§ MR. WATKINsaid, he would beg to ask Mr. Chancellor of the Exchequer, What communications have taken place between himself and the Bank of England in reference to his Letter and to the continuance of the discount rate of 10 per cent by the Bank?
THE CHANCELLOR OF THE EXCHEQUERSir, I cannot say that any communications of a formal or official nature have taken place; but, after writing a letter of the character of that referred to by the hon. Member, on the part of the Government and in conjunction with my noble Friend Earl Russell, I naturally took pains, aided by the Deputy Governor of the Bank, to inform myself as to the course of its operations and the consequent state of the Reserve, so long as it appeared to be probable or within the range of anything like likelihood that that Letter might be so far acted upon as to involve measures not sustained by the Act of 1844. I am not quite sure whether the Question of my hon. Friend (Mr. Watkin) is intended to go beyond that. I rather infer that he desires to know whether, and in what degree, the Government are parties to the present course and action of the Bank. The Letter itself explains the point up to which the Government is engaged in joint action with the Bank under certain hypothetical circumstances, which have not actually arrived. Short of their arrival I do not consider it is any part of the functions of the Government to attempt to instruct or influence the Bank in regard to the course it may think fit to take as to discounting bills, and the prices which may be charged. I think that if such a mixture of functions took place at all, it ought to be recognized and defined by law. I am not by any means of opinion that it should receive the sanction of law; but I am clearly of opinion that nothing could be more inconvenient than the assumption of responsibility by the Government in the conduct of the ordinary business of the Bank. As 718 to the course the Bank has taken since the issue of that Letter, and especially as to the course the Bank has taken within the last two or three weeks, during which time there has been some public expectation of a reduction of the rate of discount, I have only to say that the Directors of the Bank have acted entirely on their own judgment, and—so far have I thought it my duty to go—they have not been influenced by any considerations relating to that Letter. That is all I have thought it to be my duty to ascertain. I apprehend that the Directors have been governed entirely by banking considerations, It is not for me to pass any opinion one way or the other upon the correctness of the judgment they have formed. Undoubtedly, I should not wish it to be supposed for a moment that I have presumed to arrive at any judgment differing from theirs, or that I imagine they have formed an inaccurate estimate of the circumstances under which they act. That is all I have to say, but if there is any point on which the hon. Member wishes for further information I shall be happy to give it.