§ EARL GREYpresented copies of Correspondence between the First Lord of the Treasury and the Chancellor of the Exchequer and the Directors of the Bank of England, respecting the enlargement of their discounts and advances. He would take the opportunity of presenting these papers to answer the question put to him on the previous evening by the noble Lord (Lord Ashburton). The noble Lord asked whether the authorities of the Bank had not addressed a communication to the Chancellor of the Exchequer and the First Lord of the Treasury, on Thursday, the 18th, expressing a wish on the part of the Directors to reduce the rate of interest; and whether, no answer being returned to that communication, the measure was not delayed till the following Monday. The facts of the case were these: The Court of Directors, on Thursday the 18th, came to a resolution that the Governor and Deputy Governor should be instructed to acquaint the First Lord of the Treasury and the Chancellor of the Exchequer, that, in the opinion of the board, the rate of interest might be safely reduced. The Governor and Deputy Governor of the Bank did accordingly see his right hon. Friend the Chancellor of the Exchequer on the evening of Thursday, and informed him of the resolution; but the communication was merely a verbal one, and did not require or receive any formal answer. On Monday, the Court of Directors did reduce the then minimum rate of interest, as they perfectly understood, though they received no answer from the Chancellor of the Exchequer, that the Government conceived, in the present state of circumstances, there was no occasion for any interference on its part; it was, therefore, in the exercise of the discretion that properly belonged to them, that the Court of Directors adopted the proposed measure on the Monday following the interview.
§ LORD ASHBURTONhad stated that the Court of Directors came to the resolution to reduce the rate of interest—a measure, he need hardly tell their Lordships, of great importance to the commercial com- 219 munity, on the Thursday; and he could not understand why they delayed acting on that resolution till the Monday, unless they were under the impression that it was first necessary to have the opinion or decision of the Government upon it. He did not exactly collect from the answer of the noble Earl when the Government withdrew its letter to the Bank recommending a minimum rate of interest of 8 per cent; but he rather thought it was not withdrawn until after the Thursday. It was quite clear, if that letter was in existence, the Court of Directors could not with any propriety act contrary to the recommendations contained in it, even though they might entertain no doubt of their power to take any course they might deem advisable. If he was not mistaken, the original letter was not withdrawn till the Monday.
§ EARL GREYthought the noble Lord had not correctly understood his explanation. When the Governor and Deputy Governor waited on the Chancellor of the Exchequer, no formal answer was given to their communication; but his right hon. Friend expressed his opinion that the Directors were perfectly free to act as they pleased in the matter. The letter of the Government to the Court of Directors only contained a recommendation to the Bank that the minimum rate of interest should be 8 per cent. Of course, it was understood that if the Bank of England, acting on that advice, should be obliged to go beyond the law, the Government would apply to Parliament for a Bill of Indemnity. But when the state of the Bank became such, that there was no longer any reason to apprehend a necessity of exceeding the law in making its issues, that letter ceased to have any practical effect; but it was not withdrawn till Tuesday, the day after the Directors carried their proposed reduction of interest into operation. It was in the exercise of their own discretion the Directors fixed Monday as the proper time for commencing the lower rate; but in point of fact, the letter of the First Lord of the Treasury and Chancellor of the Exchequer was not withdrawn until the Tuesday following. He was not sufficiently conversant with the details of banking affairs to say what were the circumstances that induced them to come to that decision; but he had every reason to believe the resolution was entirely in accordance with the opinion of those best able to give one on the subject.
§ LORD ASHBURTONadmitted that, as 220 the Chancellor of the Exchequer told the Directors he had no objection to the measure, no blame could be attached to the Government; but, undoubtedly, some blame was due to those gentlemen themselves, who, knowing the pressure there was for money, and having on Thursday decided on a reduction of the rate of interest, had delayed acting on their own resolution till the Monday following.
§ EARL GREYbelieved the Directors had good and valid reasons for postponing the reduction till the Monday. The step was very carefully considered, and they acted to the best of their judgment in fixing on that day for the date of the measure.