THE CURRENCY—COMMERCIAL DISTRESS.

HL Deb 02 December 1847 vol 95 cc481-518

The MARQUESS of LANSDOWNE, pursuant to notice, rose to move— That a Secret Committee of this House be appointed to inquire into the Causes of the Distress which has for some time prevailed among the Commercial Classes, and how far it has been affected by the Laws for regulating the Issue of Bank-notes payable on demand. The noble Marquess said, that no Motion could come before their Lordships of a nature more calculated than that was to command their most serious and anxious attention. The subject also was one with which the greater number of their Lordships were probably well acquainted; and if he were merely governed by that consideration, he should on the present occasion occupy their time with only a very few words. But under the present circumstances of the Parliament and the country, considering the vast importance of the subject—considering also the great attention that had been given to it in the other House of Parliament—he thought it would be disrespectful to their Lordships if he did not preface the Motion that he intended to make with some general remarks as to the necessity for the Committee that he meant to propose, and the probable tendency of its inquiries. He believed that the events of the last two years were of a nature that demanded from him not a great deal of comment—they constituted a period during which great masses of the community underwent much suffering, and there could be no doubt that the events of that period were, on the whole, extremely prejudicial to the general interests of the nation, there was one great subject which, of course, attracted universal attention, he referred to that distressing dispensation of Providence which withheld from them a large portion of the ordinary produce of the soil. It was obvious that such a calamity could not have been averted by any human precaution; it was obviously not in the power of Parliament to repair an injury of that description, or to replace completely any deficiency which the operations of nature had occasioned; yet it had been found extremely difficult to impress upon the minds of the large mass of the community, that it was not within the scope and power of Parliament to do more than this, in alleviation of the calamity, viz., in some degree to regulate the distribution of the amount of produce that remained. So with respect to that other source of our distress, which did not arise from any visitation of Providence, but which proceeded, more or less, from the rash, ill-advised, and ill-imagined speculation of men: that source of our difficulty was nearly as much beyond the reach of legislative enactment as were the causes which had so greatly diminished our supply of food. Those speculations, as he need scarcely remind their Lordships, had produced a great demand upon the capital of the country—a greater demand than that capital was capable of supplying. To assist the capitalists of the country, under such a pressure, by anything partaking of the nature of that false and ill-advised policy which would create fictitious resources, would be a course which he, for one, could not be induced to propose, and which he fully believed that their Lordships could not be induced to sanction. It was perfectly obvious that no amount of capital which partook of a fictitious character could be made to add to the real resources of the country; and, whatever inquiry their Lordships might be pleased to go into, he entertained scarcely a doubt that strong evidence would be brought before them, founded even upon the events of the last few weeks, which would show that the positions he had just laid down rested upon a solid foundation. When he, in common with other Members of Her Majesty's Government, had been asked whether they thought that the Bill of 1844 had been followed by the effects which it was intended to produce—when he was asked whether or not it ought to be continued—neither on his own behalf nor on behalf of Her Majesty's Government was he prepared to say that that Act ought to be repealed. While, on the other hand, when he was asked whether, under all circumstances, and at all events, and at all hazards, he was prepared to maintain that Act unchanged, he declined then, and he now declined, to answer any such question. After the events that had taken place, he was no more prepared to say that that measure had been the cause of our safety or our suffering, than he should be prepared to affirm that the construction of a particular vessel had enabled her to escape a sweeping tornado, and sail safe and unharmed into port. He might be told, as he had been told, that such a construction was not fitted to enable the vessel to grapple with such a series of events as those to which she had been exposed; so he was not prepared to say that the existing state of the laws which regulated our currency had or had not been sufficient to enable the country to bear up against its present difficulties; but this he was fully prepared to say, that he had no intention to propose the appointment of a Committee for the purpose of going into inquiries with a view to the revision of the currency as it now existed, subject to convertibility into the precious metals—that he had no intention to propose from that basis to depart. He had said thus much to prevent any misapprehension on the subject. He now came to the question their Lordships were invited to consider. It was simply this—Whether an Act passed in the course of the last three years, for certain defined objects, had answered its purpose, or whether it had been attended with any mischievous effects under circumstances entirely unexpected and new. He thought it right he should here indicate shortly the objects which, in his opinion, would come within the sphere of the proposed inquiry: these were, first, what were the provisions of the Act of 1844, to which their Lordships had given, if not an unanimous, at least a very general concurrence; second, what had been the peculiar circumstances of the last three or four years in which the Act had been in operation; and, third, such being the peculiar circumstances, what effect had the existence of the Act had upon those circumstances and upon that distress. The Act of 1844 had been passed too recently for any important part of its provisions to have escaped their Lordships' recollection. It was proposed for the avowed purpose of giving greater solidity and certainty to the operations of the Bank, by confining within certain limits its issue of notes, in proportion to the amount of gold in its coffers. Before that the convertibility of the paper of the Bank had been the fundamental law of the country; but notwithstanding this, occasions had arisen when the Bank of England, the mainspring and hinge of all the commercial affairs of the country, had been on the verge of a situation in which it would not have been able to comply with the law, and might have been compelled to resort to foreign aid from positive disability to meet its engagements. The object of the Act of 1844 was to introduce a greater degree of safety into the existing system, preserving enough of it to induce the greatest degree of economy in the use of gold. It was intended to leave as great a portion of paper to perform the office of gold as could be left with safety to the system and to the public. The Bank was allowed to issue 14,0000,000l. in notes on securities; but for every note issued beyond that sum there must be in the Bank an equal amount of sovereigns. He now came to the circumstances under which this Bill had been subjected to the severe trials of the last autumn; and he thought it his duty to point out to their Lordships, although it would be a subject for inquiry by the Committee, that the commercial and financial crisis of that period was one, unfortunately, exceeding in its intensity any that had heretofore occurred. He would state what had been the demand for railway expenditure during the last few years, and the rate at which that demand had increased—being a demand for the employment of capital, not for circulation, but for fixed purposes; not for increased floating capital, which could be tranferred from one object to another, but for capital to be invested in such a manner that it could not be extricated and carried to other objects where its use was desirable. In the years 1841, 1842, and 1843, the demand for capital for railway expenditure was on the average 4,500,000l. In 1844, it increased to 6,000,000l.; in 1845, it was 14,000,000l.; in the first half of 1846, it was 9,800,000l.; and in the second half of the same year it increased to no less than 26,000,000l., making nearly 36,000,000l. for that one year. In 1847, up to the 3rd of June, the demand was 25,770,000l.; up to the 4th of December, 38,000,000l.; making a total of 63,770,000l., thus doubling the sum of 36,000,000l.demanded in the previous year. It was impossible even for a child to hear such an account read without asking the question whence was all this capital to come? How was all this money to be created from month to month, and year to year? There were no visible means of supplying it. He did not know whether he should be told it existed somewhere in some boundless mine, from which the Bill of 1844 cut off the supply; but he believed no such thing. He did not believe that that Bill or any other Bill prevented any person from having access to such funds if they existed; but he believed they existed nowhere, save in the imaginations of speculators. No sound legitimate means of providing such an expenditure, so to be locked up, could be provided; but the matter was one for their Lordships to inquire into and ascertain. But this immense demand came in concurrence with another—one of infinite importance—one that could be less attributed to any fault or misconduct on the part of any individuals or body of individuals, for it arose from a calamity inflicted by the hand of Divine Providence. Nevertheless, that demand came at the same time with the other, and added to the difficulty; it increased the commercial embarrassment the country had had to struggle with in the course of the last few months. It neces- sitated a large importation of corn, the demand of money for the payment of which was from Juno, 1846, to January, 1847, 5,139,000l.; and here he begged to express his gratification that this drain was not likely to be required during the ensuing year. The amount paid for corn imported from abroad in 1847 was still greater. From January to July, 1847, there was paid for foreign corn 14,184,000l. and from the 5th of July to the 18th of October, no less than 14,240,000l. Whether the disorder thus caused by the concurrence of the pressure from these two different sources was aggravated by the operation of the Bank Charter Act, or any other statute, it would be for the Committee of their Lordships' House to consider and inquire. He did not himself believe that that measure had any share in producing a state of disorder which must ultimately have been produced under the circumstances of the country. He believed the pressure which had arisen must have existed with or without that Bill; and he would go further, and say, that if the effect of the Bill had been—what he was not prepared to deny—to cause the pressure to be felt and foreseen somewhat earlier than it otherwise would have been, then it had effected a great good. He believed, that the operation of the Act of Parliament, acting compulsorily on the Bank, compelled the commercial public in this country to perceive that it was outstripping its means, and was endeavouring to accomplish that which it was unable to perform, and that thus a valuable service had been done to the country by applying to all parties that lever which was the only one that could be safely had recourse to on the occasion, and forcing them, not suddenly but gradually, to draw in the extent of their operations. Now, the state of the country was such, that the perception which had been brought upon the public faculties would appear like a glare of light, illumiminating, it is true, that which had been in darkness before, but illuminating it only to show the precipice on which the public were standing, and thus increasing the terror which the danger of their position must inspire. The effect had been to alarm all persons in the country, and thus to create something like a general panic. He was not prepared to say to what degree the panic might have been so occasioned, or so increased by this Act; but he was prepared to say, that when that pressure went beyond that which he might call a legitimate pressure, beyond that degree of pressure which must exist from time to time for the purpose of compelling those engaged in speculations to keep within solid, discreet, and sufferable bounds—when money had been called up from every quarter, and taken out of the usual course, or usual means of investment, and withdrawn from channels in which it should legitimately be employed—then he would not deny that the panic was in itself a great calamity, and one which called, as in the present instance it did call, for the immediate attention of Parliament. With respect to the pressure, he believed no means could have been taken by which it could have been averted; but with regard to the panic, there were undoubtedly occasions in which the Government could act for its alleviation. He believed, that when there had been created in the country, almost universally, a disposition not only to obtain money by speculative means, but to draw money out of every place and every channel in which it had been invested—a disposition to diminish all balances at the banker's, and in short to create that which did not exist usually in this country—a desire on the part of every person to keep a quantity of money in his own possession, and under his own immediate control, beyond what under ordinary circumstances they would require, that then Government was bound to step in, and endeavour to restore the circulation to a proper and regular channel. He considered that the time for such interference on the part of Government had recently arrived; and he did not think it would be denied that the interference of the Government had been satisfactory. He said so, because, not many days—hardly many hours—had elapsed after such interference, before the confidence which had been suspended was restored, and that, without any additional demand being made on the Bank; and, above all, without that proportion which in 1844 Parliament imposed on the Bank between the amount of its gold and of its currency being deranged, the panic at once subsided, and every man felt that he had, under certain circumstances at least, the means of realising what he wanted; and that if he were entitled to have his l,000l. or his 10,000l., that 1,000l. or 10,000l. was secured to him. He was not now going to argue the question of the Bank Charter Act; but he would say, that that Act might exist for twenty years without any such occasion again arising. He was not prepared to say, that no circumstances could again arise in which it might be necessary for the Government or for Parliament to interfere with the stringent provisions of the statute. It would be for their Lordships to consider whether, under any circumstances, they might not retain the operation of the Act itself, but at the same time, whether some overruling power might not be with advantage entrusted to the Government of the day. That point, he thought, might be left to the careful consideration of their Lordships; but at the same time he felt bound to say for the Government and for himself, that they had nothing to regret in the course that had been pursued, and that the suspension of the provisions of the Act, or the authority which had been given for that suspension, had been attended with the most beneficial results. It was not to be expected that upon such a difficult subject perfect unanimity could prevail among their Lordships; but he anticipated much good, and the acquisition of much valuable information, from the appointment of Committees of Inquiry by this and the other House of Parliament, and from the evidence which would be given before them by those individuals who had most deeply thought upon the subject. He trusted that the view taken of the subject by Her Majesty's Government would be confirmed by the Committee which he proposed. The inquiry which he now proposed was not one calculated to lead to party discussions, for the Act of 1844 was not made at the time a question of party politics; sitting as he did on the benches opposite at the time it was first brought forward, he voted for it. He did so because he felt convinced of the great danger of allowing the inconvenience which had so often been felt from the former mode of conducting the affairs of the Bank to continue; and when the Government of the day came forward with a measure to prevent the recurrence of the disorders which had before been experienced, he felt disposed to accept of their proposal, and to give the measure a full and fair trial. He was sure the noble Lord opposite (Lord Stanley), himself a Member of the Government by which the measure had been introduced, could not but feel some parental yearning towards his own offspring, and that notwithstanding all that had passed since that time, he would not now be found anxious to attack a measure which he had himself contributed to bring to life. Having thus briefly vindicated the course taken by Her Majesty's Govern- ment, he would leave the question in their Lordships' hands. He would himself have perhaps wished that this inquiry had taken place at a somewhat later period, after the immediate tumult of the recent panic had subsided. But at the same time he trusted that the effects of the crisis would not last so long that their Lordships would not be enabled to give the coolest as well as the fullest consideration to the subject of this inquiry. The noble Marquess concluded by moving for the appointment of the Committee in the words of the notice.

LORD STANLEY

My Lords, while there are portions of the noble Marquess's speech in which I am disposed altogether to concur, and while I agree with him that this is not an occasion on which to enter into any extended discussion of the very large and complicated question which is necessarily involved in his Motion, for the appointment of a Committee to inquire into the causes of the recent commercial distress, and its connexion with the laws affecting monetary regulations, I wish I could agree in what the noble Marquess appears to anticipate—an almost unanimous feeling on the part of your Lordships in approbation of the course taken by Her Majesty's Government with regard to this matter. My concurrence I undoubtedly give, cheerfully and readily, in the appointment of the Committee. If an inquiry before a Committee is the only course which Her Majesty's Government are prepared to submit to the consideration of your Lordships and of Parliament on this subject, then I think, with all deference for the other House of Parliament, that such an inquiry should not be exclusively carried on before the House of Commons. I think that if an inquiry is to be instituted by Parliament, it is desirable that such an inquiry should be carried on simultaneously by your Lordships' House and by the other House. With this view, and understanding that it had not been the intention of Her Majesty's Government to propose to your Lordships the appointment of any Committee of the description which the noble Marquess now moves for, I felt it to be my duty, on a former evening, to give notice of my intention to move for the appointment of this Committee, for the reasons I state. I wish I could say—which I cannot—that this, and this alone, is the course which Her Majesty's Government are in duty bound to pursue. Among the causes which were put prominently forward for the meeting of Parliament—and it was a cause which undoubtedly went home to the feelings of every man—I find that of the commercial distress under which the country has been suffering—a distress which I cannot agree with the noble Marquess in calling recent, but which I would rather describe in the words of the Speech from the Throne, "the distress that for some time has prevailed among the commercial classes"—when that cause existed to an extent that, if the Legislature was to interfere at all, not only justified but rendered necessary the calling together of Parliament immediately and without loss of time; and I am sure none of your Lordships could consider that the inconvenience of being called together at this unusual period of the year is more than the weight of a feather in the scale, while any palliation of the sufferings of the country may be effected by our prompt interference—when that distress has, I say, prevailed to a degree of intensity and magnitude which the noble Marquess has very far from overstated (but which I think he has understated in the statement he has just made to your Lordships), and when it has been the cause of Parliament being called together—then I hold we had a right to expect from Her Majesty's Government that they should at least be prepared to come forward with such measures as they think expedient for the purpose, not of removing—for I agree with the noble Marquess that that is beyond the power of any Parliament, or of any legislation—but of palliating that distress, the magnitude of which they put forward as the cause of calling Parliament together at an unusual and inconvenient period of the year. We have sat for fourteen days. It is now precisely fourteen days since Parliament was called together, and yet what does the noble Marquess tell you? He tells you that with regard to the cause of the distress, he is not prepared to give an opinion, and that with regard to the remedy or palliation of that distress, he and Her Majesty's Government have no suggestion to offer—that they are prepared to appoint a Committee to inquire into the causes which have led to the distress, but that as to any opinion of their own they have none whatever. I repeat the noble Marquess's own expression. As to any effect which the Bank Charter Act of 1844 may have had on the distress of the country, the noble Marquess told us distinctly that he did not express, or had not formed, any opinion whatever. On the degree to which that Act had affected the general mercantile distress he had no opinion, or Her Majesty's Government had no opinion to offer. [The Marquess of LANSDOWNE explained that his allusion had reference only to the distress which prevailed during the last two or three months.] But the distress of the last two or three months has been the cause of Parliament being called together. It is on account of the magnitude to which that distress has arisen that your Lordships are called together thus inconveniently early; and yet the noble Marquess came down to tell you that on that subject, that most important subject, which we are called upon to inquire into—the effect which the Bank Charter Act had on the recent crisis—he has not expressed or formed an opinion; that he goes into the Committee perfectly uncommitted to any view, and without having formed any opinion on the subject. That such should be the case is to me surprising; for I cannot reconcile the meeting of Parliament at this early period with the mere purpose of appointing a Committee to make inquiry, which inquiry the noble Marquess would infinitely prefer had been postponed until a much later period. Her Majesty's Ministers have nothing to propose, no recommendation to suggest, no opinion to express. They have merely resolved to call Parliament together in order to appoint a Committee, which the noble Marquess tells you had, in his judgment, better not be appointed until some future time. Now, if that Committee is not expected to provide a remedy for the existing evil, I agree with the noble Marquess that it would have been much better to postpone the appointment of it to a future period. If the object is only to inquire into the past, and leave the subject of calm, deliberate legislation for the future, then I say, make the inquiry when the crisis has passed over; and it will thus be distinctly understood that for the mitigation of the existing distress, neither this Committee, nor any other measure that Her Majesty's Government are prepared to suggest, is to have the slightest effect. Your Lordships are called upon to appoint a Committee to consider the causes of the recent commercial distress. Now, let it not be supposed that my opinion is, that the Bank Charter Act, or any single measure, was the cause, or even the prominent cause, in producing that distress. I might say that I could put out of consideration altogether the question whether the Bank Charter Act had any share in producing the distress. The question, which I think has been solved by the act of the Government itself, was, whether the Bank Charter Act had aggravated the pre-existing panic, and by doing so had added to the distress. Her Majesty's Government ought to have formed and have expressed to Parliament an opinion whether the Bank Charter Act had so affected the distress. If they thought it had not, it was their duty boldly to state that under all circumstances and at all hazards that Act was to be maintained unimpaired and unaltered. On the other hand, if it were their opinion—as from the course which they adopted one would suppose it must have been—that at the time when the operation of the Bank Charter Act was most relied upon, and when it was most imperative that the Bank should be restricted, the Act broke down, then, notwithstanding the varied similes which the noble Marquess has brought forward, I cannot help thinking that a primâ facie is made out that the Act, when it was most wanted, and when all the maxims of commercial prudence would require the operation of its provisions, became impracticable, and was found to fail in its object. The noble Marquess referred to me as one of the framers or parents of the Act of 1844, because I happened to be a Member of Sir Robert Peel's Ministry when it passed through Parliament; and he called upon me not to disown my own offspring. I am not one who am desirous of avoiding any responsibility which may properly attach to me in my place as a Peer of Parliament, or from my former position in Her Majesty's Government. I think, however, that the noble Marquess must be well aware that in the ordinary business of Government those departments that are particularly charged with any distinct branch of the public business have, I will not say an exclusive, but a preponderating influence in regulating it; and though I admit that as a Member of Sir Robert Peel's Government I am bound to take my due responsibility of supporting the introduction of that Act, yet I think the noble Marquess went a little beyond the limits of fairness when he spoke of that measure as my Bill and my "offspring," and applied to me a charge of inconsistency for the course which I now take. Now, in the first place, let me ask whether, in the first instance, the Bill was not as strenuously supported by the present Members of Her Majesty's Government, at that time sitting on the other side of the House, and especially by the present Chancellor of the Exchequer, who had been for two years chairman of the Committee on Banks and Banking, as by any Member of the Government of Sir Robert Peel; and yet those who so supported it, feel themselves compelled, when the crisis comes, to abandon it at the time when it was most required? In the next place, they came forward to inquire what effect that Act had on the distress of the country, thereby implying a manifest doubt—to say the least of it—whether it had not had an injurious effect. But I am ready to assume all the responsibility attaching to the passing of that Act, and I say it is perfectly consistent on the part of any Member, however prominent in the introduction of the measure, and adhering to all the main principles involved in it, to entertain a doubt—a more than doubt—whether subsequent to 1844 the operation of the Act has been such as was anticipated for it by the Government. If you find that a measure, however well designed, fails in its object—if you find by experience that an enactment breaks down in operation, are you not to condemn it because you were yourselves parties to its introduction? If such be the rule, there is an end—not to all consistency—but an end to all statesmanship, and to the value of experience. In 1844 it was truly stated, both by Sir Robert Peel and the Chancellor of the Exchequer, that on that subject inquiry had been exhausted. But what was that inquiry? It was an inquiry among the most practical and competent men—among those who had directed their attention most closely to the theoretical part of the subject, and who were examined as to the principles on which the Act of Parliament should be founded. I agree entirely with the noble Marquess in his statement of those principles. They were, first, to adhere to a metallic standard; next, to secure practically the convertibility of your paper currency into gold; and, thirdly, another and very important principle, to give to the Bank of England a controlling power over the circulation of the country, by which they could regulate it more or less in accordance with the state of the foreign exchanges. Now, it is consistent in one who upheld and adheres to every one of these principles, to think that the experience of the operation of the Act from 1844 to 1847, has demonstrated that the restrictions imposed by that Act on the proceedings of the Bank of England, are restrictions unnecessary in themselves and injuriously affecting the exercise of the discretion which should rest in the Bank Directors. The main question is, whether, by restricting the Bank to the issue of notes not exceeding by more than fourteen millions the amount of bullion in their coffers, and with one-fifth part only of that bullion being permitted to be kept in silver, we did not unduly fetter the Bank of England, and prevent them from giving the extent of accommodation at a certain time, which the amount of bullion in their coffers, and their knowledge of the influx of bullion from foreign countries, would have safely warranted them in giving, if the restrictions imposed by this Bill had not stood in their way? Now, is not that subject one for legitimate inquiry in reference to the effect of the Bank Act of 1844 on the distress of 1847? And is it not one which the noble Marquess and her Majesty's Ministers, with the information which the Government possess, and with the intense anxiety with which they no doubt watched over the whole progress of that distress, ought to be prepared to offer an opinion upon? On referring to the letter of the 25th of October, it appears that the Government, for the purposes, as they then stated, of restoring confidence and removing that panic by which the commercial embarrassments of the country had been so greatly aggravated, felt it necessary to authorise the Bank to violate the Act of Parliament. Now this is a dilemma that they cannot get out of. If the Act did not create that panic, or aggravate the embarrassments that prevailed, what was it which induced Her Majesty's Government to take so extraordinary a step as to advise the Bank authorities to violate the Act of Parliament? I do not mean to say that authorising the Directors to violate the Act was not a wise measure. I think it would be better if it had been adopted earlier; but it was a measure which, when adopted, violated the Act, and condemned its efficacy at the very time it ought to have been most effective. They acted at all events in a way which showed the feeling of the Government to be condemnatory of it. I well remember that at the period of the passing of the Act, a Member of the other House of Parliament (Mr. Raikes Currie), one of the warmest advocates of the measure, in allusion to the proposal for giving a power to the Government to authorise the Directors to exceed the provisions of the Bank in certain contingencies, said how extraordinary it was that they should approve of the structure, that they should admire its beautiful symmetry, and the perfection of the scale on which it was constructed, and yet be willing to demolish all its strength, and destroy all its symmetry, by taking away the keystone of the arch by which all was held together. I said just now, my Lords, that I thought Her Majesty's Ministers had underrated the amount of commercial distress, and I said I thought that an interference at an earlier period would have tended to mitigate that distress. In so saying, I proceeded upon the assumption of the consequences which followed the interference of the Government, as stated by the noble Marquess, who alleged that by permitting the violation of the law, they so far restored confidence that there was an immediate diminution of the panic, and an immediate influx of bullion into the coffers of the Bank. I have had placed before me a nominal list of commercial houses, 106 in number, which have become actually insolvent between the months of July and November; and from that statement are excluded all houses which have entered into private compositions with their creditors, all failures on the Stock Exchange—which have not been few in number—all houses the liquidation of whose engagements is not actually under inspection; and that class involves one house whose liabilities are enormous, amounting to several millions. It, besides, does not include one single house the liabilities of which do not exceed 20,000l.; and the whole number of houses that failed, with their liabilities, are returned thus:—In July two became insolvent, the joint amount of whose liabilities were 210,000l.; in August, sixteen gave way, for a total amounting to 2,369,000l.; in September, twenty-six broke down, for 6,520,000l.; and in October, thirty-five went, for a total of 6,840,000l. Making in all, from July to the period at which for the first time Her Majesty's Ministers thought it fit and wise to interfere, failures of seventy-nine houses, involving liabilities to the amount of 15,969,000l. Now, I concur entirely with the noble Marquess in some of the observations with which he opened his speech. In the first place, I entirely agree with him, that it was impossible for any form of legislation or for any Government to prevent those distresses which occurred from the failure of the agricultural productions of this country, or those which arose from rash speculations. But I think it impossible that amongst that list of commercial houses which have failed for such large sums, from July to October and November—I think it impossible, I say, but that amongst them there must have been some, and there may have been many, which an earlier interference by the Bank of England might have saved from ruin; and by saving them might have prevented the ruin also of many more lesser houses that were dependent upon them. I have stated the liabilities of the houses only which have failed; but, my Lords, that is not to be taken as the measure of the whole loss to the commercial houses of the country. It is but a small part of the general loss. You know the amount of the liabilities of those which have fallen, but you know nothing of the losses sustained by those which stand as yet, but in so precarious a condition as to render it doubtful how long they may be able to carry on their business, and certain that they must at all events contract their dealings greatly. The noble Marquess has used the expression (and I trust he will not object to alter the wording of his resolution in that respect) "recent," in speaking of the commercial calamity of this country. That expression, my Lords, conveys the idea that the distress has passed away. By a singular coincidence, on the very first day that Parliament assembled, the Bank reduced its rate of discount from 8 to 7 per cent; and on the very day that the noble Marquess comes down to this House to ask your Lordships to appoint this Committee, that is to say, within these three hours, the rate of discount has been further reduced from 7 to 6 per cent. But, my Lords, although the Bank of England may be in a state of less difficulty than it has been, so far am I from thinking that the distress of the country has passed by, that I fear the worst and severest portion of that distress has yet to come. You have yet to receive accounts from, abroad of the effects of the recent failures in this country. You have as yet received no accounts from India of the consequences there of those failures. But if I am to believe what I have heard, and accounts that I have received from quarters supposed to be well informed upon the subject, three months will not have elapsed before you will hear of the sweeping off of some of the greatest houses in Calcutta. Our merchants in Manchester, Birmingham, and elsewhere will, ere many months more have elapsed, be receiving back in payment for the goods which they may have shipped, bills upon those houses which have failed; and the full effect of the pressure which has reduced so many great houses, has yet to be felt, when in its return it shall have fallen upon the smaller houses, upon the tradesmen, the retail dealer, and upon those employed in the production of manufactures. And whether you look to the railway interest, or to any other department of industry in the country, you will find, I fear, that many will be thrown out of employment, and that you will have increasing distress. It is not my intention, undoubtedly, to offer any opposition to the appointment of the Committee which the noble Marquess demands; but I must dissent from one proposition which he put forward in asking for it. The noble Marquess said, that important as was the subject of the inquiry, it was a very narrow one. Narrow, my Lords, narrow!—an investigation into all the causes of the recent commercial distress, one question being as to the effect of a particular Act of Parliament, the consideration of which must occupy much time, and is certain to lead to great difference of opinion? Narrow!—when not only the operation of that Act, but the questions of over-trading, of railways, the conduct of the Bank of England, free trade, and every other matter to which any portion of the distress can be attributed as an effect, are involved in it? Why, my Lords, when the noble Marquess says an inquiry of this importance is narrow, I am utterly confounded; and I can only wish to know what the noble Marquess would consider an extensive one. Long, my Lords, before any results of this inquiry can have taken place—long before the Committee shall have closed its labours and made its report, the crisis will be over. And, so far as we can judge from the opinion which the Government has formed, we may presume that the report of the Committee will be something to the effect that they will be sorry to hear of the distresses; but that nothing could have prevented over-speculation—nothing could have prevented the occurrence of a bad harvest—and however much they regretted the mode in which the Bank Charter Act operated, it had nothing to do with causing the distress. The noble Marquess has said, and I concur with him, that no circumstances, and no legislation, can make up for a loss of supply in the agricultural produce of this country, and the consequent necessity of importing a very large amount of foreign corn. Undoubtedly, an importation to the amount of 33,000,000l. in value, within eighteen months, as stated by the Chancellor of the Exchequer, or of 20,000,000l. within a twelvemonth, as stated by the noble Marquess to-night, for the purpose of supplying a deficiency which should have been supplied by our own country, is an immense loss of capital, and sufficient to have caused the great embarrassment which has occurred. But the noble Marquess entirely misunderstood me in what I said the other night, if he thought that I attributed to free trade the large importations of foreign corn which have taken place during the last three years. I maintained that whether under a system of free trade or protection, that importation would have taken place. That under the former corn law it would have taken place, as well as under the system which repealed that law. But what I maintained, and am prepared still to maintain, is, that whereas those who advocated free-trade principles predicted as a necessary consequence of that importation of foreign corn a large exportation, in return, of our manufactures, and great national prosperity in consequence; we, on the contrary, maintained that such exportation did not follow as a necessary result. There was one other observation of the noble Marquess to which I wish to refer. He said that nothing could guard against great and unnatural speculation. I do not deny it. But I ask, upon whom ought the blame of those enormous speculations in corn to rest? I say that Her Majesty's Government are not wholly blameless in this matter. You held out inducements to those speculators in corn, and encouraged the vast importation. You came down and asked to have the navigation laws suspended, in order to enable foreign corn to be more freely brought in. I think, after that, it is rather too much for Her Majesty's Government to turn round and say-it is impossible that any Government could guard against the consequences of rash and dangerous speculation? I will not trespass further on your Lordships' time. As I before observed, I have no opposition to give to the Motion of the noble Marquess. But I must hold it as my deliberate judgment, that a question such as this ought not to have been thrown by the Government loosely upon Parliament and the country for a decision. I think it was their duty to have expressed some opinion upon it, and that they ought to have proposed any palliation by law which they thought practicable. They have shrunk from that course. I will not give any formal notice at present; but Her Majesty's Government having stated that the appointment of the Committee is the only measure they intend to propose, they must not be surprised if other parties, less bound by the obligations of their position, assume to themselves the task of suggesting measures which they think suited to meet the exigency, and voluntarily assume a responsibility from which Her Majesty's Government appear to shrink.

EARL GREY

My Lords, I should not have thought it necessary to have troubled your Lordships with any observations upon the present occasion, but for some expressions which were used by the noble Lord who has just addressed you. He has attributed it as a matter of blame to Her Majesty's Government, that under the present distressing circumstances of the country they have contented themselves with a Motion for the appointment of a Committee, which the noble Lord says will have no practical effect upon its condition; and he has added that some measure of a more practical nature ought to have been proposed. Now, at the beginning of his speech the noble Lord adverted to the same topic. He said, if you have no measure to propose, why should Parliament have been called together? If the noble Lord had referred to Her Majesty's Speech at the beginning of the Session, he would have seen that, in our opinion, there were good grounds for calling Parliament together, although we did not think it possible for Parliament or Government to aid in palliating the existing distress. My opinion is in accordance with that of the noble Marquess, namely, that the distress under which the country is labouring is easily attributable to causes not only sufficient to account for it, but so powerful, that, great as the sufferings are, I am surprised they are not still greater. I believe that suffering, in part, arises from causes such as neither Government nor Parliament have any power over—from the dispensations of Providence—partly from causes attributable to the imprudence of individuals—and partly, it may be, even arising from the imprudence of the Legislature. Those causes have now been operating some time, and it is utterly impossible now to avert their consequences. But, holding these views as to the causes of the distress, there still was an obvious reason for calling Parliament together. We had taken a measure which might very probably have led to a violation of the law. If we had, we should have been obliged to ask for a Bill of Indemnity. We should not, as the noble Lord opposite himself remarked, have taken such a step without giving Parliament the earliest possible opportunity of pronouncing an opinion upon it. We were bound to give Parliament that opportunity. An Act of Indemnity would have been indispensable for the Bank Directors as well as for the Government, had the law been violated, for we have held out encouragement to the Bank Directors to take the course which might have led to that violation of the law; and it was right that Parliament should have had an immediate opportunity of pronouncing an opinion, and either permitting or censuring the act as it should think proper. But, my Lords, if you look to Her Majesty's Speech, you will find that we do not hold out to Parliament or to the country any hope that we were about to propose measures for the relief of the distress. The words are these:— Her Majesty has seen with great Concern the Distress which has for some Time prevailed among the Commercial Classes. The Embarrassments of Trade were at one Period aggravated by so general a Feeling of Distrust and of Alarm, that Her Majesty, for the Purpose of restoring Confidence, authorised Her Ministers to recommend to the Directors of the Bank of England a Course of Proceeding suited to such an Emergency. This course might have led to an Infringement of the Law. Surely, my Lords, there is nothing in these words which could lead to an expectation of certain measures of any description being about to be introduced. But such measures as we thought could tend to alleviate the distress we have already laid before Parliament. It is clear that postponing for some time the demands on account of railways in progress is one of the best possible for such a purpose; and, accordingly, Her Majesty's Ministers have proposed in the other House of Parliament a measure which will, we hope, lead to the postponement for some time of the great outlay which should otherwise take place upon those railways. We have proposed to go as far as possible with a due regard to contracts already entered into, which Parliament would not be justified in setting aside. But my noble Friend opposite has complained a good deal that no opinion has been expressed on the part of Her Ma- jesty's Government on the Act of 1844. Now, I must say that that assertion is hardly well deserved. My noble Friend near me did, undoubtedly, state to your Lordships that the causes of the commercial distress were not attributable to the Act of 1844; and my noble Friend opposite agreed in that opinion. He said distinctly that that was not the case; but he said that the operations of that Act had tended to increase the panic, and to prevent relief from being afforded as early as it might have been. Now, when we have been compelled to interfere with the operation of that Act, it would be impossible to say that we are prepared to maintain it to the fullest extent. But I am prepared to maintain that the Act of 1844 did not in any way tend to produce the commercial distress, or the consequences to which my noble Friend opposite has referred. My noble Friend said, that by sanctioning an interference with that Act, we have expressed an opinion against it: but I dissent entirely from such a conclusion. I know that it is an opinion entertained by many persons of the highest experience, and that the opinion was hold by them in 1844 when the Act was passed, that whilst it is impossible and impracticable to define with precision sufficient for the requirements of an Act of Parliament what the currency should be; yet that when circumstances of an extraordinary nature should arise, as they might from time to time, they might be dealt with by the Executive Government. That opinion was entertained by many experienced persons in 1844, and to it many, I believe, still adhere. But in regard to the opinion that the ultimate adoption of a measure of interference implied that something of the same kind ought to have been done earlier, I must dissent entirely from the noble Lord opposite. On the contrary, I maintain that that measure should have been deferred to the last possible moment. No one laments more deeply than I do the extent to which the distress has gone. The calamities are almost unparalleled in amount, and of a most lamentable description. But I believe it is the opinion of those best acquainted with the commercial world, that the houses which have fallen, whether from imprudence or misfortune, or from whatever cause their failures have arisen, were houses which might have been certainly maintained by external assistance for some time longer, but whose continued maintenance could not have been effected; whilst, on the other hand, their further support for the short while they could have been kept up might have been productive of far greater mischief than their failure at the time they gave way. But when towards the end of October we received accounts that although up to that time the failures had not extended to solvent houses, yet, if something were not done to maintain credit, the consequences would be serious to houses that were perfectly solvent—that they were becoming unable to meet the demands upon them, the panic amongst merchants, bankers, and traders, being so great, that in order to maintain their credit as far as possible, they were hoarding up and keeping in their own possession all the money they could, and calling in all the debts due to them. Now the whole of our commercial system is based upon the assumption that there will not be a simultaneous demand of all engagements due, but that a fair amount of credit will be afforded; and, undoubtedly, the result of the measure we adopted goes far to prove the correctness of this statement. We were told that if there were an assurance, no matter on what terms money was to be had by persons who could give good security—that if there was an assurance that money could be had, the money hoarded in various quarters would be brought forward abundantly, and that thus the pressure would be at once mitigated. We believed this opinion to be well founded; we acted upon it; and the result proved that we had not been deceived. My noble Friend says that this is a question which we ought not to turn loose upon a Committee of this House, or upon Committees of both Houses of Parliament; and that we ought to have made some definite proposal in respect to the Act of 1844. Now, if we believed that any possible alteration of that Act could have any perceptible effect upon the existing commercial distress, I should entirely concur with my noble Friend opposite. But we think the very reverse. We think that Act may require alteration in some points, but that the main principles of it are correct, and that to teach the commercial classes of this country to look for relief to what is called relaxation of the currency would be most dangerous. We do not mean to say that the Act of 1844 is not capable of improvement in many parts. We know that there are various points in which persons of conflicting opinions contend that improvements may be made. One set of persons contend for some authority being entrusted by law to the Executive Government to make such alterations as they may deem necessary in special emergencies, such, for instance, as we have lately seen. Others contend that the Act of 1844 does not carry to its legitimate conclusion the principles on which it was founded; and that too much power has been left to a corporate body—the Directors of the Bank of England—and that the Directors of that institution represent the interests of the Bank rather than those of the public. We thus find views put forward by well-informed persons almost in perfect opposition to each other; and it appears to me that, under such circumstances, it is only fitting that Parliament should appoint Committees for the purpose of considering those various propositions. My noble Friend opposite (Lord Stanley) has intimated an opinion that commercial distress has not yet passed by. I wish I could say I differed from him. But I feel bound to admit that many of the causes which contributed to bring about the late distress are still in operation, and that we have still to look to a further period of depression. But there is nothing in the present state of the country which ought to discourage us—nothing to cause us to fear but that—it may be at an earlier or it may be at a more distant period—shortly this country will emerge from all its difficulties, and rise to a prosperity still greater than before. The causes of the present distress have been already so fully stated, that I will not again go into them. But I will remark that, in addition to the drain upon the resources of the country for the importation of foreign corn, every class in the community, from the highest to the least, has felt the pressure upon its expenditure from the high prices of provisions during the past year or so. The price of homegrown corn during the past year has been almost unprecedentedly high, having risen to 80s., 100s., and even for some time having touched the enormous price of 120s. a quarter. My Lords, when we consider what must have been the effect of these high prices on the expenditure of every family, especially in the families of the middle and working classes of this country; when we consider the enormous drain on the resources of the country, when added to the large demands paid on account of railways and other sources of expenditure—certainly we cannot be surprised at the extent of the difficulties we have experienced. But, my Lords, we have just had a good harvest—a bountiful harvest; and if, by the blessing of Providence, we should be favoured with a recurrence of such a plentiful season, that greatest of all drains upon the resources of the country will be at an end. Then, with respect to the railways—undoubtedly, at a moment when a great drain of money from this country was caused by the importation of foreign corn, the amount of capital absorbed in the construction of railways could not fail to produce great temporary inconvenience; still, it must be admitted that these great works of improvement, when completed, will add immensely to the national wealth. Many of these undertakings are beginning to produce wealth, and their benefits will speedily be realised. The pressure made by the efforts on the part of the trading community and others to meet the demand on account of railways, has undoubtedly been very inconvenient. But when I look at the energy and industry of the country—when I take into account the improved prospects of the cotton trade, arising from a cheaper and more plentiful supply of the raw material—I have no reason for doubting that, at no far distant day, this country will again attain her accustomed prosperity. Before I sit down, I cannot help referring to what fell from my noble Friend opposite, at the end of his speech. My noble Friend, referring to what had been stated by him on the first night of the Session, reiterated the opinion that the experience of last year, and the wide-spread distress which unfortunately existed—universally attributed, in the main, to the large importations—went far to corroborate the arguments of those who opposed any alteration in the corn laws. I entertain an opinion exactly the reverse of that stated by my noble Friend. I can hardly conceive a combination of circumstances more powerfully corroborative of all the arguments produced by those who were in favour of a free importation of foreign corn. In the first place, it was of the utmost importance that we should have those importations of grain. If we had not secured these supplies of corn, what would have been the sufferings of the people? In spite of the immense arrivals of grain and flour, no later than the months of June and July in the present year, the prices were so high, and the sufferings of the population of Ireland and of this country had arrived at a height which it was fear- ful to contemplate; and what prevented these sufferings proceeding to the extent of starvation? The supplies of foreign corn. Parliament had given unlimited liberty to importations, and British merchants ventured to send to the most distant markets; while, under the old corn law the merchants necessarily confined their operations to the continent of Europe; they went no further for their supplies of grain. The effect of the sliding-scale was such as to prevent any prudent man from proceeding to a distant market; his cargo, when it arrived at Liverpool or London, might be met by low prices and high duties. The sliding-scale was in fact an ingenious contrivance to impose a forfeit upon every merchant who ventured to order cargoes of corn from a distant port. It, however, happened that just at the period when we were on the verge of starvation, neighbouring countries on the continent of Europe were suffering under an equally heavy calamity. Instead of being exporters of corn, they were bidders against us in the market of the world for the small surplus that remained. Our merchants drew their cargoes from the Turkish dominions, from the United States of America, and from distant countries never before visited for such a purpose. But they would not have ventured to do this under the operation of the old sliding-scale. They would have known that a voyage to the Turkish dominions, or to the United States, was a work of time, and they would have declined making the experiment. I say it advisedly, that actual starvation would have been experienced by no small portion of the population. My noble Friend then went on to say that this enormous addition to our imports had not been attended by any increase of exports. It is perfectly true that our exports of manufactured articles have fallen off. But this is easily accounted for. It may be partially accounted for by the diversion of much of the capital of the country to the construction of railways; it may also be partially accounted for by the deficiency in the supply of cotton. But to those countries from whence the largest supplies of com were received, there has been an increase of exports—an increase infinitely greater than had been anticipated. My noble Colleague the First Lord of the Treasury, the other night, in the House of Commons, quoted a document to prove this gratifying-fact. His Lordship showed that the declared value of exports from the port of Liverpool alone to the United States had amounted, for the three quarters ending October, 1846, to 4,030,000l.; for the three quarters ending October, 1847, it amounted to 6,291,000l., making an increase of British manufactured goods to that country from whence we received the greatest bulk of foreign corn of no less than 2,261,000l. in nine months. More than that, it is notorious that the effect of the increased demand for corn from America has increased the consumption of British goods in that country. This increased demand has taken place in a degree much greater than was ever anticipated. The fact is, that the farmers of America have been making large profits, and, like their friends and relatives on this side the Atlantic, they have increased their expenditure, and that in a great degree has led to the increased exportation of British manufactures. The same thing has taken place with respect to many other countries. I do not think it worth while to trouble your Lordships with an array of figures, more especially upon a point not exactly before us, or I could show that the same thing holds true with respect to the Turkish dominions, from which we obtained large supplies of corn, and to Brazil, in consequence of the increased importations of sugar. In short, the events of the past year confirmed, in the strongest manner, every argument advanced by the advocates of an alteration in the corn laws. There can be no doubt this extraordinary and unlooked-for increase of imports has caused a great demand for capital—a far greater demand than would be covered by our ordinary imports. Under the pressure of circumstances considerable sums of money have been exported from this country. I believe, however, that if you could ascertain the amount of foreign railway stock held by parties in this country, compared with the amount held by them in the previous year, you would find that this forms a considerable part in the large payments which had, of necessity, to be made. Formerly it was the general practice of the British merchant to be in advance with the foreign merchant; but now, I am afraid, that the foreign merchant is in advance with the British merchant. This naturally arises from the balance of trade being against us. It should also be borne in mind that a large part of our exports were necessarily affected by the distress which prevailed during the last year throughout the continent of Europe. The popula- tion of many of the continental nations were as much affected by the scarcity as ourselves. It was utterly impossible, under such circumstances, that they could be large consumers of British manufactured goods. Germany, France, Belgium, and other countries were so situated—they could not consume their accustomed amount of British manufactures—it would be quite irrational to suppose they could have done so. But my noble Friend has rather tauntingly said, "If the corn speculations of the past year were inordinate, who is to blame but Her Majesty's Government?" Now, I am not prepared to say, that these corn speculations were inordinate. I very much doubt whether they were at all less than prudence required. In some individual instances I do not deny that heavy losses may have been incurred; but for the interest of the country I doubt whether the importations were at all in excess. Your Lordships will be pleased to remember that—thanks to an all-wise Providence—we had, some weeks before harvest, an unprecedented succession of fine weather. The harvest which during the spring it was thought would be late, proved to be early—earlier, indeed, than usual. Human foresight could not foresee such an occurrence; it would have been considered the height of folly to have relied upon such a result. Supposing the weather during last July had been wet, and the harvest, instead of being so early, had been a fortnight or three weeks later, and that the consumption of the country had depended upon the foreign supplies; does the noble Lord think there would have been one grain of corn to spare? I must own that I do not consider the speculations in corn to have been carried on to any inordinate or unwarrantable extent. There always was, and always will, when high prices exist, be instances of individual parties holding on too long, and consequently enduring great and ruinous losses. I do not deny that, for the public interest, it is desirable that a certain quantity of corn should be held on; by such means alone might we be preserved from the privations of scarcity. I do, however, deny that there is any ground of complaint against the late mercantile speculations in corn as inordinate. On the contrary, I am of opinion that the corn trade has been conducted with a degree of foresight not less remarkable than the enterprise, energy, and activity employed in it. It has been the only means, under Providence, of saving this country from the horrors of famine; it has proved the wisdom and justice of the policy pursued by Her Majesty's Government, which, in spite of the most urgent advices to the contrary, they steadily acted upon, left the supply of corn to the exertions of private traders, instead of sending fleets to America and elsewhere in order to import corn on Government account. The Government steadily refused to interfere with the corn trade, and the result of so refusing shows that they judged wisely. I say further—taking the noble Lord's version—that if the corn speculations of the past year were inordinate, which I deny, Her Majesty's Government did not encourage those speculations. We asked Parliament to suspend the Bill authorising the collection of duties on foreign corn—we asked Parliament to suspend the navigation laws. And if we were again placed in the same position, does his Lordship doubt—do any of your Lordships doubt—what would be our course of action? If we had hesitated for a moment—if we had failed to afford every facility for securing a full and speedy supply of corn—we should have been utterly unworthy of the places we now hold in Her Majesty's councils. Feeling that the present is a subject which will invite and require much discussion-—one which will have to be much more fully considered—I will not trespass upon the attention of your Lordships further than to say, that, with my noble Friend, I think there do appear good and sufficient reasons for the appointment of this Committee.

LORD BROUGHAM

alluded to the circumstance—he did not call it an unfortunate circumstance—of the noble Lord opposite (Earl Grey) having followed his noble Friend (Lord Stanley) and broached the vexed question of the corn laws during the present discussion; but he entreated his noble Friend near him (Lord Ashburton) not to be tempted into a reply. The question was sufficiently wide without that additional subject; and he felt quite sure that his noble Friend (Lord Stanley), who, almost unavoidably, began the discussion, having only just taken it up, would immediately see the necessity of again laying it down. For his own part, he had not the least objection to the subject of the corn laws—he was quite prepared to discuss it with his noble Friend (Lord Stanley) on any future day, and after due notice; but he rested quite satisfied with the argument of the noble Earl opposite (Earl Grey). He entirely subscribed to that argument; and he considered that it completely confuted the statements of his noble Friend. Their Lordships might exclude the corn laws from the present discussion—his noble Friend (Lord Ashburton) kindly yielding to his advice; but their Lordships might rest satisfied that the whole question would, and must, of necessity, come before the Committee. The whole question, also, respecting the railway speculations, which, he did not say, had distracted, but had certainly absorbed, a great deal of the capital of the country, must also come before the Committee. He quite agreed with the noble Lord opposite, that very much of that speculation might be imputed to the imprudence of the people; but he thought that it might be also traced to a higher, a larger, a more important source—the imprudence, not of individuals, but of the Legislature. In the consideration of the subject, he thought it would be far better to look to the present, and provide for the future, rather than waste their time in an inquiry into the past, scanning the merits of measures or of men. Yet he could not help reflecting, that if there was any part of the Legislature whose consciences were free from blame as to the railway speculation, it was the noble and illustrious Duke (the Duke of Wellington) and the individual who then had the honour to address their Lordships, and for naming whom in conjunction with the noble Duke he perhaps owed an apology to the House. Ten years ago they gave that warning, which it would have been well for the nation to have taken. That warning was reckoned a prejudice—he called it an opinion—and if it was a prejudice he wished it had spread to a greater extent throughout the country. The noble Lord had referred to those things as constituting the cause of the present distress; but there was another, and no very unimportant cause, which his Lordship had not referred to—he alluded to the usury laws. The owners of land were placed by those laws in a position of peculiar hardship. They suffered by a partial repeal and a partial retention of the enactments relating to usury. And in addition to the difficulties which had been so well described by the noble Lord opposite, their Lordships must prepare themselves for agricultural distress, or, at least, landowners' embarrassments. Capital would become more difficult to procure every year; the rate of interest would rise in proportion as capital became scarce; the landowner alone would be unable to raise the rate of interest upon his incumbrances. He did not object to the appointment of the proposed Committee. He considered their Lordships' House was peculiarly calculated for inquiries of that character. With all deference to the other House, he thought this House better calculated for such inquiries than was the House of Commons. He thought, however, that it would be better for the inquiry to commence in the other House—their Lordships then not only had the benefit of the opinion of the other House, from its report, but they saw the evidence of the witnesses. Those witnesses were not examined on oath, and many things were taken which might not be considered strictly accurate by a court of law; but inquiries commenced and concluded in the other House formed so many guide-posts and helps; and when they came under the more deliberate consideration of their Lordships, while masses of evidence were frequently rejected, a better conclusion was arrived at in consequence of the previous inquiry. He would not inquire whether the panic was over or not; he would merely ask whether their Lordships had a prospect of peace and quietness during the sitting of the Committee. With his noble Friend (the Marquess of Lansdowne), he greatly feared that, during the course of the inquiry, a recurrence of the same calamity from which this country had been suffering might take place. Their Lordships would enter upon the inquiry in a state of constant alarm. They would be receiving evidence abounding with appeals to their feelings. They would be told that things were very awkward—that they were worse and worse—that ruin was staring every merchant in the face—and that their investigations might increase the peril. Upon these grounds he held that it would have been better had the inquiry before their Lordships been longer delayed. If, indeed, there existed any prospect of a speedy and practical result from the inquiry, all objections would be at an end; but no man could dream that such would be the case. In about a fortnight or three weeks, the recess would intervene. Was it at all likely that the inquiry could be completed before the recess? The inquiry would necessarily extend ever a long space of time. Did Her Majesty's Ministers think that the subject of the currency could be kept from the Committee? It would be impossible to keep it out. A great number of persons thought that it was not the Bill of 1844 but the Bill of 1819 that had done the mischief. [A Noble LORD: Hear, hear!] There's an instance. And as soon as that subject was broached, away went all hopes of a speedy termination. A determined Member might succeed in dragging any subject forward in Committee, if that subject were not quite foreign to the inquiry; and he could not say that the Bill of 1819 any more than the Bill of 1844 was so absolutely foreign to the inquiry as to justify its discussion being shut out. The noble Lord concluded by stating his intention to vote for the appointment of the Committee, and reiterating his opinion that the inquiry would have been better prosecuted after the complete subsidence of the alarm in the commercial world. He wished he could differ from his noble Friend (Lord Stanley) as to the probability of increased pressure in the monetary world; he greatly feared that further disasters might be looked for in many quarters, and from the embarrassments both of the East Indies and the West.

The DUKE of GRAFTON

entirely agreed with the noble Lords who had spoken as to the policy of appointing a Committee. His Grace considered that the commercial distress arose from the want of a sufficient circulating medium—a want of money whereby to carry on the transactions of trade. He considered an extension of the currency would be the best remedy.

LORD ASHBURTON

then rose, but was at first very indistinctly heard in the gallery. The noble Lord was understood to observe, in respect to the proposed Committee, that some parts of the case were too imminent to admit of waiting for a remedy until the close of an inquiry that promised to be of so long a duration. He was sensible that, under every circumstance, this Committee was proper; but whilst he said this, he must be understood as reserving to himself, or to any other noble Lord, full liberty to offer, at any time, should he think fit to do so, some proposition for a direct interference with that Act which had so much to do with the difficulties that had occurred. With regard to the question of the corn laws, no one had said that those laws were the cause of the present distress, though it could scarcely be doubted that the great importation of foreign corn that had taken place had much to do with it—by the drain of capital which it had of necessity caused. But the old corn law would have admitted corn just as freely as the present had done; and not much inference could be drawn, perhaps, from what had passed in regard to the general operation of the corn laws. But let him remind their Lordships of one little fact. One of the great objections that were brought against the old sliding-scale was the fluctuation of price; but they had had, under the new law, a greater fluctuation than had ever before been known—a fluctuation, indeed, from 40s. to 120s. Another of the objections to the old corn laws was that they encouraged gambling; but the gambling under the new law had been, he feared, far greater than ever had existed during the whole system of the sliding-scale. He should not, however, have touched upon this question on that occasion, had it not been so strongly pressed upon their Lordships' notice by the noble Earl (Earl Grey) who had lately addressed the House. But what was it that was said to have been the cause of the condition in which the country had found itself during the last twelve months? The noble Marquess (the Marquess of Lansdowne) appeared to throw the cause upon Providence, attributing it principally to the visitation of the famine. But that famine did not absorb that extent of capital which had been imagined. No doubt could exist that these great importations of corn did cause a very considerable quantity of specie to leave the county, and this greatly reduced the balance at the Bank; and, certainly, the Act of 1844 did aggravate every difficulty that occurred—indeed, made things difficulties which would not, perhaps, have been so but for the operation of that Act. One of the great difficulties in the case was the railways; but would it be said that Parliament had not been strongly warned on that subject? The noble Earl now the Governor-General of India (the Earl of Dalhousie) had been as strongly impressed with the difficulties of that question as he (Lord Ashburton) was himself. Those ventures had no doubt been, in many points of view, of service to the country; but they had been carried on with insufficient means. The main cause, then, was one which the Legislature, though often warned against permitting it to operate, had, nevertheless, allowed to take place. There was another question, too, which was much connected with what they were discussing, and in regard to which the noble Earl (Earl Grey) was more responsible than any one else, but which was too large a subject to enter upon on that occasion—he meant the West India question. It was not true that the misfortunes which had overtaken and struck down the West India interests were to be attributed to the acting of Providence, over which man could exercise no control; a great portion of these misfortunes was to be attributed to legislation. Much stress had been laid upon over-trading as regarded those East India houses which had failed. Their Lordships, however, should bear in mind that these houses conducted their business exactly in the same way that they had been accustomed to do, at all events since he recollected; and although much of the business transacted was carried on on credit, still the parties would have been enabled to go on as they had been accustomed to do, but for the altered state of the money laws, which rendered it impossible for them to go on. Much loss of capital had no doubt been sustained during the present crisis; but it was not the loss of commercial capital alone which had to be deplored—the commercial character of the country had been injured from one part of the world to the other, and the name of a London merchant had become a by-word. With the view of showing the low estimate formed of English credit in a foreign mart, his Lordship read an extract of a letter dated the 6th of November, which stated that the accounts received of continued mercantile disasters in England, and the discredit thrown upon English paper in consequence, had almost suspended bill operations as regarded Great Britain. It was for their Lordships to consider how far this state of things was to be attributed to physical causes, or to causes arising out of past legislation as regarded the money laws. For his own part, he was decidedly of opinion that the monetary derangement was attributable to the restrictions placed upon banking operations by the Act of 1844. Take the case of France. That country suffered greatly from the loss of its crops as well as England; but the Bank of France, although possessed of not more than two millions sterling in its coffers, continued its usual banking accommodation at a reasonable rate of interest, while the Bank of England, with ten millions and a half of bullion in its coffers—in fact its stock never fell below 8,000,000l.—not only contracted its accommodation, nay, almost for a time suspended it, but charged an exorbitant rate of interest. The Bank of France, on the other hand, with its 2,000,000l., made no alteration in its rate of discount, thus avoiding all disturbance to trade; and he believed that throughout the provinces no difficulty was felt in obtaining the usual amount of accommodation on the usual terms. He thought the Government were very blameable in having stipulated for a minimum rate of 8 per cent, as a condition of its authorising the chance of an infringement of the Bank Charter taking place. The effect was not confined to London, but extended to the country, causing local banks to charge equally high rates for accommodation to their customers. He would give an instance of the consequences as regarded individuals. A most respectable merchant in Birmingham informed him that, having a very valuable order to execute, he applied to his banker for the assistance he had been accustomed to receive under similar circumstances. The banker said, "Certainly; you are one of our customers, and we will give you what you need; but you know that the Bank of England is charging 8 per cent, and our charge must be in proportion. "The merchant informed the banker that his profits would not afford such a charge—that he must decline the accommodation and the order too. In fact, it was impossible that tradesmen could bear up under such exorbitant and capricious charges as had prevailed, not only in London, but throughout England. If the Committee would take the opinion of the best-informed merchants—he did not mean persons—he would not speak in terms of any disrespect of those to whom he alluded, neither would he name them—who were possessed of great wealth and large capital, but who derived great advantage from a high rate of interest, the opinion he had expressed would be confirmed. He did not think that the real interest of that class of capitalists to which he had referred was promoted so much as the parties themselves were inclined to believe by the existing law; still the temptation was so great that they had no objection to the continuance of a law which was occasionally so advantageous to them as capitalists. He thought the Government ought to suspend the restrictive clauses of the Bank Charter, and then wait for the report of the Committee as regarded the modification to be permanently adopted. The sole object of any such restriction as that complained of was to prevent the Bank from getting into the predicament of not being able to pay its notes in gold; and, in order to carry out this precaution, the establishment was divided into two departments. And what has been the result? Why, the Bank, with upwards of 8,000,000l. in its coffers, was at one time in the predicament of acting as though it possessed not more than 1,160,000l., the amount of its reserve. The noble Lord then proceeded to observe that the Chancellor of the Exchequer was not quite correct in stating, as he had done in another place, that the Bank had continued to afford accommodation throughout the crisis. Such a statement was not quite consistent with the facts. As he (Lord Ashburton) had already remarked, the stock of bullion in the possession of the Bank was never below 8,000,000l.; and if reference was made to published documents, it would be found that that institution had gone on satisfactorily with a much less stock than 8,000,000l. In 1835, the average was 6,500,000l.; in 1836, 7,000,000l.; in 1837, not more than 6,000,000l.; in 1838, 9,000,000l.; in 1839, not more than 5,000,000l.; in 1840, 4,000,000l. In fact, previous to the existing restrictions, the Bank was able to give reasonable accommodation at a reasonable charge with a stock of gold not more than 5,000,000l. or 6,000,000l.; but with 8,000,000l. in its coffers, under the apprehension, not of being unable to redeem its notes, but of infringing on the terms of the charter, the Directors were obliged to act as though they possessed not more than 1,160,000l. He did not impute any blame to the Directors for entertaining such an apprehension. He objected, however, to their acting as stockbrokers. Such conduct was altogether new to that institution. By their operations the Directors were enabled to produce fluctuations in the stock market, and to take advantage of these fluctuations to make a profit. When the rate of discount was raised, stocks fell; and the Directors were able to produce such a result when they thought it would be advantageous. Such modes of "rigging" the Stock Exchange, he held to be highly objectionable in an institution like the Bank of England. The cast-iron rule which bound down the Bank in its issue of notes ought to be abrogated. A discretionary power ought to be given to the Directors, for it was well known that while an issue of twenty millions might be dangerous at one time, twenty-five millions might be perfectly safe at another. He held that the Act of 1844 had been decidedly condemned by the procedure of the Government itself in advising its suspension. In doing so, Ministers had admitted that circumstances might arise in which the restriction placed upon issues should be removed; and the result of the interference had been, as his noble Friend opposite truly said, completely successful. The moment the suspension was authorised, credit was restored, and had continued to operate since. As preliminary, therefore, to the inquiry by the Committee, he would earnestly advise that the suspension of the restrictive clauses should immediately take place.

The EARL of EGLINTON

had no intention of entering into any inquiry as to whether the monetary difficulties were created by the corn laws, or free trade, or anything else. He wished to ask whether the inquiry would embrace the operation of the Bills of 1845 and 1846, which related to the Scotch banks? He asked this question, because in all the speeches which had been delivered, no mention was made of the Scotch banks. In another place it had been stated, that the final incident which caused the Government to authorise the suspension of the Bank of England Charter Act was an application which was made by the Scotch banks for assistance. Now, he felt perfectly convinced that the larger portion of the Scotch banks had not applied for relief; and indeed the general opinion was, that a very small part of them, he believed only two, had applied for any assistance whatever. He would only add, that if the Bill of 1845 had not passed, probably these applications would not have been made.

The MARQUESS of LANSDOWNE

said, that according to the terms of the Motion no doubt the inquiry included the Scotch banks; but the Committee would exercise their own discretion as to what branches of the inquiry they should entertain.

LORD WHARNCLIFFE

said, there was one point which had not at all been adverted to; and in reference to which he wished to put a question to the noble Marquess. The question was, on what footing the Legislature stood with regard to the Bank? In 1844 the existing charter was on the point of expiration, or had reached that period, when the Government, by giving notice to the Bank, had the power of examining its charter, and of proposing to Parliament to make a new arrange- ment with that establishment. At present it appeared that one of the objects in view was to examine the constitution of the Bank, and ascertain whether it required any new regulations; and if they were to investigate the condition and constitution of the Bank, it was desirable that they should know on what footing the Legislature stood with respect to it. He wished, therefore, to ask, whether, supposing at this period that the result of the investigation should be, that it was thought desirable to alter the constitution of the Bank, or to withdraw any powers which it now possessed, Parliament would find itself in a position to make those alterations, or whether the Bank had given to the Government an express assurance of acquiescence on its part, so as to make the inquiry a really practical one. He would not on that occasion, and in the present state of the House, enter into the general question which had been discussed; but he could not sit down without saying that, in spite of all he had heard, and in spite of the arguments of his noble Friend near him (Lord Ashburton), he still felt disposed to give his confidence to the principle of the Bill of 1844—and to give credit to Her Majesty's Government for the course which they had pursued. He certainly thought that the moment at which they had interfered with their advice to the Bank was well chosen; and the very restriction which they imposed on the power given, and with which his noble Friend found so much fault, was a safe and prudent one. The effect of that step was most fortunate; for it brought the country back into a state of commercial confidence, without any actual violation of the law. He was glad to hear from the Government their determination not to sanction any relaxation of the currency, for he believed that the principles on which the Act of 1844 was founded, were sound, even if any alteration in its details should be required; and that, if they adopted any relaxation of the currency, they would be led into a course beset with dangers and difficulties of a more serious kind than any which they had yet encountered.

In reply to a question from LORD ASHBURTON,

The MARQUESS of LANSDOWNE

said, that not only was no instruction to be given to the Committee to the effect that the general monetary system of the country should be investigated; but he considered the Committee appointed with a perfect understanding that the general question should not be even an admissible branch of the inquiry. In answer to the question of the noble Lord, he could state that at present certainly the charter of the Bank could not be altered without the consent of the Bank; but he had also the satisfaction of adding that, as this matter had been very much discussed at the Bank, the Government had received an expression on the part of the Bank of their readiness—not to acquiesce in any measure which Parliament might choose to adopt—but to consult with the Government upon the subject, and to concur in such alterations as might seem desirable to both of them.

LORD STANLEY

said, he hoped the noble Marquess would consent to an alteration in the terms of the Motion. He wished to substitute for the words "the recent commercial distress," the words used in Her Majesty's Speech," the distress which has prevailed among the commercial classes."

The MARQUESS of LANSDOWNE

said, that he had no objection to the alteration—they were both general terms.

Motion then agreed to.

House adjourned.