Lords Sitting of 10 December 1857

MINUTES.
1a Trustees Relief; Transfer of Estate Simplification.
2a Bank Issues Indemnity.

BANK ISSUES INDEMNITY BILL.

  SECOND READING.
  LORD STANLEY OF ALDERLEY, in moving the second reading of this Bill, said, he believed there had been a general understanding that the discussion upon this Bill should take place upon the third reading, and therefore he now proposed that the Bill be read a second time and that any debate upon it should take place to-morrow.
  THE EARL OF DERBYsaid, he was not present upon the occasion when the presumed understanding was come to, but he had no desire to interfere with it. It was very important that the Bill should not be allowed to pass without being discussed, but at the same time he had no wish at all to impede a measure which he believed was but an act of justice to the Bank Directors and the Government. He, however, would avail himself of the present opportunity of calling the attention of the Government to a part of the Bill of which, as he conceived, some explanation was necessary; he referred to that part of the Bill which required that the rate of discount should be kept up during the whole period of the suspension of the Act of 1844 to a minimum of 10 per cent. He could understand that at the period when the suspension took place it might have been quite proper and necessary to make that requisition; but it was different when they were passing an Act, not merely of indemnity, but for continuing the suspension of the Act of 1844 for twenty-eight days after the meeting of Parliament in February. The continuance of so high a rate of interest after the absolute necessity for it had passed away was most undesirable, as tending to prevent the restoration of public confidence and to inflict great and perhaps undeserved suffering upon the smaller class of traders. He was not prepared to move any amendment upon the point, but he thought the Government would act wisely in leaving a discretionary power to the Bank of England, instead
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  of prescribing an absolute restriction for two months longer. If the Government should press the provision to which he had referred, he hoped at least they would be prepared to give some explanations of the reasons which induced them to take that course.
  Bill read 2a (according to order); Committee negatived, and Bill to be read 3a To-morrow.

TRANSPORT OF TROOPS TO INDIA.

  CORRESPONDENCE MOVED FOR.
  VISCOUNT DUNGANNON, in moving for Copies of any Correspondence that may have taken place during the present year between the East India Directors and the Board of Control relative to the Transmission of Troops to India, observed that he did not seek to inquire into the question whether the Government had commenced sufficiently early to send out reinforcements to India, but he wanted to know why, when the necessity for reinforcements was admitted by them, they had not adopted means to forward the troops with the utmost expedition. It appeared that a passage through France had been offered by the Emperor Napoleon, but it had not been accepted, neither had a similar offer on the part of the Sultan. Troops were sent in sailing ships, which by some peculiar mode of reasoning were conceived by the Government to be a quicker mode of transit than steamers. There was an impression among the public that the best means had not been adopted to forward reinforcements. If that impression was erroneous, the public should be disabused of it; and the best way in which that could be done was by the production of the documents relating to the subject. If, on the other hand, the public impression was incorrect, it became the imperative duty of Parliament to ascertain on whom the blame rested.
  EARL GRANVILLEsaid, the noble Lord was probably not aware that a Committee was about to be moved for in the other House to investigate the whole question, and that the Government, who were only desirous that the fullest inquiry should take place, would assent to its appointment. All the correspondence which had passed between the Board of Control and the Court of Directors of the East India Company respecting the transmission of troops would be laid before that Committee; and, under these

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  circumstances, perhaps the noble Lord would not press his Motion, as the object he had in view would be fully answered by this proposed inquiry.
  In answer to Viscount DUNGANNON,
  EARL GRANVILLEsaid, he wished to be understood as saying that the Committee would have power to call for the papers if it chose, but he could not pledge himself that they would be required.
  Motion (by leave of the House) withdrawn.

THE INDIAN MUTINY—OBSERVATIONS.
VISCOUNT MELVILLEsaid, there was a point which had not been sufficiently alluded to, on which it was desirable they should have some information. It was extraordinary that the local Government should have had no information of an organized mutiny such as that which had broken out in India. He believed it was perfectly well known that the revolt was to commence all over the country on a certain day; but owing to some misunderstanding it broke out a day or two too early at Meerut, otherwise the disasters we had now to deplore would have been far greater. He was told that information of the intended mutiny had been communicated to the Indian Government by indigo merchants, and even by officers of the army; but it seemed that the letters containing this information were totally disregarded, and not even answered by the Government. The signal for the outbreak went through the land like the fiery cross of old without the local Government taking the slightest notice of it, or making any preparations for putting down the movement, and, as soon as it began, they seemed to be taken entirely by surprise. He hoped Her Majesty's Government would give some explanation to the House on this important subject. The local Government ought to tell them what information they had received, and whether, on receiving it, they made immediate preparations for strengthening their means of defence.
EARL GRANVILLEsaid, he admitted the necessity of a full inquiry; but at this moment it was premature to urge such an investigation.
LORD MELVILLEexplained, that he did not blame Her Majesty's Government for anything which had occurred, because he believed they acted as promptly
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as they could do after receiving intelligence of the revolt, but he found fault with the local Government for not attaching due weight to the information which was communicated to them.
EARL GRANVILLEwas understood to say, that Her Majesty's Government were not aware of the exact nature of the information which the local Government of India had received, and that he was, therefore, unable to give a definite answer to the question of the noble Lord.
THE EARL OF DERBYsaid, this was a subject which could not be dealt with lightly; but at the present moment, when we were engaged in repressing and putting down the mutiny, it would be premature, and perhaps injurious, to inquire what information had been received by the Government as to the causes of the mutiny. When, however, the revolt had been put down, it would be the bounden duty of Parliament to inquire into its causes; and, moreover, to satisfy themselves and the country whether the Government had, in point of fact, received any information which would have enabled them to make more complete preparations than they had done, and what use was really made of such information.

ASSASSINATION OF MR. SULLIVAN, BRITISH MINISTER AT PERU.
THE EARL OF POWIS, in rising to put to the Secretary of State for Foreign Affairs the question of which he had given notice,—What information the Government had received concerning the Assassination of our Minister at Peru, and what Steps they had taken in the Matter—said, it was necessary for him to bring to their Lordships' recollection the extraordinary circumstances under which that act was perpetrated, but he might observe that it was an act in which not merely the feelings of that gentleman's family and friends were concerned, but one which, for the sake of the community at large, should not be allowed to pass over without some satisfaction being given; because the efficiency of all our diplomatic relations rested mainly on the principle of personal security, which, by the common consent of all nations, was observed as regarded the accredited representatives of other countries. He hoped the noble Earl would state what information he had received on the subject, and what steps had been taken to procure the conviction of the

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persons guilty of the murder, and that Her Majesty's Government would not allow their efforts to be thwarted by the transatlantic indifference for human life, or by the proverbial procrastination of Spanish justice.
THE EARL OF CLARENDON: My Lords, it was in the month of August last that we received from our Consul at Lima an account of the murderous attack made upon Mr. Sulivan. On the day following that on which he was attacked Mr. Sulivan died, having suffered great agony from the wounds which he received. It appears that he was struck by the assassin while at dinner with his secretary and other persons. The assassin escaped. Mr. Sulivan, before his death, said he did not believe he had an enemy in the world; and the general opinion there was that he had not an enemy in Peru, for there never was a more amiable or good-natured man, or one who was less likely to give offence to any person. The assassin appeared to have had accomplices waiting outside Mr. Sulivan's residence, and with them he escaped beyond the city. I must do the Peruvian Government the justice to say that nothing could exceed the feeling which they manifested at this most atrocious murder, or the activity which they showed in adopting measures for the detection of the perpetrator. The Peruvian Minister of Foreign Affairs was, at his own request, the chief mourner at Mr. Sulivan's funeral, and both by written communications and verbal ones through the representative of Peru in this country, the Peruvian Government have expressed their deep regret at the occurrence, and informed us that they have good reason to believe that a foreigner was the actual perpetrator of the murder, and that there is no reason to think that he was actuated by any political motives. Believing that they knew where the man was concealed, a police force had been sent out into the country in pursuit of him; but whether it has been successful in its search we do not know; but it seems that one of his accomplices has been recognised by a servant of the late Mr. Sulivan, and has been made prisoner. The Peruvian Government offered in the first instance a reward of 3,000 dollars for the apprehension of the murderer; that sum had since been increased to 10,000 dollars, and we have ourselves offered £300. The belief
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of the Peruvian Government is, that they will be able to arrest the assassin. I must say we have no fault to find with that Government on the subject, for they have done all that lies in their power to bring the man to justice.

BANKS OF IRELAND AND SCOTLAND.
LORD MONTEAGLE, in rising to move for Accounts showing the Circulation and Bullion of the Banks of Ireland and Scotland, said, that the object which he had in doing so was to obtain accurate information upon the subject on the bullion withdrawn from the Bank of England for the Scotch and Irish banks. It appears that the monetary pressure which had recently prevailed in England had been attributed by some persons to the system upon which the banks in Ireland and Scotland had been conducted. In dealing with this question, he would not say a word with regard to Scotch banking, as there were noble Lords present who were more familiar with that part of the subject than he could pretend to be. He would confine his observations to the management of the banking establishments in Ireland, although he was of opinion that whatever he might have to say respecting the law regulating those establishments might also, mutatis mutandis, be applied to banks in Scotland. Of the banks in Ireland he believed he might assert, without fear of contradiction, that to the manner in which they had been of late conducted, no part of the inconveniences which had arisen on this side of the water could with justice either directly or indirectly be attributed. It had, however, been stated, with some degree of truth, that to a limited extent a pressure had been produced upon the banks of this country in consequence of demands for gold made upon them from Ireland and Scotland. This could only have taken place so far as the Scotch and Irish banks were holders of Bank of England securities. He wished, however, to protest against the supposition that, so far at least as Ireland was concerned, such pressure had been the result of indiscreet trading or of injudicious banking operations. During the recent crisis, though their operations had been subjected to a severe test, arising out of the state of things here, and though some demand for gold had been the result,

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there yet had not been an instance in Ireland of suspension of payment upon the part of even a single bank, or scarcely the suspension of payments of any commercial house. He was not, however, prepared to deny that the state of the law in respect to banking transactions between England and Ireland was such as to require alteration. When his noble Friend (the late Lord Spencer) introduced his Bill commonly called the Bank Charter Act of Lord Grey's Government, he introduced a clause which he very erroneously and very unscientifically described as a legal tender clause. That designation, unexplained, would seem to imply that Lord Spencer had sanctioned the principle that, without qualification or restriction, the Bank of England notes were to be made a legal tender. Such a step, however, would have been entirely contrary to the opinions uniformly entertained by Lord Spencer. What that nobleman did assume was, that a banknote convertible on demand into gold was equivalent to gold so long as the convertibility was strictly and practically maintained, and was capable of legal enforcement. Upon that assumption, therefore, a clause was introduced making a Bank of England note a legal tender, but with one most material exception—it was in all cases except on the part of the Bank of England itself, which continued bound to pay in gold, if gold was demanded. Such was the strict limitation which Earl Spencer maintained, and their Lordships would observe that so long as the Bank of England were bound to pay their notes on demand in specie, and so long as that promise to pay was strictly performed, it could be no breach of faith or violation of principle that parties indebted should have an option of paying either in specie, or in notes, which, being convertible on demand, were equivalent to specie. But to show with what strictness Lord Spencer carried out that view, he introduced into the very clause in question a further limitation, reciting that these Bank of England notes should not serve as a legal tender except so long as the Bank paid its notes in coin. The instant there was an interruption in such specie payment the power of discharging public or private obligations by notes was to cease. The Bank of England note, if inconvertible by the Bank, forfeited its privilege. This had been the state of the law in relation to Bank of England
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notes throughout England and Wales from the passing of Lord Spencer's Act. But the clause of the Act was somewhat ambiguously worded. It did not appear from the language of the clause that its operation was to be confined within England and Wales, or whether, although the general enactments were so limited, that special clause did embrace Scotland and Ireland likewise. This question was subsequently raised. About the year 1837 a considerable failure occurred in Ireland—that of an establishment called the Agricultural and Commercial Bank—a bank exceedingly ill-managed, and which deserved to fall. He (Lord Monteagle) was then Chancellor of the Exchequer, and application was made to him, on the part of the Irish banking interest, respecting the applicability of the legal tender clause to banking transactions in Ireland. He took the opinion of the law officers of the Crown on the subject, and it was their opinion that the clause in question did not apply to Ireland. Although unable to give the relief asked for, arrangements were made by the Treasury of the day which gave currency to Bank of England paper by accepting it when paid for revenue in Ireland, and by so doing thus afforded very great relief to the existing pressure. So the law stood until the Government of Sir Robert Peel in 1845 (the year after the passing of the last Bank Charter Act) introduced two Bills for Ireland and Scotland, into the former of which a clause was inserted, reciting that doubts had been entertained with respect to the applicability to Ireland of the legal tender clause in the original Act, and declaring and enacting that Bank of England notes should not be received as a legal tender in that country. That was the state of the law at the present moment, and what was the consequence? Why, that at any time of general pressure, like that which had lately taken place, there must be imposed upon the central point from which all monetary transactions proceeded, an augmented pressure, and considerable sums of specie must inevitably be exported from England to meet the demands of Ireland and Scotland. It was the object of the papers for which he intended to move to exemplify the extent to which these transactions had in the present year been carried. Had the legal tender clause extended over the whole kingdom, the difficulties arising out of the Scotch and Irish

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demand for gold might to some extent have been met by a transmission of convertible Bank of England paper in the place of specie. In that case we might have realized with respect to Ireland and Scotland the benefits extended to England by Earl Spencer's clause; and he was at a loss to know what earthly reason operated to require a different rule in Waterford and Glasgow from that which prevailed at Bristol and Liverpool. All the witnesses who had been examined before the Commons' Committee last year, seem to have recommended the extension of the legal tender clause to Scotland and Ireland. The only objection which could be raised was, that the legal tender clause in Ireland and Scotland would not produce the same benefits, owing to the existence there of a small note circulation. Now, he admitted that the effect of the law might not be exactly the same in these countries, but he could not understand how any one could doubt that it would, as far as it went, be productive there of good. It was a curious phenomenon that, throughout the late banking crisis, in the south of Ireland (he could speak of that district from his own experience, but he believed that what he was about to say would apply equally to the other parts of Ireland) there had not been the least pressure with respect to the note circulation. He was inclined to attribute this withdrawal of deposits to the losses sustained by the depositors with that most fraudulent establishment, Mr. John Sadleirs Tipperary Bank. The demand of the people was for their deposits, and it did not seem to matter whether these were paid in gold or in notes. There was another remedy suggested, namely, the abolition of the small note circulation; but into the merits of this proposal he would not now enter. The question was one too large to be discussed incidentally. For the present he would confine himself to moving for returns showing the circulation and bullion of the banks of Ireland and Scotland, in continuation of returns previously made on the same subject. The noble Lord then moved for a
"Return showing the authorized Issues of the Notes of the Private and Joint Stock Banks in England and Wales, and the actual Amount issued; also the authorized Issues of the Banks in Scotland and Ireland, the actual Amounts issued, and the Amounts of Bullion held by those Banks respectively, in each Week from
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the 9th May, 1857, up to the latest Period to which the Account can be made up (in continuation of Appendix No. 17 to the Commons Report on Bank Acts, No. 198, 1857)."
LORD STANLEY OF ALDERLEYsaid, there was no objection to the production of the Returns for which the noble Lord had moved, as they were mere continuations of Returns which had been laid before the Bank Committee of last year. His noble Friend had dwelt with very just satisfaction upon the manner in which the commercial and banking transactions of Ireland had been maintained during the recent crisis. At the same time, considerable inconvenience was occasioned to the Bank of England by the great demand for gold which was made at a time of pressure, in order to enable the banks of Ireland and Scotland to meet their small note circulation; and undoubtedly that inconvenience would be obviated to a great extent by making Bank of England notes a legal tender in those countries. The objections to such a measure had, however, originated with the bankers of those countries, who were afraid that their own issues might be superseded by Bank of England notes. He agreed with his noble Friend that it was most desirable that the Government should seriously consider whether some alteration of the existing law in this respect might not be made.
Motion agreed to.
House adjourned at" Six o'clock, 'till To-morrow, half-past Pour o'clock.