minister that ever maintained that commercial distress was occasioned by the derangement of capital and credit. If we try to form an idea of the consequences and extent of the operations I have referred to, imagination would scarcely enable us to come to a sufficient conclusion. I speak on the authority of those who are deeply acquainted with these transactions, who have the largest knowledge of foreign trade, and I express their opinion when I say that the operations of these five years are not to be measured by millions or hundreds of millions, but by a denomination unusual even in commercial concerns. In these transactions what has been the share of England? By the most moderate estimate it is to be computed at hundreds of millions; and yet we are told that transactions of such a kind can be affected by a portion of £20,000,000 of notes of the Bank of England. We always exclude from our calculation, when these disasters arise, every other form of credit that influences prices and operations, and we concentrate our views and criticism on one of the smallest forms of credit that can influence transactions. Derangement of credit can only be produced by abuse of credit, and not by mismanagement of currency. [Sir CHARLES WOOD: Hear!] Now, the right hon. Gentleman cheers that observation, but what have he and the school to which he belongs been doing for the last thirty years, whenever there was a disturbance in the commercial world, but ascribing that commercial disturbance to arrangements respecting the bank-note circulation? This is not an affair that depends on assertion, for we have it in evidence before us. What happened in 1825? There was a commercial convulsion then, and what was it alleged to be caused by? The issue of notes by country bankers! That was then stated as the cause, and no one pretended, as we learn now from the Treasury bench, that it was the derangement of the capital and credit of the country. No! we denounced then the poor, innocent country bankers, who had circulated too many country notes. No doubt the country bankers then did many improvident things, and made very injudicious advances of their capital; but we never went into that. We declared it was the circulation of their bank-notes that produced the commercial convulsion of 1825. What happened in 1837?—and I rather suspect the right hon. Member for Halifax must have, from personal experience, all these details fresh in his recollection. There was a commercial convulsion in 1837, and to what was that attributed? To the joint-stock banks issuing so many bank-notes. No person was more distinct in that assertion, or more precise in that charge, than the right hon. Member for Halifax, who has been just now cheering the new doctrine of the Chancellor of the Exchequer, that the commercial distress is occasioned by a derangement of capital and credit. In 1847, what happened? There was another great commercial convulsion. In 1825 it was produced by the circulation in the notes of country bankers; in 1837 it was produced by the circulation of the notes of joint-stock banks; and in 1817, what produced it according to the great authorities? Why, the mismanagement of the Directors of the Bank of England in the circulation of their bank-notes. In every instance the great authorities have confounded capital with currency, and on every occasion have attributed to the least influential form of credit, consequences which could only be effected by the employment of credit and capital on a colossal scale, and which no circulation of bank-notes could ever have brought about under any circumstances. I will show the House, if they will permit me, that in this misapprehension lies the cause of the difficulty under which we are now labouring, and in its solution alone shall we ever find any effectual means of extricating ourselves from these perpetually recurring embarrassments. Now, Sir, it has always struck me as a very curious thing—and I have often pondered over it—that men should persist in such a confusion of ideas as always to mistake capital for currency, and should attribute to the least powerful instrument the most important results. It is a very curious thing also, that in this country the two schools of currency, which agree in no single point besides, are in accord in one respect. That high authority to whom the right hon. Gentleman has referred (Lord Overstone) and my hon. Friend behind me (Mr. Spooner)—the first of whom does justice to the merits of bullion, and the other who sufficiently esteems the merits of paper—agree in only one point—that commercial convulsions are occasioned or may be prevented only by a wise administration of the circulation of bank-notes. I want to know the reason why persons differing in every sense of the subject generally should agree on this point. I think, however, it may be accounted for, and in ascertaining the cause of that difference we may advance a step in ascertaining the means of extricating ourselves from the embarrassments surrounding this unsettled subject. The resumption of cash payments in 1819 was followed by a great fall in prices for two years, and even more, after that time. It was not at all surprising that those who had suffered, and sharply suffered, should have ascribed to that resumption the great injury they then experienced. Sir, I believe that the resumption of cash payments had nothing to do with that fall of prices. I do not think that any problem of Euclid is capable of more complete demonstration than that conclusion. However, nothing was more natural than that, in dealing with a subject so abstruse and under the influence of excited feelings, a great body of men who had suffered so severely should attribute to that resumption of cash payments the fall of prices which went on for two or three years afterwards. It was at that time a school of currency arose which has exercised at moments of distress considerable influence out of doors—I mean the Birmingham school. Now, Sir, the other school of opinions on this subject has been the one predominant in this House. All our public men have accepted it, and I trace the origin of similar tenets on the peculiar influence of bank-notes to the Bullion Committee of 1810. I am sure that no one will speak of the labours of the Bullion Committee but with the respect that all great intellectual efforts and public services deserve. The Bullion Committee vindicated that great principle on which the happiness of a community mainly depends—the maintenance of the standard of value. The Bullion Committee proved that an over-issue of inconvertible paper must be depreciated, and that in our case there had been a depreciation. I think it might be shown by fair argument that the price of gold in those days was raised by some other causes besides the existence of depreciated paper. However, let that pass. That our paper was depreciated, and that the depreciation was demonstrated by the Bullion Committee, no fair inquirer can deny. But Sir, after all, the Bullion Committee sat nearly fifty years ago, and I suppose the Bullion Committee are not an exception to that rule which makes time and thought enlarge the ideas and improve the practice of mankind. It is not very probable that the Bullion Committee, which sat nearly fifty years ago, were correct in every conclusion they arrived at, or that they could have foreseen all those consequences which have since occurred. This is an age of progress. Everything that existed fifty years ago has been subject in that interval to great modifications. Our commerce and jurisprudence as they were established fifty years ago have undergone very great changes, and it is pedantry to suppose that the Bullion Committee could have foreseen all the possible consequences of the principles they advanced and established. After all the sharp experience the country has gone through—after all those great experiments on our circulation—after all those commercial crashes and convulsions—after those endless inquiries before Parliamentary Committees—and after the labours and published opinions of those who have devoted their study to this subject, it would be the height of absurdity to maintain that the science of the currency is in the same state that it was when the Report of the Bullion Committee was presented to Mr. Speaker at that bar. Sir, the Bullion Committee were perfectly right in their conclusion that the inconvertible paper money of this country had become depreciated by over issue. But, Sir, I think that they rapidly and rashly extended that conclusion to bank-notes convertible at par. Now, Sir, I hold that there is a complete distinction and one which can be established by irrefragable argument, between paper money and paper credit—that inconvertible notes are paper money and subject to depreciation, but that banknotes convertible at par are paper credit and cannot be subject to depreciation. I call the attention of the right hon. Gentleman the Member for Halifax (Sir Charles Wood), who I see is making a note, to that position. I hold that by ample, complete, and irrefutable evidence three things are established—first, that a bank-note convertible at par cannot be depreciated; secondly, that it is impossible for any issuer of any bank-notes convertible at par to force them into circulation; and thirdly, that prices cannot be affected by a banknote circulation under such conditions, further than they would be affected by an equal amount of metallic currency. I hold, Sir, that it has been shown by the labours of our Committees in the evidence they have taken, and in a manner not to be confuted, that there is a clear distinction between paper money and bank-notes convertible at par; and that there is a law which regulates the circulation of banknotes convertible at par, which prevents redundance, which renders what we call the inflation of the currency impossible, and which makes a balance between the issue and the reflux of the note a certain result. I know the difficulty of treating this subject in what is still, and I trust will always be, a popular assembly. But this difficulty is experienced because we will not discuss the subject in this House, and because we always send it to a Parliamentary Committee. But I hope the House will bear with me while I express as clearly as I can the different nature of the principles which influence these respective operations. Now, Sir, take the case of gold and paper money, and by paper money I mean bank-notes not convertible. They are introduced into the market as a medium of payment. They discharge this office, and when fresh payments are to be made, fresh gold, if that can be got, and fresh paper, if easier to be obtained, again serve as a medium of payment, and add to the aggregate of currency already existing. But bank-notes convertible at par enter the market, not as a medium of payment, but as a loan on which interest must be paid, and when the time for that loan to be repaid comes round, other bank-notes must return to the issuer to effect that payment. The consequence is that the issue and reflux are always equal, and in the long run the balance is always struck between them. Let us apply these principles to the issue of bank-notes during all those commercial convulsions, which for thirty years have periodically prevailed. Take the issue of country banks which has been already referred to to-night. The commercial convulsion of 1825 was alleged by the Ministers of the day—and the allegation has been repeated by their successors on the Treasury bench to this very moment—to have been occasioned by the over-circulation of notes by the country banks. We have evidence before us which was not in the possession of Bullion Committees fifty years ago, who carried on their investigations without half the advantages which we possess from official returns and statistical inquiries. We have evidence upon that subject before us, presenting results which no man can resist, and which utterly destroy the theory in that respect, always maintained by the right hon. Gentleman the Member for Halifax. We have the returns of the issues of notes by country bankers for a period of twenty-five years. Those returns are on our table, and let any hon. Gentleman look over them, emanating as they do from hundreds of country bankers—supposed to number between 700 and 800—and when they examine those issues they will see at once that there is some law which regulates the issue of bank-notes convertible at par which is too strong for country bankers, or even for a British Parliament. They will find in the whole circulation of England, supplied by hundreds of country bankers, that at a particular period of the year that circulation expands, that at another period of the year it is depressed, that at another period of the year—the middle term—it is quiescent; that these terms correspond with the occupation of the people among whom these notes are circulated; that in the spring, when the farmer buys his stock and pays his rent (and you must remember that the notes of country bankers chiefly circulate in country districts), there is an increase of circulation; that at the end of the year, when agricultural pursuits are dead, the circulation falls; and that after harvest the circulation is equal. Now you will find this same state of things to have occurred regularly for about a quarter of a century, and I will ask how is it possible to observe phenomena of this kind recurring with the regularity of astronomical phenomena, rising in spring, sinking in winter, and equal in autumn, without supposing that there is some law which regulates the circulation of notes, much too strong for any management or any legislation. No one can imagine for a moment that country bankers combine to manage their circulation in the same manner, for of all classes of men bankers are the least calculated to confederate, because their pursuits naturally induce reserve, and they do not communicate their transactions to each other. The returns from our offices now on the table, prove that it is impossible for the issuer of notes to control the circulation, and that it depends on the wants of the community. If he attempt to force issue, he may think he circulates his issue, but he is only lending his capital. The notes come back instantly, and he suffers for his injudicious advances; but if those injudicious advances lead to commercial convulsion, you cannot ascribe it to the circulation of banknotes. There are no means whatever by which the function of a bank-note convertible at par can be changed. It is circulation, it is currency, and I defy any Minister or any banker to change bank-notes into capital; a man, indeed, may take a large number of banknotes, and lock them up in his box, but it cannot be said that by having them locked up in his box the circulation is inflated, or that the currency, so far as those notes are concerned, is redundant. But so long as they circulate they are circulation, not capital, and no man can force them beyond the fair demands of the community in which they are current. So much for these unfortunate country banks according to the school of the ultra-bul- lionists, of which the right hon. Gentleman is a distinguished member, producing the commercial convulsion of 1825. Let us look at the commercial convulsion of 1837. The commercial convulsion of 1837, according to the ultra-bullionist school, was produced by an over-issue of notes convertible at par by joint-stock banks. Let us look into the facts of this part of the case. Remember that we have evidence and documents which the hon. Gentlemen who made speeches then did not possess. I do not assume for a moment that I have more discrimination or equal discrimination with the right hon. Gentleman and his colleagues, or with any hon. Gentleman here. But I am availing myself of authentic facts, which are now in our possession to guide us, and which were not before us when those speeches were made—speeches, let me remind the House, which influenced public opinion, and are the very foundation of that law which the Government has been obliged to suspend. I come now to the overissue of notes, convertible at par by joint-stock banks. The joint-stock banks were founded in consequence of the horrible sins of the poor country bankers. It was said to be necessary that we should have banks of a much more efficient character. The circulation of country bank-notes having once nearly ruined the commerce of England and convulsed the commerce of America through its relation to ours, it was necessary that joint-stock banks should be established, and then we were told everything would be perfectly right. Another commercial convulsion comes in 1837, and what does the right hon. Gentleman the Member for Halifax, who is taking notes to-night, say then? Why, he said that he had found the cause to he the over-issue of bank-notes convertible at par by joint-stock banks. Let me recall to the House circumstances with which they are no doubt familiar; but in discussions of this kind it is better to have a clear recollection of what happened. We have heard so much of late of joint-stock banks; they have done such great things; they have accomplished such great disasters; all about them is of such a colossal character, that hon. Gentlemen must not expect that the joint-stock banks which were established in 1835 were of equal dimensions, and of course they don't. But allow me to say that joint-stock banks even then were not of a mean character. When the law was changed 107 joint-stock banks were established in England. They had a paid-up capital of £15,000,000. They had a subscribed capital of nearly ten times that amount. They had 478 branches and agencies pushed in every active town and seat of trade and agriculture in England; and they were established with the idea that they would make a great profit by the circulation of their notes. What occurred? When the commercial crash happened in 1837, it was found that the circulation of joint-stock banks had increased. It had increased during the last two years before the crash occurred £1,500,000. It was instantly said the commercial convulsion of England was occasioned by that overissue of £1,500,000 by the joint-stock banks. That was redundant currency. That was inflated circulation; and the fall of great houses and the disturbance of the capital and credit of the whole of the United States and of England were attributed to that cause. It was urged by the defenders of joint-stock banks that in fact their business had very much increased, and that there had been a legitimate demand by the public for an increased circulation of notes to that amount, but that was not listened to for a moment. Yet it would seem that few things could be more absurd than for any one to maintain that a commercial convulsion so important as that of 1837 was occasioned by so petty a cause. Nevertheless, let me remind you that these are the instances and these the arguments which have been, not prevalent, but absolutely predominant in this House, and it is because these arguments founded on these instances have been accepted so easily that we have had laws like the law of 1844 passed, which, to the shame and confusion of the country, is upon every recurring emergency obliged to be suspended. But, now, what happened in 1837 with respect to these joint-stock banks? It was only so recently as in one of the sittings of the Committee the reappointment of which is proposed to-night, that I found the right hon. Member for Halifax sharply cross-examining one of the witnesses who had expressed what I believe to be a legitimate opinion, that the over-issue of notes convertible at par was impossible, with the returns in his hand of this excess of issues to the amount of £1,500,000. But it turns out that the excess of the issues of these joint-stock banks was produced by depriving the poor country banks of a considerable portion of their circulation, and by supplanting the circulation, not only of the country notes, but even of the branches of the Bank of England itself, to no inconsiderable amount; so that, in fact, the aggregate bank-note circulation of the whole country, notwithstanding the increase of the circulation of the joint-stock bank-notes, was actually diminished in that year. Who, then, with such evidence, can for a moment adhere to the theory which, to my great surprise, the Chancellor of the Exchequer seems entirely to have cast to the winds to-night, but which is in fact the foundation of the very law which he has recommended his Sovereign to suspend, and to inquire into which he wishes us to reappoint this Committee? If more evidence were necessary—and it is best rather to risk being tedious than to be wanting in illustrations—what occurred with all these joint-stock banks is to my mind an absolute demonstration of the fallacy which has ascribed to the limited circulation of bank-notes convertible at par this immense influence on the vast transactions of European commerce. A joint-stock bank fails—say, for £1,500,000—it is a bank of issue—one of them, the Northern and Central Joint Stock Bank, did fail in 1837 for £1,500,000, and its issues were £30,000. But it was the £30,000 that produced that commercial convulsion, and not the advances—the improvident and injudicious and unprincipled advances to the amount of £1,500,000! What has happened at the present day? Look at the great joint-stock banks that have failed in Scotland and England; the majority of them were not banks of issue at all. One or two of them which have suspended with liabilities of millions have issues, but to an amount which, in comparison, is contemptible. I cannot for a moment suppose that any hon. Gentleman can think that the circulation of these banks has produced any effect upon the commercial transactions of the five portentous years to which I have been drawing the attention of the Committee. There is another illustration on which I will not dwell, though it is a strong one, because it refers to the Scotch banks. I am not grudging the Chancellor of the Exchequer any inquiry into the Scotch banks and the Act of 1845 if he desires it. If you will look into the circulation of those banks you will find a most extraordinary illustration of the principle which I have been so long and in so many forms attempting to enforce. Since the year 1826 there is no country in the world in which there has been such an increase of what are called banking facilities—such an employment of banking capital, and such an extension of banking credit, as in Scotland. But the joint-stock bank-notes in the hands of the public have, I believe, diminished every year. I doubt whether they are so large in amount at this moment as they were in 1826, when this great development of banking facilities began to take place. I have shown you that both as regards the note circulation of the country banks in 1825, and the circulation of the joint-stock banks in 1837, nothing can be more futile than the position that the commercial disasters of either of those years is to be attributed to an over-issue of notes. Let us come now to the year 1847, when the only victim left to whom the calamities could be ascribed was the Bank of England itself, and the only cause which could be alleged for the vast misfortunes which befell us, was the management by the Bank of its bank-note circulation. It is a most curious thing—and it entirely proves, I think, that the Directors of the Bank have no controlling power over the circulation of their notes—that in 1847, when there was a withdrawal of bullion at the beginning of the year to the amount of £7,000,000, the bank-notes in the hands of the public remained at exactly the same amount. Later in the year, when the crash actually occurred, and when the law was suspended, there still remained in the hands of the public—how locked up or how hoarded is another point, but still issued—the same amount of bank-notes. And yet you inveigh against the over-issue of notes and the power of the Bank and the Bank Directors to force a circulation of those notes. Let me remind the House of all that has occurred during the ten years that have elapsed since the last convulsion of 1847, in respect to the commercial circumstances of the country. In ten years you have doubled your exports and your imports, and in ten years you have not added one single note to your bank-note circulation. The whole bank-note circulation of England in 846–7 was—I am speaking from memory—£40,000,000; in 1855, which is the last return I have seen, though I am informed that facts have since occurred to strengthen my argument, it was £39,000,000. All this proves that banknotes are in a certain sense a form of credit that is really falling into disuse. The truth is, that from various circumstances—our improved means of communication, the penny post, the telegraph, and a thousand other circumstances—we require less of this kind of circulation than we did ten years ago. Now, Sir, I hope the House will believe that with the views which I have expressed I approach the consideration of the Act which has been suspended illegally by the Government without any prejudice. I never could suppose that the disturbance of the capital and credit of a country like England could be at all occasioned or prevented by any legislative arrangement for the circulation of the, after all, very limited amount of the notes of the Bank of England. But it is impossible, in my mind to resist the conviction that the Act of 1844—which, after all, is an Act only regulating the circulation and the issue of bank-notes—is an Act drawn up in deference to those fallacious principles respecting issues which have so long and so fatally prevailed in this country, that all the arrangements of that Act are framed in deference to those mistaken views, and that in consequence of that deference they have exercised an aggravating influence upon commercial distress when it has arisen. That I believe to be the case. The great objection, in my mind, to that Act is that it paralyzes circulation. Circulation, which should at all times be active, and especially active at a moment of commercial alarm, becomes stagnant at the very instant that this alarm occurs. That Act applies to all circumstances, however different, exactly the same treatment. Whether you are dealing with a foreign drain occasioned by an unfavourable exchange, or a domestic drain occasioned by panic, the action of the Bank Act is exactly the same. While in one instance it is perfectly competent to control the foreign inconvenience, the very moment there is j a domestic alarm, the Bank, instead of encouraging the public, announces that it also is subject to terror, and it in- creases the action of the very panic which it ought to allay. Now, Sir, at the bottom of all this, as it appears to me, is the misapprehension that existed in the framers of that Act as to the principle which regulates the issue of bank-notes. They assumed as a truth what I think can be proved to be an error—that it was possible for any issuer of notes to force a circulation; but if the principles which I have attempted to recommend to the consideration of the House are founded in truth, we need no longer argue as to whom a discretionary power is to be intrusted in the issue of banknotes convertible at par, because it is impossible that such a discretion could ever be used. That is the point to which the House must direct its attention. The right hon. Gentleman opposite, anticipating from me, perhaps, different observations from those which I have made, taunted me, either with proposing nothing, or as being about to make a statement which could not be supported by argument or maintained by fact; but I think that I have taken upon this occasion the Parliamentary course, the legitimate course, and, I will add, a very moderate and proper course. As for legislating before Christmas on a subject of this kind, it is quite absurd to suppose that even a Ministry could embark in such an undertaking; but I ask the House to come to-night to this conclusion, that though we are not in favour of precipitate legislation at a moment when every one knows perfectly well that it is impossible to legislate, yet that the materials for legislation are in our possession, and that in due season and with due deliberation we will address ourselves to the solution of this great public difficulty. Now, I will say one word with respect to the conduct of the Bank of England. I understand—and the Chancellor of the Exchequer told us in his last speech but one with some pride—that all the Directors of the Bank of England are in favour of the Act of 1844. Far be it from me, Sir, to speak in any other spirit of the Bank Directors than that of the sincere respect to which I think they are entitled. I think it a very great thing for a country like England and for a city like London that a body of men of such intelligence and public spirit can be found competent to take the management of a great national institution like the Bank of England, and conduct themselves, as especially of late they have done, with so much firmness and, I will add, with so much liberality. But when there is an attempt to influence public opinion and the conduct of this House by appealing to the great authority of the Bank Directors, I am sure that they will permit me to advert to some circumstances—not in a hostile, but in a truly friendly spirit—which I think ought to be brought before the recollection of the House, in order, not to deprive the Bank Directors of the due influence of their judgment upon our debates, but that that influence should be tested and be placed before the House, not in an exaggerated light, but rather in those more subdued colours and calmer tone to which I think it is entitled. I assume that everybody has read the evidence taken before the Committee on the Bank Charter last Session; but there is a second volume, which it is quite possible that they may not have perused, although it is really the most entertaining volume of the two. It bears the somewhat repulsive title of "Appendix," and it has been published very lately; it is like some of those banknotes which were hoarded and kept back, for it was not brought into circulation until a very critical period. That interesting volume contains the opinions of the Bank Directors in the year 1856 upon the Bank Charter Act—about the time, I suppose, that the Committee first began to sit. The Chancellor of the Exchequer, wishing to obtain the best information from the highest quarter, addressed a circular to the Governor of the Bank, stating that he should be very obliged if each Director would favour him with his opinion upon the Bank Charter Act. I have not the volume with me, as I thought I would not weary the House by quoting from blue-books; but I perfectly remember the cream of the communications with which the Directors favoured the right hon. Gentleman, and if I make any slight mistake in referring to them I am sure that the most charitable construction will be put upon my motives. There is no doubt that the Directors of the Bank of England—at least, all who answered, and the vast majority of them did answer, the appeal of the Chancellor of the Exchequer—expressed themselves in favour of the Act. Our old friend Mr. Masterman, who was in favour of a relaxing power, and I believe Mr. Horsley Palmer, were the only exceptions. As a body, undoubtedly, they were in favour of the Act. But the Directors as a body were not contented with giving in their adhesion to the Act—they entered into a great many critical observations, and, strange to say, they all became prophets. They lifted up their voices and said that no doubt the Bank Charter Act was suspended in 1847, which was certainly a very awkward epoch in its history, and a rather troublesome fact to swallow undiluted; still they united in one common panegyric of the Act, because they declared that it was totally impossible that events like those of 1847 could ever occur again—a very simple, satisfactory, and all-convincing reason. The hon. Gentleman the Member for Southampton (Mr. Weguelin), late Governor of the Bank, my friend Mr. Hubbard, whom I knew as the Governor of the Bank, and who, I am proud to say, is a gentleman of Buckinghamshire, and all the high authorities, were agreed upon this point. "The fact is," they said, "the rules of banking are now understood. In 1847 we did not understand our business, but we understand it so completely now that you may dismiss that year from your memory as a hideous dream; let 1847 no longer disturb the slumbers or awake the inquiries of the Chancellor of the Exchequer; those times can never come again; we now know the true principles of banking, and you may be perfectly easy and may go down to Parliament and propose a Committee of inquiry to amuse Members and the nation, and rest with confidence on the Act of 1844." It is a remarkable thing—and the Chancellor of the Exchequer certainly owes an explanation to the Bank Directors for his conduct in that respect—that the right hon. Gentleman should have circulated all those prophecies in this blue-book, and that after another suspension of the Act in this present year. He may say, perhaps, that the book was printed, that it was a folio, that great expense had been incurred in producing it, and the like; but I really think, even if the Members of the Government had subscribed among themselves to defray the cost, that they should have suppressed that volume; and, whatever excuse may be given, I shall always think that there was a certain degree of malignant candour on the part of the Chancellor of the Exchequer and those with whom he consulted in having thus publicly pilloried at such a moment his old friends the Bank Directors. For myself, I can only say, that nothing in the world could have induced me to have referred to the circumstances but an overwhelming sense of public duty when I found the opinion of those gentlemen brought forward with such weight as conclusive in favour of the Act. It was with the utmost satisfaction that among those letters from the Bank Directors I did not remark the signature of one who is a Member of this House, and of whose friendship I am proud, of one who on this subject has addressed the House before with that effect which a thorough knowledge of the subject and natural eloquence will always command. I believe that my hon. Friend the Member for Huntingdon (Mr. Thomas Baring) was at the time to which I refer at the baths of Kissingen, where, for his own sake and for that of the country, I trust he reaped the utmost benefit. If I may be permitted, in closing these observations respecting the Bank, to make one remark of a more serious character—as I hope that the proposed Committee on the Act of 1844 will receive its death-blow from this debate—I will express my opinion that there are three great conclusions with regard to the management of the Bank satisfactorily established by the evidence which we have before us. I think it is by that evidence conclusively shown, in the first place, that the Directors of the Bank of England really exercise no more control over the circulation of their notes than the hon. Members of this House do; and I believe that what is called the management of the circulation of notes by the Bank Directors is a misnomer and a delusion. Secondly, we have established that the Directors of the Bank of England have a great duty to perform to the nation as well as to themselves, and that is by the policy which they extend to the management of their securities—a subject of infinitely more importance than the circulation of bank-notes, and in the wise management of which the wealth of the nation is indeed deeply concerned. It is in the regulation of their rate of discount, it is in the discrimination and discretion with which advances are made by the Directors of the Bank, that a beneficial influence may indeed be exercised over the fortunes of this country. And, thirdly, it does appear that it has become a great national object, which statesmen ought to insist on accomplishing, that there shall be in the Bank of England a great treasure at the command of the Directors, by which, when moments of emergency arise like those which have recently occurred, it shall be in their power so far to assist distressed commerce, not by advancing capital, but by ensuring, by the possession of that treasure, that there shall be a currency—an active circulating medium—which shall be the medium of exchange where real capital is concerned, and that those interested in the pursuits of commerce shall not find themselves in the desolate position in which some persons of undoubted capacity and resources have been recently found. Now, I have endeavoured to-night to draw this subject out of the limited sphere of Select Committees of inquiry. I am convinced myself that we shall be taking a step injurious to the community and injurious to the character of this House, if we evade any longer the attempt to arrive at a statesman-like settlement of this question. Sir, in my mind the functions of a Committee of inquiry with regard to this subject are entirely exhausted and fulfilled. No one can esteem higher than I do the labours of Select Committees of this House. I look on the Parliamentary literature of England as one of the proudest products of the national mind. There is a mass of information, there is a power of research, there is an exposition of argument on all questions that have deeply engaged the public attention, which no other country can produce, or for one moment attempt to rival. Sir, the question of the circulation was one of a nature so abstruse, that it demanded that species of investigation which a Select Committee of Parliament can alone extend to a subject; because we must remember that our Committees of inquiry have two characters. They not only pursue research, but they exercise criticism. They not only accumulate information, but extend to the witnesses that cross-examination which cannot be exercised in this House. It is, therefore, of the utmost importance, when there is a great question of public interest of an abstruse and complicated character, dealing with vast details, and yet requiring the ascertainment of profound principles, that that subject should not only be subjected to the investigation of a Committee of this House, but that the investigation should be prolonged for a considerable period. I think the subject of the issue of bank-notes by the Bank of England has received that sufficient and ample investigation which it required and de-served. I am not supposing that upon such a question as the principles which should regulate issue, this House can immediately come to a unanimous opinion, or that any opinion can be carried here on that subject by any large majority; but the way that we shall come some day to an overwhelming opinion, if not to an unanimous one, on this subject is by discussions in Parliament, for which the question is now ripe. The labours of a Committee of inquiry, however invaluable they may be, exercise no influence, generally speaking, out of doors. The subjects are so vast, the number of questions asked so immense, the variety of detail so great, the conflicting statements so striking, the authorities so weighty and so balanced, that it requires men who have leisure at command, and not only leisure but penetrating minds, to arrive at any conclusion which can attempt to guide public opinion. But the labours of Parliamentary Committees, though they exercise little influence out of doors, exercise immense influence in this House. In those volumes when they are digested, we find materials for thought which form our opinions, and it is when the mind of Parliament is in that state that the discussion of public questions here discovers, asserts, and vindicates the truth, and that, through our conclusions, acts on opinions out of doors. And, in my mind, we shall be taking a course which will tend not to depreciate banknotes, but the character of Parliament, if year after year, crisis after crisis, and convulsion after convulsion, it turn out that all that the House of Commons can do is to refer this question again to a Select Committee. I was surprised to hear that one of the most eminent men in this country—one whom I greatly respect, as I ever respect intellectual power—Lord Overstone, has declared that, in his opinion, the discussion of this subject is inconvenient and injurious; that Parliamentary debate upon it should not be encouraged, but, on the contrary, should be prevented; and that we should rest on the conclusions that we have before us in the Reports of our Committees. Sir, I am surprised that a man so eminent, so capable of maintaining his opinions by his pen and by his tongue—a man who, besides, is a Peer of Parliament, should give such an opinion upon the proudest privilege of Englishmen, and one, as I believe, the beneficial exercise of which cannot be overestimated or exaggerated. No, Sir, I hope the time has arrived when we shall come to some safe and satisfactory solution of this long-vexed question. But I am sure, whatever may be the consequences of this Amendment, I am only acting rightly when I recommend the House to delegate their functions no longer to Select Committees, but to show to the country that sent them here that they are equal to the fulfilment of a great public duty.

Amendment proposed, to leave out from the word "That" to the end of the Question, in order to add the words "in the opinion of this House, no further inquiry is necessary into the operation of the Bank Act of 1844 (7 and 8 Vic. c. 32)," instead thereof.

Question proposed, "That the words proposed to be left out stand part of the Question."


Upon this dry subject at this late hour, and as I know the House is desirous of closing this discussion to-night, I certainly have no intention of trespassing at any great length upon its attention, and the more especially as the vote which I intend to give is a vote in favour of that inquiry which has been asked by the Chancellor of the Exchequer, for I think many of the difficulties of this subject can be more conveniently discussed in a Committee than in a debate in this House. Two matters have been brought before us. One is the proper mode of dealing with a commercial difficulty of great magnitude. Of that part we have already disposed without controversy, by giving our unanimous concurrence to a Bill of Indemnity, and to-night we have been told by the Chancellor of the Exchequer that the circulation of the Bank of England has returned within its ordinary limits, the amount of bullion now exceeding £8,000,000, and the reserve £4,000,000. The question, then, that remains is this—Ought we, or ought we not, to appoint a Committee of inquiry? Now, how stands the case? In the first place, a Committee of inquiry into this subject was unanimously appointed in the last Session of Parliament; that Committee closed its deliberations by recommending its own reappointment. It is true, and an important feature in the case, that a large part of the inquiry has been exhausted, as far as the taking of evidence was concerned—namely, that part of the inquiry which relates to the Bank of England; but they have made no Report to the House, and we are without their statement of the results of their investigation. But what has happened in the interval which should render us less desirous of continuing that inquiry? That Committee was going to inquire into the issues of the country banks and into the question of the issue of the Scotch and Irish banks. It was also going to inquire into the interesting subject of the relations between the Bank of England and the Government; and has anything occurred to render that inquiry less desirable? There has occurred a series of commercial circumstances which is not less interesting or less deserving to be considered and to be communicated to this House in the shape of a Report of that Committee than any previous series of events in the history of commercial disaster. What have we just heard? A most ingenious and elaborate speech, the ingenuity of which I confess in some instances transcends my humble powers to follow, but a speech which raises a number of points which I am sure this House will be unable to decide without the previous assistance of many laborious Committees. We have been told that the troubles from which we are now suffering are to be traced in a great measure to the results of the influx of gold from California; that they are connected with the great expenditure which has been going on in railways and public buildings in France; that they have some connection with the Credit Mobilier, and are not entirely unconnected with three bad harvests in France. It may be so; but if these are the circumstances which have aggravated the edge of commercial pressure in England rather than in France, I submit they do need investigation by a Committee to substantiate and make those points clear before we are prepared to legislate upon them as to the currency. Then we have been told that the doctrine of the Bullion Committee, which was in some respects sound and bene- ficial, had, upon the other hand, laid a foundation of error which we have followed up in our currency legislation for the last half-century. I submit that if the labours of Horner, Huskisson, and others are to be overthrown by a decision of Parliament, it will be after further investigation by other Committees, and that we are not at once prepared to legislate in that direction. I submit to the House that if in the last Session the right hon. Gentleman who has just sat down gave the great weight of his authority and the great advantage of his abilities to the deliberations of the Committee which closed its labours for a time by recommending their own reappointment, both that which has happened and that which has been said in the interval add strength to that recommendation. What has been the main cause of the calamities from which we have suffered? One thing is admitted, that there is nothing in the causes or the circumstances of these calamities which tends to throw discredit upon the system of currency legislation now prevailing in this country. We have seen greater suffering in Hamburg with a metallic currency than there has been in England. And what is the country from which all these evils originally sprang—Quo fonts derivata clades?—a country which enjoys a mode of circulation which has just been so eloquently recommended to us—a convertible but unlimited currency, which is incapable of mismanagement. We find the result is, as has been justly said, mainly owing to new circumstances in regard to the use of commercial capital, and the use, and, if you will, the abuse, of commercial credit. We have seen grow up within the last ten years so vast an instrument for the diffusion of commercial capital and such a creation of commercial credit as constitutes a new feature in our social system since the date of the last crisis in 1847. I allude to those extraordinary amounts of money which are now held in single hands upon deposit. Those sums were formerly inactive, intended only for the most ordinary and tranquil operations, and constituting, when collected together, sums which first acquired commercial activity in the hands of the banker who used them; but now you have large amounts of deposits which have an active character in the hands of the depositors themselves. When things go wrong, and when there comes an advantageous opportunity of making large investments of these sums in depreciated securities, then there is an enormous amount of obligations only to be liquidated in money all requiring to be paid at the same time, and that is a feature which any currency, whether the metallic currency of Hamburg, or the limited convertibility of England, or the convertible unlimited currency which we are now told is incapable of mismanagement, will find it difficult to sustain. Three charges, if I mistake not, have been brought in the course of this debate against the Act of 1844. The first charge was brought by my hon. Friend the Member for Kendal (Mr. Glyn), who says that the Act of 1844 creates a limit, that the existence of that limit creates panic, that panic creates commercial disaster, and that therefore the Act of 1844 is the cause of commercial disaster. The second charge is that brought by the right hon. Gentlemen the Member for the county of Buckingham (Mr. Disraeli). In adopting what was the opinion of the Lords' Committee, but not the opinion of the Committee of this House in 1848, he charges upon the Act of 1844 that it exposes the country to this inconvenience—that it lays down one fixed rule with regard to two sets of circumstances of opposite characters and requiring different modes of treatment—namely, a foreign drain and a domestic drain of gold. The third charge is, that it imposes a useless restriction and fetter on commerce, inasmuch as it is impossible, under a system by which notes are convertible on demand, that the issue of those notes should be mismanaged. Now, what has been the case with regard to the first of these charges—namely, that the Act of 1844 has created a limit which has eventually created a commercial disaster? I take the liberty of submitting to the House that the limit is not owing to the Act of 1844. In the year 1820, when the bullion in the Bank of England barely exceeded £1,000,000, there was a limit that created a very serious panic, and that was attended with very serious disaster. I contend that in the years 1837 and 1839, in one of which the bullion was allowed to go below £4,000,000, and in the other, notwithstanding exceptional aid from the Bank of France to the extent of £2,000,000, the bullion positively fell to £2,400,000, there was, indeed, a limit which affrighted all those who were interested in the well-being and reputation of this country. Well, what is the effect of the Act of 1844? It compels the Bank Directors to take measures at an earlier period than they were formerly accustomed to do, while there is yet bullion in the coffers, against a foreign drain. If there be mismanagement, as I believe the Bank Directors will themselves be the first to tell you was the ease in 1847—or if events happen the responsibility for which we are all agreed does not attach to them, as in 1857—if in either of these cases you approach the limit which has been created by the Act of 1844, what is the consequence? That, there being that which is really the great security at all times of commercial danger and disaster—namely, an adequate supply of bullion in the Bank—it is then in the power of the Government of the day to relieve the country from its difficulties, and to set loose the fettered wheels of commerce. But if that alarm-bell had not been rung by the Act of 1844—if the foreign drain had gone on as in 1826, 1836, and 1839, what then would have been the use of an application to the Government? Powerless would have been the Minister, and useless would have been an appeal to the Government, unless that were done which the assailants of this Act tell us they will be the last to do—namely, to subject this country to the degradation of a suspension of cash payments. But unless that be done all the power that the Government possess could not give relief to the country. I say, therefore, in answer to my hon. Friend the Member for Kendal (Mr. Glyn), I admit that panic was the cause of the disaster, and that the limit created that panic, but if you tell me that it is the Act of 1844 that created the limit, I say that there is another limit which in every other period of commercial disaster before that Act was passed had been suffered to be reached, and the consequences of which were of a far more formidable character than those of the limit imposed by the Act. The right hon. Gentleman the Member for Buckinghamshire, following, as he said, the Report of the Committee of the Lords, charges upon this Act that it exposes us to this inconvenience—that it compels us to adopt the same remedy for two states of things which require very different treatment, namely, for a foreign and for a domestic drain. From the right hon. Gentleman I appeal to my right hon. Friend who sits near him (Mr. Henley), who so ably presided over the Board of Trade when the right hon. Gentleman was in office. What did the right hon. Gentleman tell us the other evening? He told us that there was no instance of a great foreign drain in this country that had not been accompanied by domestic discredit also. He might have gone further. Now that we have curbed the issues of the local banks, now that we have put an end to the issuing of small descriptions of paper, my right hon. Friend might have said, there is no conceivable cause in the present state of our social arrangements which can be expected to occasion any serious domestic drain, except an alarm supervening upon a foreign drain. Well, but if that is the case, how is the Act of Parliament to prescribe preventives against two totally different dangers? An Act of Parliament can only prescribe one course of conduct. This Act of Parliament prescribes against that which is a real danger. It has compelled the Bank Directors to control that foreign drain, and to take care that they shall have an adequate amount of bullion in their coffers. And as soon as it is known to the public that the foreign drain has ceased, that there is an adequate amount of bullion in the coffers of the Bank, and that the Bank and the Government are in unison and pursuing the same policy upon the subject, then, as a matter of course, the alarm is at an end, and the domestic drain ceases. Therefore it is that the same answer which I made to the former objection I now make to this objection, that it is by the enactment with regard to the reserve in the hands of the Bank Directors that the Act of 1844 enables you to control a foreign drain, and to get rid of that which is the origin of a domestic drain. Then we come to the third charge against the Act, namely, that it is a useless, and therefore objectionable fetter. The right hon. Gentleman the Member for Buckinghamshire has boldly stated this evening that a convertible and unlimited currency is incapable of mismanagement. He has made that statement in a British House of Commons assembled in unusual Session for the purpose of repairing the mischief brought upon them by a universal suspension of cash payments on the part of all the banks in the United States of America, which have a convertible but unlimited currency. Now, will the House indulge me—I shall keep faith with them with regard to the time that I shall occupy their attention—because I do not think that this part of the case ought to be left entirely unnoticed? We have been told to-night that Mr. Homer and Mr. Huskisson, as authorities on this subject, are obsolete. New canons are to be established: but let us examine upon what ground. I will refer to history. While Mr. Pitt's restriction was in force, we had not in this country a convertible currency. I will therefore ask you to refer to the last commercial crisis that occurred before the passing of that Act, namely, to the crisis of 1793, and also to any commercial crisis which occurred between 1819 and 1844; that is, to every crisis which occurred after our currency had again become convertible, and before it ceased to be unlimited. May I ask you, then, to consider what was the state of this country in the great crisis which occurred just before the Bank Restriction Act was passed? What was the state of the case in 1793? This is an extract from Mr. M'Culloch, quoted by him from Macpherson and Chalmers, the historians of that time:— The great object of a large class of traders was to obtain discounts, and the bankers of an inferior description were equally anxious to accommodate them. The catastrophe which followed was suchas might easily have been foreseen. The currency having become redundant, the exchanges took an unfavourable turn in the early part of 1792, and the Bank of England having been in consequence obliged to narrow her issues, a most violent revulsion took place in the latter part of 1792 and the beginning of 1793. When this revulsion began there were, it is supposed, about 350 country banks in England and Wales, of which about 100 were compelled to stop payment, and upwards of 50 were totally destroyed, producing by their fall an extent of misery and bankruptcy that had until then been unknown in England. Well, then, what happened in the year 1826 after our currency had again become convertible? We have been told that unjust blame was thrown upon the country bankers in that year. The opinion of Lord Liverpool was this:— Speculations in trade had been the origin of the evil, but it would not have been so extensive if it had not been for the state of the currency. Between 1824 and 1826 this species of circulation (country issue) had been actually doubled. This was a most material fact, and proved the continuance of the increased issues of the country banks after the Bank of England had contracted its issue to a very considerable amount. Lord Liverpool estimated the increase in the country issues at £4,000,000: Mr. Tooke at nearly double that amount. The right hon. Gentleman the Member for Buckinghamshire alluded with great respect (in which no one shares more cordially than I do) to an opinion which my hon. Friend the then Member for Huntingdon expressed in 1848. Although I do not agree in that opinion, yet I admit that the speech which he made before the Committee on this subject, if it had been reported, would have been an enduring memorial of his great ability and knowledge. May I read to the House what the head of the firm of Baring stated with regard to the cause of the catastrophe of 1826? Lord Ashburton (then Mr. Baring) said:— He had no hesitation in attributing the distress of the country to the extent to which the paper circulation had been pushed about eighteen months ago, and for which the country banks, and, he was sorry to say, the Bank of England, were answerable. The Bank of England, by the facilites which they afforded, had been the authors of that dangerous redundancy of money that gave rise to the wild speculations which abounded in every part of the country. It seemed as if Bedlam had broken loose on the Royal Exchange. The same frantic spirit overran the country. The bankers in London and their agents in the country, and the customers of both, were actuated by the same universal desire to put out their money in whatever way they could. Then all on a sudden the very reverse of this system came into practice. A panic seized the public. Men would not part with their money on any terms. Men of undoubted wealth and real capital were seen "walking about the streets of London, not knowing whether they should be able to meet their engagements next day. The over-issue by the country banks was the main cause by which the distress had been widely spread. Now this is exactly the language which the opponents of the Act of 1844 are fond of applying to the operation of that Act. Observe that in 1826, when the currency was convertible, hut unlimited, men of undoubted wealth and capital did not know where they should obtain the money with which they were to meet their engagements. Nothing can be more interesting than to see how well Ireland has weathered the gale of the present year; but what was the state of things in Ireland in the year 1826? Let me inform the House in the words of a distinguished native of that country, Sir H. Parnell, who says:— With the exception of a few that withdrew from business, and of four banks in Dublin, three in Belfast, and one in Mallow, the whole failed, one after the other, involving the country in immense distress. Sir Robert Peel, having quoted that passage, observes,— I was in the west of Ireland on the occasion, and I could hardly conceive such desolation and misery as was caused by the failure of these banks. Well, but what was the position of affairs in the years 1837 and 1839? The right hon. Gentleman who has just spoken—I regret to be obliged to allude to his speech in his absence—took my right hon. Friend the First Lord of the Admiralty severely to task because he cross-examined one of the witnesses who had spoken about the circulation at that period, and quoted figures which no doubt are correct, but which would appear to lead to a result completely different from that which was established by figures laid before the Committee by no less an authority than Mr. Norman. Those figures show that during the period just anterior to the great pressure of 1837 and 1839—namely, from April, 1834, to April, 1836—there had been an increase of notes to the amount of £1,800,000, and a decrease of bullion to the extent of £900,000, while during the severest period of the drain in 1837 and 1839 the circulation had increased to nearly £3,000,000. That is convertible and unlimited currency, incapable of being mismanaged. You may argue in favour of the theory as you like, and still it will require the investigation of Committees, and of many Committees too, before you can establish the practical justice of that doctrine. How, I would ask, can it be possible to charge the Act of 1844 with the aggravation of commercial disaster when your commercial disasters—the result of the failure of a number of banks—were far more terrible before the passing of that measure than has ever since been the case? I shall, with the permission of the Plouse, cite one other instance, namely, that of America. Between the years 1811 and 1820 about 195 banks became bankrupt in different parts of the American Union, and it is stated in a report drawn up by the Secretary to the Treasruy in that country, and which bears date the 12th of May, 1820, that those failures, which for the greater part took place in the year 1819, had produced a state of distress so general and so severe as to be almost unparalleled. These are, how- ever, by no means the worst instances of the failures which have taken place in America. Let me for a moment call the attention of the House to the details of the over-issue of paper money in the United States, and the consequences to which it has led. The amount of the note circulation in that country in the year 1830 was 66,628,000 dollars. Well, it increased before 1837 to 149,000,000 dollars; considerably more than double its amount in the former year, and what was the result? Why, that in 1837 every bank in the Union without a single exception was compelled to stop payment. In the year 1838 those banks which had been the best managed and had the largest amount of capital resumed payments in specie, but towards the close of that year and in 1839 a further crash took place, and the bank-notes afloat, which in 1837 had amounted to 349,000,000 dollars, became 83,734,000 dollars in 1842, and 58,503,000 in 1843, thus proving the injurious effects of the over-issue of paper money in 1837. Such, if the voice of history be heard, is the experience of convertible unlimited paper, both in this country, and in America. But then comes the question—why should we not leave a discretion in a matter such as this to the Directors of the Bank of England? I, for one, am disposed to place the utmost confidence in their prudence, but I think it is right that before we impose upon them the exercise of a discretion in relation to a question so critical as the issue of paper money, and in connection with which the smallest mistake would be calculated to prove so fatal to the interests of 'the country, we should ask them whether they desired to be intrusted with this power; and if their reply should be that in their opinion it is a power which it would be dangerous to intrust to their keeping, will there not, then, be a good reason why we should so far show the confidence we have in their discretion as to abstain from forcing upon them this dangerous responsibility? Now, we have been told that the Directors of the Bank of England are almost unanimous in their support of the Act of 1844. The oldest and certainly not the least influential member of that body, Mr. Norman, says:— I consider it is impossible to know until a drain has passed away the extent to which it will go, and it is very difficult while the drain is proceeding to ascertain all its causes. These are seldom simple, and involve a multitude of con flicting considerations. In fact, no human sagacity or experience is equal to the solution of such a question. He then goes on to recommend you not to abandon that law which, going over the history of the past, has, he tells you, been your guarantee against disasters such as those which in 1826, 1837, and 1839, produced the most lamentable consequences. The right hon. Gentleman who spoke last laid down towards the close of his speech three canons—if I may so call them—which he considers to have been conclusively established—namely, that the Bank cannot control its issue; that its Directors should be made duly responsible for the advance of their capital; and that they should always keep on hand a large reserve. Now, we are debating as to whether or not we should have a Committee of inquiry, and I should humbly ask the right hon. Gentleman whether the question, how it is possible for the Bank to be responsible for the advance of its capital, if it is allowed no control over its issue, is not worthy of a more searching inquiry than any which it has yet received? When the Bank advances bank-notes it is, in point of fact, advancing capital for the relief and the advantage of trade, as was signally proved to be the case within the last month. With respect to its maintaining a large reserve in its coffers, the action of the Bank is this:—to control the export of bullion by contracting its issues. This is done under the operation of the Act of 1844, and upon that measure the light hon. Gentleman appears to me to have cast a blame to which it is not fairly liable. I believe that public opinion does not concur in the view which the light hon. Gentleman has taken, but that it desires to see engrafted upon the provisions of the Act of 1844 other provisions framed in the spirit of progress, and not upon the principle of that convertible and unlimited currency which, in 1826, 1837, and 1839, was found to be compatible with so large an amount of commercial disaster. Let me beg of you to reflect before you adopt that principle. First, consider for a moment the difficulties with which the Act of 1844 has had to grapple. Within the last few years you have had a foreign war; you have had a foreign loan; you have had an almost unexampled drain of bullion from commercial causes; you have witnessed convulsive efforts upon the part of the Bank of France to supply itself with bullion; you have had an increase of your import and export trade so great, that if the most sanguine free-trader had ten years ago ventured to predict anything like it he would have been looked upon as an insane enthusiast. Now where, let me ask, has capital been found to meet all these enormous demands? Is it wise upon your part to abolish a system of currency which has been found equal to your great requirements? You will, perhaps, say that it failed you in 1847, and again in the present year. Yes, but it did not break down from any of those causes to which I have just referred, nor from the combination of them all, for in the letter of the Bank Directors to the Treasury, on the 2nd of December, they say, speaking of the state of things which had prevailed in November:— The continental drain for gold had ceased, the American demand had become unimportant, and there was at that time little apprehension that the Bank issues would he inadequate to meet the necessities of commerce within the legalised sphere of their circulation. Then your system of currency had ridden safely through the whole combined pressure of these unexampled demands on your capital. What then occurred? The same authorities add:— Upon this state of things, however, supervened the failure of the Western Bank of Scotland and the City of Glasgow Bank, and a renewed discredit in Ireland, causing an increased action upon the English circulation by the abstraction in four weeks of upwards of £2,000,000 of gold to supply the wants of Scotland and Ireland; of which amounts more than £1,000,000 was sent to Scotland, and £280,000 to Ireland, between the 5th and 12th of November. Is there, then, any reason why we should decline to pursue the recommendation of the Committee of last year, namely, that, having completed the investigation into the Bank of England, we should now proceed to investigate the banks of Scotland and Ireland. You have gone through a great disaster, emanating from a country—let it never be forgotten—that has this convertible currency, every bank of which has suspended payment; and, nevertheless, you are urged by those who are the warmest supporters of a convertible currency, and the most strenuous advocates of cash payments, to part with a system which has weathered the storm in comparative safety, and not even to take the prudent and reasonable precaution of entering into a full and dispassionate examination of the causes of this remarkable crisis before you determine whether you will again enter into the retrograde courses of 1826, of 1837, and 1839, or whether you will not rather endeavour, if you do make any changes, if you do add any stones to the edifice, to secure that they shall be such as will give most complete effect to that policy from the partial adoption of which you have already derived these inestimable benefits.


I can assure my hon. and learned Friend opposite (Mr. Malins, who had risen at the same time) that I will not long stand between him and the opportunity he seeks; but, after having heard the speech of my right hon. Friend who has just, sat down, although I had not intended to follow him in debate, I feel that it will be more convenient to the House, at a moment when time presses, that I should now make the few remarks which I have to address to it. Because, whatever may be the sentiments of the right hon. Member for Buckinghamshire after the opinions expressed by my right hon. Friend upon the Act of 1844, my duty is at least a very plain one. It is to thank my right hon. Friend for the able and, as I think, unanswerable statement he has made, to show that we should indeed be taking a retrogressive course if, after thirteen years' experience of the Act of 1844, we were to return to what has been termed a convertible currency, regulated by discretion, and unlimited in amount. Sir, to every word of the speech of my right hon. Friend on that subject, I for one give my hearty assent, and I am so willing to be bound by it that I will not trouble the House with a single remark upon the arguments he has adduced. But upon the application of those arguments I am quite sure that my right hon. Friend will permit me to make an observation. For what is the doctrine he propounds,—not with respect to the currency, on which I think he is pure light and reason, but with respect to the decision which the House is called upon to give to-night? He says that doctrines are now advanced which throw over all that has been established by the labours of Mr. Horner, Mr. Huskisson, and those who followed them, and he adds, it will require the investigation of one Committee, aye, and of many Committees, before we put a negative upon those doctrines. Sir, I agree with my right hon. Friend, but I invert his proposition, and say it will not require the labours of many Committees, nor even of one Committee, before we stamp those doctrines, in a moment of crisis, with our solemn sanction and assent. It is my right hon. Friend, the advocate of those doctrines, who, as it appears to me, is placing them in jeopardy by inviting us now to go into Committee in order to ascertain whether we are to establish a system of unlimited issues; in order to inquire, not whether we are to go forward to the completion of what we have already done, but whether we are to go backward in ratification of doctrines of which he has himself demonstrated the unsoundness. Therefore, being firmly convinced that the system which prevailed before 1844 was radically vicious and dangerous, I am not willing, without a vote of this House, to admit that it still remains for a consideration before a Committee whether we are to return to that system or not. I say the case is clear, the evidence accumulated; and the speech of my right hon. Friend is itself the strongest testimony I could quote. If, then, we are prepared to go back, let us say so by our vote. That vote if challenged will, I think, result in the establishment of the opposite principle. But at any rate, whatever your conclusion may be, the evidence on this point is accumulated beyond the possibility of leaving room for a further demand; and I frankly, yet most respectfully own, that for the House of Commons to leave it in doubt with the nation, upon what essential and fundamental principles it intends the currency of the country to be based, is a course not worthy of the dignity of the British Parliament, and not answerable to the demands which the people of England have a right to make upon their representatives. But while I strongly entertain this feelington general grounds, I am bound to admit that there are other and specific grounds which make it plain to me that, unless it can be shown that real doubt hangs over this subject which can be cleared up in a Committee, we ought now to proceed to tell the country distinctly what we think about the Act of 1844; and my main reason for coming to that conclusion is this—I feel satisfied that after what has occurred the Act of 1844 cannot stand as it is. It is, I hold, impossible for it so to stand. That Act, as experience has shown, requires alteration in order to obviate difficulties and dangers which, if we leave them without a remedy, will increase every day, and will beset with peril, as long as they are suffered to continue, the very principles of the Act itself. Upon two occasions we have seen that Act brought into circumstances of the sharpest trial and crisis. I am afraid, judging from the figures of my right hon. Friend the Chancellor of the Exchequer to-night, that we should be too sanguine if we were even now to say that the commercial crisis has passed away; for if I understood him rightly, the reserve of the Bank stands at about £4,500,000. These £4,500,000 include, I believe, £2,000,000 of issues not authorised by law. Therefore the real reserve of the Bank, under the law of the land as it stands, is about £2,500,000. On the 11th of November, that reserve was something like £1,500,000, not quite so much, I think, but not far shore of it. [Mr. MALINS: Not a million.] I believe it was nearly £1,500,000. We have, therefore, between the 11th of November and the 11th of December an increase of something like £1,000,000 in the reserve of the Bank. So far so good. But what has been happening in the interval with the public revenue; and what has been the increase in the public deposits during that period? If the public deposits during that period have increased by a sum less than £1,000,000, or less than the increase of the reserve, whatever it is, I grant that so far you have reason for congratulation. But if they have increased by a sum equal to the entire increase of your reserve (I now speak of matters of fact, and have no fear of creating ill-founded apprehensions)—if I say, the public deposits have increased by a sum greater than the increment of your reserve, then I cannot say that we have as yet made any very great progress towards a state of ease and security. But, however that may be, we must look to a recurrence of these crises; because it is not in the currency that the root of the evil lies—it is not, I am sorry to say, simply in a foreign drain, in a foreign derangement of trade, or in foreign folly and foreign speculation that the source of the mischief lurks, but much of it springs from the state of the trade of this country. We must look therefore, I repeat, to a return of these crises; and now I have to ask myself, "Have I reason to be satisfied with the way in which these crises are habitually met?" I say, habitually met, because the two precedents which have occurred, will form an inflexible rule for the third whenever the opportunity occurs. How, then, will the third crisis be met, when it comes? During the interval, what influence upon the discretion of traders will be exercised? Will they fear that if they overrun their means they will have to pay the just and natural penalties of improvidence? Why, Sir, on the contrary, they all know perfectly well that if they can but stand the gale for a certain time there will come a letter—not solicited by the Bank—on the responsibility of Government, signed by the First Lord of the Treasury and the Chancellor of the Exchequer, stating with what regret they have observed the menaced peril to the commerce and labour of the country, and directing that issues be made contrary to the law. Therefore the force of the Act as a preventive check, not with respect to foreign drains, but with respect to commercial overtrading and bad banking, which was diminished in 1847, in 1857 I am afraid is utterly shattered and destroyed. But I do feel that there is force in what has been said by my hon. Friend the Member for Kendall (Mr. Glyn), whose great experience in these matters, as well as his natural ability, give much weight to the judgment which he has delivered in this House. My hon. Friend says that the existence of a limit, as it is determined by the Act of 1844, has a decided and powerful tendency to create an apprehension gradually deepening into panic, which panic increases the commercial pressure, and finally brings about a suspension of the law itself. So that the very rigour of its provisions in certain states of public feeling and of the public mind becomes an operative cause of the irregular relaxation of the law. Unless I am much mistaken, a noble Lord, who I think has conferred great services and benefits upon the country by his publications, and by his spoken opinions on the subject of currency—I mean Lord Over-stone—has in another place shown that he is superior to the pedantry of a dogmatist and to the egotism of self-love, and has stated that he thinks the time is come when Parliament and the Government should consider whether there should not be inserted in the Act of 1844 certain elastic provisions calculated to meet peculiar and exceptional circumstances. I have no authority to construe these words, but I think in substance they can have but one meaning, namely, that an opinion has found its way into the mind of Lord Overstone to the effect that it is desirable to endeavour to provide something like the relief, which has been given upon a recent occasion, by means embodied in the law itself, by means having authority of law, and by means which will save you from the great and serious evils that I do not hesitate to say must attend every suspension of a statute of the realm by the authority of the Executive Government. Nor is this the only constitutional point. I feel the pressure of another argument. I hear it said—and I am not able to deny it—that the effect of maintaining certain provisions of law which we know will be relaxed, and which almost all of us think should be relaxed, is to place it in the breast of the Executive Government to determine what houses shall be ruined and what houses shall be saved. Of course, I shall not be understood as meaning here to cast the slightest imputation upon the discretion and much less upon the purity of the Government as exemplified in the recent suspension of the Act. It is not necessary to take into our view any element of the case which would impart one moment's offence to any man; but upon principle, as it is foreign to English habits, ideas, and traditions, as it is a thing fraught with mischief in itself, I do regret that a notion should prevail in the country that such a discretion of determining the ruin of one man and the preservation of another should be vested in the Ministers of the Crown. Pudet ct hæc opprobria nobis Et dici potuisse—— and I will add, et non potuisse refelli, for if it be true that this discretion is given, I cannot find the shadow of a justification for it. My right hon. Friend the Chancellor of the Exchequer says that we may go into Committee, and consider whether the Act should be left as it stands, or whether, on the contrary, we should insert in the Act a section empowering the Executive Government, under certain circumstances, to suspend it. I think my right hon. Friend said that as far as commerce is concerned the effect would be exactly the same in the two cases; that the insertion of a clause was certainly recommended by constitutional arguments, but that, upon the whole, his opinion was against it. It appears to me that neither the one nor the other of these courses would be satisfactory. I think it is the uncertainty of the law itself which is the main evil in the case. I grant you that we get rid of a portion—whether the major or minor portion I shall not stop to inquire—of the evil by inserting that clause in the law. Lord Overstone himself appears to be of opinion that there are means by which in the law itself you might provide for a measure not less effective than the supra-legal—I will not say the illegal—step recently taken by the Government, and we could not have a higher authority upon the subject. There is another point on which I frankly own I have a strong conviction that the Act of 1844 requires to be altered. I do not know whether the alteration would or would not be acceptable to those who wish to innovate in what I presume to call a retrogressive sense, but I think it is one which all who take a practical view of these questions and are acquainted with the commerce of the country ought to desire and promote. The greatest evils have arisen in this country from that confusion which, although it has been repeatedly exposed in this House, prevails in the public mind between the functions of currency and the functions of banking. It is all very well that in an assembly of this kind, where we have the advantage of the counsels of many of the ablest and most enlightened men, these fallacies should be understood and exposed; but what we want to do is to destroy, not a theoretical error, but a practical misunderstand in the minds of the people and of the commercial community in England. For—and I speak in presence of those who can correct me if I am wrong—this unhappy confusion between the business of issuing money and the business of a banker to afford accommodation to his customers is not a theoretical error, but is a false principle engrained in the practical part of the commercial life of this country, and having a most powerful tendency to bring about the recurrence of these crises. There is a latent idea, I do not say in the minds of all, but in the minds of many, including some of the largest commercial and banking houses in the country—that when the day of difficulty comes it is the business of the Bank of England to provide for it. If you ask them why they think so, they cannot answer you, but they know that for a long series of years, whenever these crises have arisen, in some way or other—either with the law when the law was lax, or against the law when the law was stringent—the Bank of England has made this provision. I do not believe that without carrying onwards the Act of 1844 to the completion of certain of its provisions, you will ever get rid of that most mischievous misapprehension. There again I am fortified by a declaration of Lord Overstone—a declaration which he does not want a Parliamentary Committee to adopt in order to seal his enunciation of it—a declaration to the effect that the time has come when you should distinguish between the functions of issuing money and the functions of banking. Now, Sir, when we go into this Committee, if it be the pleasure of the House to go into it, it is clear we postpone a remedy upon all these points. Why do we postpone them? The Chancellor of the Exchequer has himself made a speech to-night, in which he has given clear and strong opinions upon a variety of topics, and I put it to the fair candour and consideration of the House, we being assembled here rather as men of business than as politicians, whether there is any obscurity hanging about that part of the subject which is connected with the functions of issuing money and the banking business of the Bank of England that ought to prevent the Government from being prepared in February to make a proposal to Parliament. Further, I will venture, first of all, to express my conviction that if the will of the House of Commons be signified in that sense, such proposal will be made, and then to state my strong belief that no period can be conceived when the Government would find circumstances existing of a character more favourable on the part of the public, and I may add, on the part of Parliament, in order to ensure to them that fair and candid attention, favour, and assistance which every Government has a right to expect from Parliament and the country when it is endeavouring to raise and to summon up its vigour for the purpose of introducing or of extending sound principles in British legislation. I do not wish to weary the House, but I must point out that we are evading these questions of issue by the appointment of a Committee. My right hon. Friend near me (Mr. Cardwell), and I think. the Chancellor of the Exchequer, both said:—" Oh, the Committee of last Session took evidence upon this subject, but they made no Report upon the evidence, and you are now going to adopt a course which will prevent them from framing their Report." Why, I apprehend there never was such a case as that a Committee hearing evidence in one Session upon a particular subject which it is admitted they exhausted, should make their Report in the next. The truth is, that so far as the position of the Bank of England is concerned, the nominal Report of the Committee of last year recommending their reappointment was equivalent to a declaration by them that they intended simply to place the evidence in the hands of the House; and I am sure that that sort of indecisive treatment of these questions is the treatment we must expect from a large Parliamentary Committee, without any very great guiding authorities to lead the course of its inquiries and to determine its functions. The Chancellor of the Exchequer has accused me to-night of having shown a want of appreciation of the witnesses examined before the Committee, and my right hon. Friend triumphantly enumerates the names of a Member of this House, of other Bank Directors not Members of this House, and of my Lord Overstone, and shows that they have examined an excellent set of witnesses, and have got a great deal of very good evidence. But that was not my objection to the Committee, and if it were not that my right hon. Friend is remarkable for simplicity and straightforwardness I should have thought he was aware that that was not my objection. What I objected to was not the witness called or the evidence taken, but that upon abstract questions of this kind Committees of this House are necessarily cumbrous instruments for getting at the truth, and that they spend a great deal of valuable time in unnecessary operations for the purpose of extracting in a great many words what my right hon. Friend at the table and other hon. Gentlemen within these walls could perfectly well enunciate in few words. Now, what has this Committee got to do? It has considered the functions of the Bank of England with regard to issue, and its first step will be to consider this over again. It is admitted that it has to consider the whole question of the position of country banks in England. It has to consider the position of Scotch and Irish banks. Then there is the question of the issue of small notes in England—a most important practical question, which entirely changes its aspect and position when you come under a law of limited issue, as compared with a system of private and unlimited issues. That question has hardly yet been touched. There are other questions, such as those relating to the standard of value in this country, the seignory of coinage, and a number of other points which also have hardly yet been touched upon. There is, moreover, the large question of the relations between the Government and the Bank of England, which I presumed the other night to call antiquarian relations—rather irreverently, perhaps, yet, I venture to think, not wholly without reason. One single instance I may adduce to show what I dare say very few hon. Members are aware of—I mean the unexamined state of the relations between the Government and the Bank, and to show that those relations are in a condition in which it is desirable that a new housemaid should be introduced to sweep away the cobwebs. I do not know whether hon. Members are aware that within the last year or two, whenever you have borrowed any sum of money for the exigencies of the public service, you have likewise made a new law that the Bank of England shall continue to be a corporation until the whole of the sum is repaid. Thus, when my right hon. Friend contracted (I think with the Rothschilds) to borrow £16,000,000 of money, he (I mention it not to his blame), following the uniform precedent which has been sent from time to time, and still exists, inserted a clause in the Bill adopted by this House which provided that the Bank should be a perpetual corporation while that loan remained unpaid. What is the meaning of such a provision? It is quite plain that it is an enactment drawn from times when Governments were in bad and banks were in good credit, and when it was a great object of Governments, which used to cheat bankers and rob the tills of traders, to get a body of respectable men to cover the loans they had contracted. Now, I say such a Clause as that in Acts of the present day is antiquarian and superannuated. It is desirable that those who lend money to the people of England should know that they do so on the credit of the State, and that the credit and the honour of Parliament should not be supplemented by such an assurance to our creditors. Now this is only a specimen of the general condition of the relations existing between the Government and the Bank of England. Mind, I do not impute blame to anybody on this account. I only say it is to the blame of those who, when a good opportunity occurs, do not avail themselves of that opportunity to place these relations on a better footing. Are not these subjects enough for a Committee. Are they not sufficiently grave, sufficiently wide, sufficiently complicated, if they are to go before a Committee at all, to occupy the whole of its attention? But I contend, on the other hand, that they do not now require investigation before a Committee. They are subjects which a Committee may perfectly well investigate in easy times, but which, in times of commercial crises like those through which we are passing, it is the duty of the Government to grasp with a bold hand, making known their views to the country in full confidence that they will receive the support and assistance of Parliament in settling them. It is admitted on all hands that we have a great question to inquire into. We have to inquire into the commercial causes of the crisis and its accompanying distress, which are enough to fill the hands of any Committee; and the whole case is really and simply this,—to overcharge a Committee is to stifle the questions you refer to them; it is not to play fair; it is rather to play false to the country. Is this Committee to inquire into the whole of the laws affecting issue, to examine into the particulars in which the Bank Act of 1844 should or should not be amended? Is it also to inquire into the causes of the panic? I say, let us make those amendments in the Act of 1844, which experience has shown to be necessary to bring its principles fairly to issue. Let us, above all, effect by law that separation of the functions of issue and of banking which will relieve the Bank of England from a false position in regard to the commerce of the country when crises occur; and when we have done that, then, and not till then, we shall be in a condition to approach and to deal with still graver questions. I say "still graver questions," because I confess I think that these matters relating to the law of issue, although complicated and difficult, have advanced to such a state of ripeness through the labours of eminent writers, of Committees of this House, of statesmen and economists, and through the experience of the community, that there is no reason why we should despair of a solution of the difficulty. The other evils, I am afraid, he very much deeper. I am afraid that the state of our law with regard to limited and unlimited liability, the principles upon which joint-stock banks in particular are carried on, the strange distinction we have established between joint-stock companies and private partnerships to the discredit of the latter, the scarcely less strange distinction set up between joint-stock banking companies and other companies, applying to the one the principle of limited liability and refusing it to the other—all this betrays a confusion and want of settled principle in our enactments which demand careful and patient consideration. I am convinced it will require the whole power of Government and the whole power of this House thoroughly to search to the bottom that great question—what are the commercial causes of the existing distress, and how far are these causes avoidable and remediable by legislation? If, therefore, we have got that question to face, do not let us confound and perplex ourselves by mixing up the investigation of it with twenty other subjects, which it is perfectly unnecessary to refer to a Committee. Let us settle by legislation and debate in this House that which is now ripe for such a settlement. Let us refer to a well-chosen Committee the investigation of that subject with respect to which it appears investigation will be useful. But to give a Committee nominal powers of investigation, and at the same time to choke and overwhelm it with questions respecting issue and currency, the operation of the Bank Act in England and the Bank Acts of Scotland and Ireland, is, I think, not a dignified, is not an effective, and is hardly a straightforward manner of despatching the business of the country.


said, he was desirous of stating shortly why he conceived the Bill of 1844 was founded upon principles false in theory and false in practice, as the experience of 1847 and 1857 most distinctly proved. What was the true principle with regard to supplying the people with the necessary amount of circulating medium? Every hon. Member must agree that it was the duty of the State to supply such an amount of the circulating medium, be it in sovereigns or be it in notes, as would secure the possibility of carrying on the commercial transactions of the country with ordinary facility. Taking that principle, and referring to general results, an experience of thirty years would show that a certain amount of bank-notes was absolutely necessary for the use of the public. Now, since the Act of 1844 the lowest amount of bank-notes in the hands of the public was in the summer of 1844, when they amounted to £16,942,000, and the highest was in July, 1853, when they reached £23,880,000, so that there was an oscillation within the interval between £16,000,000 and £23,000,000. These, however, were extraordinary instances, for the oscillations in general did not exceed the sum of £3,000,000. Now the lowest amount of notes since the passing of the Act of 1844 in the hands of the public was £18,000,000, and therefore they might fairly deduce from these facts that the public required a circulation which should never be less than £20,000,000. Beyond that it was absolutely necessary that there should be a reserve in the hands of the Bank of England. Experience showed that there must be at least an average of £20,000,000 in the hands of the public in order to enable ordinary commercial transactions to be carried on with ease and satisfaction and £5,000,000 reserve in the Bank. Mr. Chapman, than whom there could be no higher authority in the country upon this subject, had told them that all commercial men carried on their business with anxiety and fear when the reserve got below £4,000,000; and, therefore, he concluded there must be at least the amount of reserve he had mentioned. They, therefore, must secure an issue of £25,000,000 of notes; and the short question was this, did Sir Robert Peel's Bill of 1844 assure to the public an issue of notes to that amount? He contended that facts and figures alike contributed to prove that it had not. The right hon. Gentleman the Member for the University of Oxford (Mr. Gladstone) had spoken of the danger of unlimited issue. An unlimited issue was not required. Those who were opposed to the Bill of 1844 did not demand an unlimited issue; but what they did demand was, that the Bank of England should at all times have the power of issuing a sufficient amount of bank-notes to enable the business of the country to be carried on. What was the cause of the disaster of 1847? That the power of issue being reduced to £22,000,000, there was not a sufficient amount of notes to be had to secure the carrying on of commercial transactions And in the present instance the amount had dwindled down so low, even below £21,000,000, that there was scarcely a note to be obtained, and if the letter of the 12th November had not been issued, it was evident that the Bank of England, must have stopped payment in forty-eight hours. Such was the effect of Sir Robert Peel's Act. He would only say a few words more in speaking of the vote which he should give that night. He must say that he had considerable doubt about his vote. He saw on the one hand very little prospect of legislation upon the subject at the present moment; but, on the other hand, if from any cause the reserve went below £2,500,000, they must come to a dead lock. He quite concurred with the right hon. Gentleman (Mr. Disraeli) that it was high time to legislate on this great subject, and, therefore, he could not but agree in the Resolution, that it was improper that there should be any further inquiry, because the time for legislation had arrived. On those grounds he came to the conclusion that it was his duty to support the Resolution of his right hon. Friend.


said, he had listened with great interest to the debate, not only with reference to the Indemnity Bill, but also to the Motion before the House, and he was anxious in a few words to state the reasons why he should vote for the reappointment of the Committee. The Committee had recommended their own reappointment, but what was of more importance was, that since the evidence had been taken before that Committee a crisis had occurred in the commercial affairs of the country unparalleled since 1825. He did not wish to submit this question to a Committee with the view of avoiding the responsibility of dealing with it. He had no prejudice either in favour of or against the Act of 1844. He did not agree with his hon. Friend the Member for North Warwickshire (Mr. Spooner) that that Act ought to be abrogated, and that there would be no safety for commerce until it was abrogated; but he thought the Act did require some amendment. He believed there were many supporters of the general principle of the Act who still thought that some material alterations and amendments might be made in it, and the views of such persons were, he conceived, justified by the opinions of the late Sir Robert Peel, which had been quoted by the Chancellor of the Exchequer the other evening, and he had been pleased to hear his right hon. Friend the Member for Oxford University (Mr. Gladstone) say he was prepared to agree to some alteration. In that speech Sir Robert Peel said:— The Bill of 1814 had a triple object. Its first object was that in which I admit it has failed, namely, to prevent, by early and gradual interference, severe and sudden contraction, and the panic and confusion inseparable from it. He (Mr. Horsfall) was one of those who thought that the prevention of panic was the most important feature of the Act, and if the Committee on its reappointment could devise any means for preventing the recurrence of these panics, they would effect what Sir Robert Peel regarded as one of the principal objects of the measure, but which experience showed that it had failed to accomplish—they would render a great public benefit. He would not detain the House by referring to the other two objects of Sir Robert Peel's Act. Although he held that the Act of 1844 was susceptible of very material improvement, he was not one of those who held that either the crisis of 1847 or the present crisis arose from that Act. He had never been disposed to make the Act of 1819 the scapegoat of the crises of 1825 and 1837. He believed that if the House adopted the most perfect measure that could be devised, they would still be unable by any Bank Act to prevent the periodical recurrence of these crises. He was of opinion that, although the primary cause of these crises might be the export of the national capital, they arose in every instance from overtrading. The hon. Member for Newry (Mr. Griffith) had suggested the other evening that a law should be enacted with the view of preventing reckless trading, and he (Mr. Horsfall) believed that a measure which rendered parties who engaged in such trading amenable to the laws of their country would be attended with great advantage. The hon. Member for Bury (Mr. Philips), in alluding, a day or two ago, to the letter addressed, by the Government to the Bank Directors, said that the effect of that letter had been to revive speculation in produce, and he referred to three articles—wool, cotton, and silk. He (Mr. Horsfall) thought it important that the House should be satisfied that this statement was unfounded. He would beg leave to read a very few lines from the circular of Messrs. Little-dale and Co., the well-known brokers, which was published on the 8th of December. With reference to silk, they said,— We have not any improvement to report during the past month. In China silks the deliveries still continue to diminish, and stocks to increase. Some few sales have been made at a reduction of 1s. 6d. per lb. on all previous quotations. Then, again, as to wool, the circular said,— We are unable to report any improvement during the month, nor does the excessive and universal derangement of money matters permit any indication of our future prospects. The London colonial sales commenced on the 12th ultimo, and terminated on the 4th instant. They comprised about 45,000 bales. Throughout the scries the biddings were unusually slow and spiritless, and about 15 per cent is estimated to have been withdrawn. A decline of 2d. to 4d. per lb. on Australian, and 3d. to 5d. per lb. on Cape wools, is reported. There was, therefore, no speculation or improvement in either silks or wool. With regard to cotton, Messrs. Little-dale said,— Cotton declined further after the issue of our last circular, and on the 12th, before the suspension of the Bank Charter Act, middling Orleans was sold at 6¼d., or at a decline of fully 2d. per lb. in one week. The suspension of the Bank Act relieved the market for a few days. Holders who had been the most pressing sellers withdrew their cotton; some regularity of prices was again established, and an advance of 1d. per lb. from the low sales previously made was obtained. However, the cheerful feeling soon subsided; the hope of a permanent improvement in financial matters gave way to fresh gloom; failures increased, holders of produce had greater difficulty than ever to obtain discounts, prices declined again, and on the 26th of November middling Orleans was sold at 6d. He thought, therefore, the hon. Gentleman was not quite justified in his condemnation of the effect of the letter which Her Majesty's, Government deemed it their duty to issue. He (Mr. Horsfall) considered that the Government were entitled to commendation for having issued that letter, and he spoke from his own personal knowledge when he said that if it had been delayed for four and twenty hours the consequences would have been most disastrous. As the representative of a commercial community he begged to thank Her Majesty's Government for having issued that letter, and it must be satisfactory to them to know that the measure they had adopted was approved by the noble Member for the City of London (Lord J. Russell), who adopted a similar course in 1847, and if Sir Robert Peel had been living it would undoubtedly have met with the approval of that statesman. He (Mr. Horsfall) might also venture to quote on this subject the opinion of a distinguished man—the late Mr. Huskisson—which could not fail to carry very great weight. That opinion was expressed before the passing of the Act of 1844, and could therefore have no reference to that measure, but merely to the general state of our monetary system. Mr. Huskisson said,— It is therefore manifest that, by a possible combination of circumstances, the Bank might be driven to part with its last guinea, not only without having checked the drain, but with the certainty of increasing it in proportion as the amount of their notes was diminished. At such a moment the preservation of the Bank from actual failure, though an important, is but a secondary consideration—that of the country is the first. The possible cases, however, which may call for such an intervention of power are not capable of being foreseen or defined by law. The necessity may not occur again; if it should the application of the remedy must be left to those who may then be at the head of affairs, subject to their own responsibility and to the judgment of Parliament. He (Mr. Horsfall) would merely express his conviction that the course recently pursued by the Government had met with unanimous approval on the part of the commercial population of the kingdom.


said, he understood a right hon. Gentleman who had recently addressed the House to say that the issue of the letter by the Government might lead to the inference that certain persons might have been assisted previously, or subsequently to the issue of the letter, who would not have received assistance had not such a letter been issued. In reply to that suggestion, he (Mr. Weguelin) begged to say that, so far as he was aware, no application for assistance upon good security, either before or after the issue of that letter, had been made by any person to the Bank of England which was not complied with. That was an important practical question, but one which was entirely independent of the duty of the Directors under the provisions of the Act. According to the strict construction of the Act, the Bank Directors ought to have stopped all discounts and advances some days previously. The reserve was in such a condition that had they supposed the letter of the Act would be carried out, it would not have been safe, after the 5th of November, to continue their advances. By adopting such a course, the Directors of the Bank took a great responsibility upon themselves, but they had to consider whether suspension of discount and advances would not, under the peculiar circumstances of the case, have done more harm than their continuance contrary to the spirit of the Act. He believed that their proceedings were regularly communicated to the Government up to the period when they determined on issuing the letter suspending the Act of 1844. The right hon. Gentleman the Member for the University of Oxford seemed desirous of hurrying the House into legislation on the subject; he seemed desirous that the issue should be completely separated from the banking department, and that the Bank of England should become, in reality, what she was in theory, nothing but a large joint-stock bank. So far was he from concurring in this view, that he could conceive nothing which would be so disastrous to the monetary interest and the trade of this country as limiting the power of the Bank of England to that of her capital and deposits. If they destroyed the feeling of the country, that there was a power behind the Bank which, in periods like the present, would support her in making advances to the commercial world, there would be ten times more panic than we had seen. In proof of this, he need only instance what had occurred at Hamburg, where a rigid metallic currency precluded the possibility of any assistance being given to commerce at the most critical periods, and in which small community upwards of one hundred firms had been swept away. Again, take the case of New York. In New York there were a number of competing banks, all issuing notes, but with so large a reserve of gold that at the time of their suspension their notes were only about double the value of the bullion in their coffers. So far were these notes from having been de- predated by the stoppage of cash payments, that at the present moment they were at par with the specie dollar. He believed that the disasters in America, in Germany, and in this country had one common origin. He agreed very much with what had been said as to the causes of these commercial disasters by the right hon. Gentleman the Member for Bucks (Mr. Disraeli), except as to his theory about the gold importation; but he was particularly anxious to call the attention of the House to the effect of the war which England and France carried on against Russia. During the last two years the three great Governments of Europe expended annually from £30,000,000 to £40,000,000 sterling more than they had been in the habit of spending. Now, an expenditure for war was one which, through the manufacture of munitions, the payment of troops, and the freightage of ships, resolved itself into a general distribution of wages, and he put it to the House whether by distributing in this way an additional £30,000,000 or £40,000,000 a-year they must not necessarily drive up the price of every article generally consumed by the population. The consequence was that in 1854 and 1855 our trade was in a most prosperous condition. No wonder, for there was great consumption, and all the goods which were imported found a ready market at rising prices.;. Trade was prosperous, with, as was said, an enormous drain for the war. When peace was concluded, merchants argued that if we had been prosperous during the war we should be twice as prosperous during the peace. They imported upon the same scale, but, with small stocks and an immense demand, the markets fell, and almost every imported article had been sold at declining prices. A paper which he had in his hand showed that during the first ten months of the present year the consumption of colonial sugar in this country and on the Continent had been 100,000 tons less than it was during the same period of 1855. This was an indication that the consumption of Europe generally was excessively enhanced by the war, and had been greatly diminished by the peace. The same thing occurred in 1815. The sudden contraction of expenditure on the part of the Government necessarily reduced consumption, and brought down prices. If that was the case, the com- mercial distress was clearly traceable to reasonable and natural causes, and we need not attribute our present disasters to currency laws. The currency stood upon a sound basis; it stood on the basis of the Act of 1844, which he believed neither affected the ordinary condition of commerce, nor very much aggravated any disasters which might befall it; for, although the issuing of the Government letter allayed some internal panic, yet as far as the commercial classes were concerned it had no effect in either alleviating or causing distress. The disasters continued after the issuing of the letter, and he was sorry to be compelled to believe that they were still not at an end. He would not have troubled the House with these observations had he not thought that they had a practical bearing upon the great question, what were the causes of the commercial distress. To that question he hoped that the House would seriously give its attention, and he should therefore cordially support the appointment of a Committee, one object of whose labours would be the solution of that question.


stated, from his own experience as a large employer of manufacturing labour, that the pressure, which had hitherto only affected the great commercial and trading houses, was now beginning to bear with great severity upon those whom they employed. Distress had now spread to the great industrial and manufacturing interests of the country, and unless it could be resisted he feared it would not be long before it extended also to the agricultural classes. He congratulated the Chancellor of the Exchequer upon the rapidity with which gold was flowing into the coffers of the Bank of England, and commended the system of remitting money to America by means of acceptances endorsed by the Bank of England and other banks, to the adoption of which this favourable result was, to a considerable extent, to be attributed. It appeared that the amount of bullion in the Bank was a true barometer of our prosperity, and he suggested that gold might be economised by the issue of £1 and £9 notes. He was disappointed that the Government had called Parliament together merely to pass an Act of Indemnity for themselves and the Directors of the Bank of England, and thought that the country would have been better satis- fled if, instead of merely reappointing this Committee, the House had adopted some practical remedial measure, by which the pressure upon the industrial classes of the community might have been averted, or at all events, mitigated.


I will detain the Committee but a very few moments, as I merely wish to state that if I had had any doubt at the outset of this debate as to the expediency—nay, almost necessity—of the appointment of a Committee to investigate this subject, all doubt would have been removed by the course which the debate has taken. We were told that inquiry was superfluous; that the facts were so undisputed, and the arguments so plain and irrefragable, that no difference of opinion could exist as to the main principles of legislation which the Government were called on to adopt; and yet, after hearing this debate, it seems to me that the House, if reduced to the necessity of founding a measure on the speeches of the principal Members who have addressed it, would be compelled to take a ticket in the lottery of legislation in the hope that it would come out a prize. I had hoped that when it was stated that inquiry by a Committee was superfluous, those hon. Gentlemen who advised the House to negative the appointment of a Committee, and proposed an Amendment, would have laid down in the most distinct manner the principles on which the House should legislate. I appeal to this House whether either the right hon. Gentleman opposite (Mr. Disraeli), or the right hon. Member for the University of Oxford (Mr. Gladstone), enunciated clearly and distinctly the principles on which they would wish legislation to be founded. If I correctly understood the speech of the right hon. Gentleman opposite, he said that this debate was the death-blow to the Act of 1844.


intimated that he had not said so.


I used the expression.


I certainly was under the impression that the right hon. Gentleman opposite used those words; but, however that may be, the effect of his speech was that the whole principle and foundation of the Act of 1844 was vicious, and that all legislative limit on the issues of the Bank of England ought to be removed. I presume, then, we must, following out the same principle, remove the limit on the issues of the country banks; we must allow any new country bank to issue notes, and the existing country banks to issue without limit. We must allow, too, Scotch and Irish banks, if newly established, to issue notes, and the existing ones to issue notes without any limit resulting from the deposit of bullion. All these consequences would follow, I presume, from the doctrines of the right hon. Gentleman opposite. But I must again return to what I said before. The right hon. Gentleman has left us in the dark as to the principles on which we should legislate. Though the whole matter, according to him, is as clear as noon—though no doubt can exist in the mind of any human being with respect to the principles of legislation on the subject—the right hon. Gentleman has still left this extensive part of the subject in a state of great obscurity. Then, my right hon. Friend the Member for the University of Oxford says he would start in a different direction, and would follow out the principle of the Act of 1844. He calls also for legislation; but by the word "legislation" as used on one side of the House and on the other, totally different things are meant. Nothing is easier than to say "legislate," but the question is, in what direction? One says you ought to repeal the Act of 1844, and the other that you should increase the stringency of its provisions. Then it is said that the Government ought to decide between the two, and to have a policy of their own. All I can say is, that I expressed my opinions very distinctly to the House, and it has been made a charge against me that while I expressed those opinions, I nevertheless moved for the appointment of a Committee of inquiry; for, it is said, what is the use of referring to a Committee a subject on which the Government have expressed confident opinions? I utterly deny that there is any inconsistency in the two courses. I do not assume to myself the power of dictating my opinions to the House without evidence or inquiry. I say I may hold certain opinions, but I wish to go to a Committee to see whether those opinions can he supported by evidence, and whether, on the investigation of facts, and on inquiry by competent judges, my views can be maintained. An additional reason for inquiry is, the maintenance of very oppo- site doctrines by persons of such eminence as those who have addressed the House. My right hon. Friend the Member for the University of Oxford says that you must separate the functions of issue and banking. You must, he says, as soon as possible, constitute the present department of issue in the Bank of England an independent institution, and in that manner carry out the policy of the Act of 1844. Well, if that be the principle on which we are to act, how can we reconcile that with the views of the right hon. Gentleman opposite? It may be well to cut off discussion by refusing an inquiry, but when a measure should be introduced, and should come to be debated in this House, it would then be found that irreconcilable opinions still continued to be entertained. My right hon. Friend hinted obscurely at certain elastic provisions which he wished to be engrafted on the Act of 1844. I presume he refers to the plan which he brought forward by means of certain questions in the Committee of last Session, which he proposed to the hon. Member for Southampton (Mr. Weguelin) when under examination. That plan was founded on the principle of increasing the issues of the Bank of England according to a sliding scale, depending on the Bank rate of discount. [Mr. GLADSTONE intimated dissent.] My impression was that it was a plan of this nature, that as the Bank rate of discount increased there should be a power of issuing by the Bank. [Mr. GLADSTONE again expressed his dissent.] I may have mistaken the plan, but such I understood to be its nature. However, if we have this uncertainty with respect to so important a provision to be engrafted upon the Act, I only say that that is an additional reason for inquiry. I remember that the plan which my right hon. Friend suggested was disproved by the witness under examination, and I do not remember that similar questions were proposed to any other witness. Therefore, as far as that plan is concerned, the only witness examined upon the point gave an unfavourable opinion as to its operation. I cannot but think that the conflict of opinions we have witnessed to-night affords anything but a favourable augury with respect to the probability of the success of any measure that might be proposed without further inquiry. I would also ask the House whether it would think it reasonable to carry further the principle of the Act of 1844 by suppressing the issues of English country banks, and of Irish and Scotch banks, without giving them some opportunity of having their case heard? With respect to the instruction I propose to move to the Committee, I cannot but think that, so far from the case for inquiry being weakened since the end of last Session, it is in fact strengthened; and it is most material that the true nature and causes of the late commercial distress should receive a searching and deliberate investigation by a Committee of this House.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided:—Ayes 295; Noes 117: Majority 178.

List of the AYES.
Adair, H. E. Cavendish, Lord
Akroyd, E. Cheetham, J.
Anderson, Sir J. Cholmeley, Sir M. J.
Antrobus, E. Clay, J.
Atherton, W. Clifford, C. C.
Ayrton, A. S. Clifford, H. M.
Bagshaw, R. J. Clinton, Lord E.
Bagwell, J. Clive, G.
Bailey, C. Cobbett, J. M.
Baines, rt. hon. M. T. Codrington, Gen.
Baring, rt. hon. Sir F.T. Colebrooke Sir T. E.
Baring, H. B. Collier, R. P.
Baring, T. G. Colvile, C. R.
Barnard, T. Conyngham, Lord F.
Bass, M. T. Cowper, rt. hon. W. F.
Baxter, W. E. Cotterell, Sir H. G.
Beale, S. Cowan, C.
Beamish, F. B. Cox, W.
Beaumont, W. B. Craufurd, E. H. J.
Beecroft, G. S. Crawford, R. W.
Bethell, Sir R. Cross, R. A.
Burgs, J. Crossley, F.
Black, A. Dalglish, R.
Blackburn, P. Dashwood, Sir G. H.
Bonham-Carter, J. Davey, R.
Botfield, B. Deedes, W.
Bouverie, rt. hon. E. P. Denison, E.
Bouverie, hon. P. P. Dillwyn, L. L.
Bramston, T. W. Divett, E.
Briscoe, J. I. Duke, Sir J.
Brocklehurst, J. Dunbar, Sir W.
Bruce, Lord E. Duncan, Visct.
Buchanan, W. Duncombe, T.
Buckley, Gen. Dundas, F.
Buller, J. W. Dunlop, A. M.
Bury, Visct. Dutton, hon. R. H.
Butler, C. S. East, Sir J. B.
Butt, I. Ebrington, Visct.
Buxton, C. Egerton, E. C.
Buxton, Sir E. N. Elcho, Lord
Byng, hon. G. Ellice, rt. hon. E.
Caird, J. Ellice, E.
Calcraft, J. H. Ellis, hon. L. A.
Campbell, R. J. E. Elton, Sir A. H.
Card well, rt. hon. E. Euston, Earl of
Castlerosse, Visct. Evans, T. W.
Ewart, W. Legh, G. C.
Ewart, J. C. Levinge, Sir R.
Fagan, W. Lewis, rt. hn. Sir C. G.
Fenwick, H. Lincoln, Earl of
Fergus, J. Lindsay, W. S.
Ferguson, Col. Locke, Jos.
Ferguson, Sir R. Locke, John
Finlay, A. S. Lockhart, A. E.
FitzGerald, rt. hon. J. D. Lowe, rt. hon. R.
FitzRoy, rt. hon. H. M'Cann, J.
Foley, J. H. Mackie, J.
Foley, H. J. W. Mackinnon, W. A.
Foljambe, F. J. S. (Lyming.)
Forster, C. Mackinnon, W. A. (Rye)
Fortescue, hon. F. D. Mainwaring, T.
Fortescue, C. S. Mangles, R. D.
Freestun, Col. Mangles, C. E.
French, Col. Marjoribanks, D. C.
Garnett, W. J. Marshall, W.
Gifford, Earl of Martin, C. W.
Glyn, G. C. Martin, P. W.
Glyn, G. G. Martin, J.
Goderich, Visct. Massey, W. N.
Gordon, L. D. Melgund, Visct.
Gray, Capt. Mellor, J.
Greer, S. M. C. Mills, A.
Gregson, S. Mitchell, T. A.
Grenfell, C. P. Moffatt, G.
Grenfell, C. W. Moncreiff, rt. hon. J.
Grey, R. W. Montgomery, Sir G.
Gurdon, B. Mowbray, J. R.
Gurney, J. H. Napier, Sir C.
Gurney, S. Norreys, Sir D. J.
Hadfield, G. Norris, J. T.
Hall, rt. hon. Sir B. North, F.
Hamilton, Capt. O'Brien, P.
Hanbury, R. Ogilvy, Sir J.
Hankey, T. Osborne, R.
Hanmer, Sir J. Owen, Sir J.
Hardcastle, J. A. Paget, C.
Hardy, G. Paget, Lord A.
Harris, J. D. Palmerston, Visct.
Hatchell, J. Paxton, Sir J.
Hay, Lord J. Pease, H.
Headlam, T. E. Pechell, Sir G. B.
Heathcote, hon. G. H. Perry, Sir T. E.
Heneage, G. F. Philips, R. N.
Herbert, rt. hon. H. A. Philipps, J. H.
Hodgson, K. D. Pilkington, J.
Hope, A. J. B. B. Pinney, Col.
Horsfall, T. B. Price, W. P.
Hotham, Lord Pritchard, J.
Howard, hon. C. W. G. Pryse, E. L.
Howard, Lord E. Pugh, D.
Hutt, W. Puller, C. W.
Ingham, R. Ramsden, Sir J. W.
Ingram, H. Raynham, Viscount
Jervoise, Sir J. C. Rebow, J. G.
Johnstone, J. J. H. Ricardo, O.
Keating, Sir H. S. Richardson, J.
Kendall, N. Robartes, T. J. A.
Kershaw, J. Roebuck, J. A.
King, hon. P. J. L. Russell, Lord J.
King, E. B. Russell, H.
Kinglake, A. W. Russell, A. J. E.
Kinglake, J. A. Russell, F. W.
Kingscote, R. N. F. Schneider, H. W.
Kinnaird, hon. A. F. Scott, hon. F.
Kirk, W. Scrope, G. P.
Knatchbull-Hugessen, E. Seymour, H. D.
Labouchere, rt. hon. H. Shafto, R. D.
Langston, J. H. Shelley, Sir J. V.
Langton, H. G. Sheridan, H. B.
Sibthorp, Maj. Vane, Lord H.
Slaney, R. A. Villiers, rt. hon. C. P.
Smith, J. B. Vivian, H. H.
Smith, rt. hon. R. V. Walter, J.
Smith, A. Weguelin, T. M.
Smith, Sir F. Western, S.
Smollett, A. Westhead, J. P. B.
Spooner, R. Whatman, J.
Stafford, Marq. of Whitbread, S.
Stanley, hon. W. C. White, J.
Stapleton, J. Wickham, H. W.
Steel, J. Williams, M.
Stephenson, R. Williams, W.
Stuart, Lord J. Williams, Sir W. F.
Stuart, Col. Willyams, E. W. B.
Sturt, H. G. Willoughby, Sir H.
Sturt, N. Wilson, J.
Sullivan, M. Wingfield, R. B.
Sykes, Col. W. H. Winnington, Sir T. E
Tancred, H. W. Wise, J. A.
Taylor, S. W. Wood, rt. hon. Sir C.
Thompson, Gen. Wood, W.
Thornley, T. Woods, H.
Thornhill, W. P. Wrightson, W. B.
Tite, W. Wyld, J.
Tollemache, hon. F. J. Wyndham, W.
Tomline, G. Young, A. W.
Townsend, J.
Trelawny, Sir J. S. TELLERS.
Turner, J. A. Hayter, rt. hon. W. G.
Tynte, Col. K. Brand, hon. H. B.
List of the NOES.
Adams, W. H. Elphinstone, Sir J.
Adderley, C. B. Farnham, E. B.
Annesley. hon. H. Farquhar, Sir M.
Baillie, H. J. Fitzgerald, W. R. S.
Ball, E. Forde, Col.
Baring, A. H. Forster, Sir G.
Baring, T. Fraser, Sir W. A.
Barrow, W. H. Galway, Visct.
Bathurst, A. A. Gard, R. S.
Beach, W. W. B. Gladstone, rt. hon. W.
Bentinck, G. W. P. Greenall, G.
Blakemore, T. W. B. Greene, J.
Boldero, Col. Griffith, C. D.
Bovill, W. Grogan, E.
Bowyer, G. Hamilton, G. A.
Bramley-Moore, J. Hamilton, J. H.
Bridges, Sir B. W. Heathcote, Sir W.
Bruen, H. Henley, rt. hon. J. W.
Buller, Sir J. Y. Herbert, Col.
Carden, Sir R. W. Hodgson, W. N.
Charlesworth, J. C. D. Hopwood, J. T.
Christy, S. Hudson, G.
Clive, hon. R. W. Hume, W. F.
Close, M. C. Ingestre, Visct.
Codrington, Sir W. Johnstone, hon. H. B.
Cole, hon. H. A. Jolliffe, H. H.
Collins, T. Kerrison, Sir E. C.
Corry, rt. hon. H. L. King, J. K.
Crook, J. Knatchbull, W. F.
Curzon, Visct. Knightley, R.
Darner, L. D. Knox, Col.
Davison, R. Laurie, J.
Disraeli, rt. hon. B. Lennox, Lord H. G.
Du Cane, C. Leslie, C. P.
Dundas, G. Lisburne, Earl
Du Pre, C. G. Lovaine, Lord
Edwards, H. Lygon, hon. F.
Egerton, Sir P. G. Lytton, Sir G. E. L. B.
Elmley, Visct. Macartney, G.
Macaulay, K. Scott, Maj.
Malins, R. Stanley, Lord
Manners, Lord J. Stirling, W.
March, Earl of Steuart, A.
Maxwell, hon Col. Tollomache, J.
Miles, W. Trefusis, hon. C. H. R.
Miller, T. J. Vance, J.
Morgan, O. Vansittart, W.
Naas, Lord Verner, Sir W.
Newdegate, C. N. Waddington, H. S.
Nisbet, R. P. Walcott, Adm.
O'Donaghoe, The Walpole, rt. hon. S. H.
Packe, C. W. Warren, S.
Pakenham, Col. Whitmore, H.
Taking-ton, rt. hon. Sir J. Woodd, B. T.
Talk, L. Wortley, Maj.
Palmer, R. Wyndham, Gen.
Paull, H. Wynn, Col.
Pevensey, Visct. TELLERS.
Repton, G. W. J. Jolliffe, Sir W.
Robertson, P. F. Taylor, Col.

Main Question put, and agreed to. That a Select Committee be appointed, to inquire into the operation of the Bank Act of 1844 (7 and 8 Vic. c. 32) and of the Bank Acts for Ireland and Scotland of 1845 (8 and 9 Vic., c. 37 and 38).


moved— That it be an instruction to the Committee, to inquire into the causes of the recent Commercial Distress, and to investigate how far it has been affected by the Laws for regulating the issue of Bank Notes payable on demand.

In reply to Mr. NEWDEGATE,


said, that Government having moved that a Committee should be appointed to inquire into the provisions of two Acts, implied, that it was within the competence of that Committee to recommend alterations in their material or less material provisions, and it would be for the Government to consider how far they would give effect to those recommendations.


said, that he thought sufficient business had already been referred to the Committee, and he would therefore suggest that a second Committee, consisting of fewer Members, should be appointed to inquire into the matters to which the proposed instruction related.


said, it would be very difficult to form two Committees on two subjects so closely connected with one another, and the practical result would be that they would have one Committee inquiring into the Act of 1844 in one room, and. another occupied with the same task in a room adjoining. He thought time would be saved by referring both matters to one Committee, and they would avoid the absurdity and inconvenience which would follow if two Committees, differently constituted, were to arrive at inconsistent conclusions.


said, the two points were distinct, and he trusted the suggestion of the hon. Member for Huntingdon would be acceded to.


said, the right hon. Gentleman the Member for the University of Oxford had inquired what was to be done with any profit that might arise from the increased issue beyond the limit allowed by the law. In 1847, the Government stated that if any profit accrued it would go to the public, and not to the Bank. At that time there were no profits, and the point was not material. If the profit should now be small, the matter would not be one of great importance. But if any elastic provisions should be hereafter introduced into the Act, it might involve larger sums; and even if the law should remain in its present state, it was desirable it should be known that the Bank would not derive any profit from the extra issue.


said, his attention had been directed to the subject, but he had thought it undesirable to come to any definite arrangement with the Bank until the account was closed by the return of the £2,000,000 now in excess. He was aware of the importance of not allowing it to be imputed to the Bank that they had any sinister interest in issues beyond the amount of the Act. He had a firm belief that the Bank Directors were very reluctant to exceed the law, and that they would reduce the issue to the limit imposed by the Act at the earliest moment they could do so with safety. He felt sure the Bank would not be influenced by any interested motives, but he agreed that they ought to be placed in a position free from suspicion.


asked on whom a loss, if loss there were, would fall?


observed, he was not aware how a loss could occur. If a loss should occur he would inform the hon. Baronet in what manner they would deal with it.


said, he hoped Her Majesty's Government would consider the suggestion of his hon. Friend (Mr. Baring) during the recess. The Committee last year was unwieldy and cumbrous, being composed of twenty-five Members. The Committee which sat in 1847 on commercial distress was composed of about the same number of Members, and, owing to the subject of the Bank Charter being wantonly mixed up with commercial distress, witnesses put in whole pamphlets on the currency, and there was no real inquiry into commercial distress. The result was most unsatisfactory; and he had no doubt his hon. Friend's suggestion was prompted by the experience of the proceedings of that Committee. It would even be better if a third Committee were appointed to inquire into the subject of the Scotch and Irish banks. Neither of the Committees ought to exceed twelve Members, and he was convinced that without some such division it was impossible that any satisfactory conclusion could be arrived at on the miscellaneous matters which were to be inquired into.


said, that the right hon. Gentleman was mistaken as to the course which had been taken in the Committee of 1847, because the inquiry into the causes of the commercial distress carried out by that Committee was mixed up at every step with the inquiry into the operation of the Act of 1844. Many hon. Gentlemen were of opinion that the commercial crisis of the present year was mainly caused by the operation of the Act of 1844, and if two separate Committees were appointed the Committee on the commercial crisis would be absolutely precluded from entering into any inquiry into what some of its Members might deem to be one of its principal causes. Other hon. Gentlemen had attributed the crisis to the overtrading and over banking of the Scotch banks; and if a third Committee were appointed on that subject, the Committee on the commercial crisis would be in a like manner precluded from entering upon another of its alleged causes. The adoption of the suggestion of the right hon. Gentleman would have the effect of preventing any satisfactory conclusion whatever being arrived at.


explained, that in suggesting the appointment of a second Committee, he had only been desirous of following the precedent set by the other House of Parliament in 1847.


said, the Act of 1844 was intended to regulate the Bank of England when bullion was diminished in its vaults. Surely the causes of the variation of the bullion were a separate subject, and ought to be separately inquired into. If hon. Gentlemen, who supported the Government to-night, had done so under the impression that they were going into Committee with the view of inquiring into the Act of 1844, he believed they would find themselves grievously mistaken.

Motion agreed to.

House adjourned at a quarter before Two o'clock.