203] HOUSE OF COMMONS, Bank Charter, and Promissory Notes Acts. [2 had now shown, that of the capital of the | upon this to consider what had occurr Bank twenty-four millions were rendered in former times. The year 1783 was utterly inapplicable to its general purposes, as a commercial establishment. The Bank was less able to meet any casual demand that might be made upon it, in consequence of its holding, what it was in the essence of all banking establishments, to avoid, a large number of unconvertible securities. The principle on which all banking establishments were conducted, was, to employ as much of their capital as they possibly could, but always to employ it upon available securities. He could conceive circumstances under which

period of great commercial embarras ment. The Bank was all but stoppi payment, in consequence of its dealin with government; and yet, all that t government then owed was only sev millions. In the year 1797, another p riod of distress, the Bank attributed to transactions with the government the n cessity under which it laboured of appl ing for a suspension of cash paymen However that statement might once ha been disputed, he believed there was n body who would now deny it. The g

the right hon. gentleman opposite might ❘vernment undoubtedly did cause th

suspension. It had been anticipated f some time previously to its occurrenc but the coup-de-grace was given to it I that Austrian loan which they had r cently seen brought to so pitiful a term nation. He did not mean to say tha with such a war as that in which th country was engaged in 1797, the count could have avoided coming, sooner later, either to that suspension of ca

feel himself justified in thus clogging the resources of the Bank. If the right hon. gentleman, from the political state of the country, had been in a situation of difficulty, he might be justified in saying, "True it is, I have put the Bank to some inconvenience by my measures, but it was only because I could not get the money elsewhere; and I thought it better to put it to a small inconvenience, than to run the risk of putting the country to a great | payments or to a peace. No such thin

one." But, specious as such language might appear in a season of difficulty, it could not be tolerated for a moment at a time when the country was at peace abroad and in a state of tranquillity at home. He must say, that, considering that stocks were at 95 and 96, and that the right hon. gentleman had the power of making any arrangement that he thought fitting, he never had heard of a clumsier arrangement than that which the right hon. gentleman had made with the Bank, on the part of government. He did not intend to introduce into the question of the Bank any criticism upon the plan of finance adopted by the right hon. gentleman further than was necessary to elucidate his view of it. But this he must repeat, over and over again, as a great fault in it, that the right hon. gentleman had, as it were, compelled the Bank to have twenty-four millions of unconvertible capital. The Bank, it ought to be further recollected, had at present no capital of its own: It was all lent to government, upon security, it was true, that was unexceptionable, but still it was lent to it; and yet the government, without any necessity for it, either real or alleged, proceeded to choke up its further available resources, in the manner in which he had above described. It was the custom upon all questions and it was very expedient

What he meant to say was this-that th result was hastened by the manner which the government had locked up the available resources of the Bank. A yet, with all this experience before it, t government still persisted in its fornm objectionable measures: though, in th years 1783 and 1797, when the Bank w obliged to play the pranks it had done, had not been mixed up with it to a thing like the sum of twenty-four million One of the first measures which, thought, the government ought to ado to make the Bank efficient to the publi was to set it at ease in this respect, an to give it elbow-room, if he might u such an expression, for its future oper tions. He considered that such a st would be advisable as a permanent me sure; but he was well aware, that it cou not give immediate relief to the ev which at present sat heavy on the countr He had heard it suggested in some qua ters, that the issuing of a quantity of E chequer-bills would be of great effect mitigating the existing distress; but was his opinion, that such a measu would inflict more unsparing ruin on t community, than any which had yet be inflicted upon it. Sure he was, that t funding of those bills would aggravate t present evil, and spread alarm and co fusion in every direction. The Bank,

Acts. [204

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The Bank,

205]

Bank Charter, and Promissory Notes Acts. FEB. 10, 1826.

it was managed at present, was the heart
of all the circulation of the country; and
it was evident that if that circulation was
not perfect, a derangement must ensue in
all its subordinate functions. The de-
rangement which existed at present in all
the relations of commerce, had arisen
from the unsteady conduct of the Bank
acting suddenly upon the country bankers,
and had been much assisted in its oper-
ations by the mania for wild speculation
which had spread over the country like a
whirlwind, of which nobody knew whence
it came or whither it was going. For he
would say, that, unsatisfactory as the state
of the circulation was, it never could have |
given rise to such evils as now pressed
upon the country, if it had not been at-
tended with such an unprecedented ex-
cess of speculation. The hon. member
then proceeded to argue, that, indepen-
dently of the danger to which the Bank
was necessarily exposed by the choking
up of its resources, there was a political
evil arising out of it which it was the
grossest folly, on the part of government,
to tolerate. In the time of peace the ob-
ject of a wise government was, to have its
monied institutions, like the ships of war
at Portsmouth, ready for a start on a mo-
ment's notice. Now, from a Bank which
had twenty-four millions of its capital
choked up in the support of silly conceits
and idle devices, the government had
taken away the means of a start; if such
a start became necessary. In such a con-
tingency the government would find, to
its detriment and disgrace, that it had not
only choked up the resources, but para-
lyzed the powers of the Bank. If they
supposed, that because they had got a
return of all the ships of the line at Ports-
mouth being in a sea-worthy condition,
they were therefore in a situation to go
suddenly to war, they would find, when it
was too late, that they were mistaken, and
that the state to which their impolitic
measures had reduced the Bank, had de-
prived them of the means of carrying it
on. The power of this country was well
known to be in its Treasury. It was far
beyond any thing to which its military
force entitled it to aspire: it rested not upon
its bayonets, but upon its money. The
last contest in which it was engaged was
decided entirely by its money. Forty or
fifty thousand men were the largest army
of Englishmen which were ever upon the
continent, under the command of that
great and illustrious captain, who had

[20

delivered Europe from the thraldom o Napoleon. The rest of our military forc consisted of the natives of other countries and principally of Germans. The power of Austria, Russia, and Prussia, were al successively put in motion by our money The great arm of our country-its power its influence, its consideration-was in it Treasury. Those, therefore, who had lef the country in such a state, that it would be impossible for it to avail itself suddenl of that arm of its strength, had acted a absurdly as it was possible for any set o men to act, who arrogated to themselve the name and character of statesmen.The hon. member remarked, that befor the House came to the conclusion, tha the present system of banking was in efficient, and did not work well to th community, it ought to see it act in th unfettered command of all its resources and not with those resources choked u as they were at present by the proceeding of government. He said, first of all, tha they ought to relieve the Bank from it present difficulties, and then, when the was done, make it understand, that ought always to be ready with four, five six, or even eight millions for the servic of the country. It was his opinion, tha if the first lord of the Treasury had re cently sent to the Bank, and, after inform ing the directors that Treasury-bills wer at a considerable discount, had desire them to buy up from four to eight million of Exchequer-bills, it would not have bee in the power of the Bank to have accede to his request. He believed, that if th Bank had been unincumbered with th government, it would have been relieve from the difficulty, or, as some called i the liberality of making the issues it latel had done. If it had possessed mor elbow-room to turn itself about in, it woul have come forward with alacrity to assi the public; and thus the difficulties whic had recently occurred would have bee obviated. Three-fourths of those diff culties arose entirely from panic; a fourt of them might, perhaps, have arisen fro actual distress. Like people in a theatr who sometimes crushed one another death, in the alarm occasioned by imag nary and not by real dangers, the membe of the community had hurried one anoth into distress and bankruptcy, by the vi lent efforts they had individually made avoid them. The Bank, it ought to I recollected, was the banker of the gover ment. In private life, any individual wi wanted a temporary pecuniary aid, applied it. The desideratum for such a bank was, to his banker for it, and in general his to erect it on a wider basis. It might be

done, when the charter of the Bank expired, either by extending its capital, or by raising rival banks; for which there were not wanting several specious projects. He should listen with great attention to any thing upon that subject; because, though he thought that the present system might be made efficient, if it were fairly and honourably carried into effect without any tricks, contrivances, or paltry meannesses, still he was free to confess, that he should have no objection to improve and strengthen it. The first plan which he had heard mentioned was to erect a

banker allowed him to have it. The government, like a private individual, might often be in want of similar assistance, and should always be able to procure it, without leaving the Bank an opportunity of saying, "We cannot give it you without choking up our resources, and becoming less independent of you than we ought to be," especially in a time of peace, and with the three per cents at 94 and 95. His own private opinion was, that the Bank, if it were relieved from its difficulties, would be fully able to discharge all the functions for which it was intended, and would soon relieve | second bank. Now, if the erection of

the country from the panic which now prevailed, as to its sufficiency to maintain the currency. If the Bank were conducted upon proper principles if it would not drive such hard bargains, and would be content with less profits than it sought to obtain at present if it would be satisfied with a profit of five instead of eight per cent and if, when its charter expired, it would adopt some prudent and liberal measure to limit the emoluments upon its capital, he was convinced that the system would soon stand upon a better footing than it did now, and that some preventive would be found against the recurrence of such evils as had lately befallen the country. He was well aware, that ever since the resumption of cash payments, doubts had existed in the minds of very respectable persons, as to whether there was a capacity in the country to maintain invariably such payments. He was well aware, that many persons apprehended that the pressure of our national debt, of our taxation, and of various other circum- | stances, would render the continuance of such a system impossible; but, for his own

any establishment in rivalry to the Bank of England was meditated in the metropolis, he must say, that he knew of no plan on which it could be erected without augmenting the present confusion. If they had one bank in the east and another in the west, it would bring the country into confusion, in a shorter time than any other measure which could be possibly devised. One bank would be jealous and fearful of the other, and would take every opportunity of acting against it. Neither the public nor the banks themselves would know precisely what they were about. At present, the Bank of England was perfectly acquainted with the nature of its transactions: it knew the risk which it ran, and the responsibility which it incurred; but, if a rival bank were established by its side, the competition would create confusion, and in the eagerness for profit, the recollection of its liabilities would be lost. He conceived that no arrangement of that kind could be made with perfect safety. But, if they strengthened the old establishment by widening its basis and extending its capital, he was of opinion that they

part, he had never participated, neither | would confer a very substantial benefit

did he participate now, in those apprehensions. He thought that if the Bank were properly administered, it would be capable of giving full and permanent effect to such a system; but, at the same time, he must in candour confess, that he should like to see the Bank rendered more perfect than it now was. If any bank could be formed upon such principles as would give greater security to the Bank of England, not only in respect of securing the commercial interests of the country, which had recently been in considerable jeopardy, but also in respect of advancing its political interests abroad, he, for one, should be very glad of

upon the community. He had been in hopes, that the right hon. gentleman opposite was going to usher in that evening some plan, better than any which had hitherto been devised; but, a speech of greater promise and of less performance he had never heard in the whole course of his parliamentary experience. The object of the right hon. gentleman's measure was contained in the simple annunciation, that the Bank had agreed to concede that part of its privileges by which any banking establishment was prevented from consisting of more than six members. He must tell the right hon. gen[210 tleman in the outset, that he had made | committee. It was one of extreme imhis own answer to his own scheme, portance to all banking establishments,

though perhaps he did not think so, quite conclusive against it. For, though at present the members of a banking establishment might consist of as many as six persons, it appeared that only twentysix out of the seven hundred banks which now existed had availed themselves of that privilege. For his own part, he saw nothing magical in the number six; and if six persons could not now be found, except in a few instances, who were willing to trust themselves together in banking establishments, he did not conceive it very likely that more than six persons would be found anxious to associate themselves together for such purposes, when the privilege of doing so was given them by law. If any country gentlemen should avail themselves of that privilege, he should say that it was the greatest act of folly they could possibly commit. If the right hon. gentleman had allowed persons to combine together on condition of depositing their capital, and of limiting their responsibility to that capital, he would have found plenty of individuals ready to engage in such associations. Landed gentlemen would put down their five, their ten, or their twenty thousand pounds, as might be convenient; and banks would then be formed all over the country on the very ery best principles. He saw no objections at present to such a system; but, if it were sifted as it ought to be, it was probable that some objections might be discovered. He thought, how ever, that they would be of a trivial nature, and would be more than counterbalanced by the advantages to which such a system would give rise. He was sure that by adopting it, solid establishments would be created all over the country, in which prudent men with families would be very willing to connect themselves. They might be created on the principle of a joint-stock company. In that case, The would make it incumbent on all persons who joined it to make a public record of their capital, and to balance their books once a year. Then, if any partner owed any thing to the bank, and touched his capital, he should be made liable for all the debts of the establishment-a regulation of which he could not complain, as he would not be involved in them without his own direct participation. -There was another point on which he wished to express his sentiments to the VOL. XIV.

and contained a principle, which, if adopted, would put them out of all apprehension of such danger as they had recently incurred: he meant the propriety of making silver as well as gold a legal tender. He was not going to state any novelty upon this subject. Silver was a legal tender in every country but our own; and in point of law, up to a very late period, it was even a legal tender here, when of a fixed fineness. The proportions having been ill regulated in this country, it became the interest of the debtor to pay in gold rather than in silver, and thus a practical tender of gold was established among us. We had now had it so long, that we had almost forgot how we came by it; but, what he had stated was matter of history, and not of speculation. The question, when it was determined in that house at the time of the Bullion committee, was determined too much in accordance with the views of philosophers and theorists, who looked to a fanciful perfection in the standard of value, and lost sight of a consideration which they ought always to have had before them; namely, not to establish a more imperfect, in their anxiety to establish a more perfect standard. If one point was better established than another, it was this

that the perfection of a standard con. sisted in its invariableness. Gentlemen might say, "If that be so, how can the standard boast of its invariableness, when it consists of two different metals, and when, to the general mutability of each, is added the mutability between gold and silver? Surely, instead of diminishing, such a plan will increase the variableness of the standard." Now, if he could show that by admitting the two, the currency, as distinguished from the standard of value, would, in point of fact, be rendered less variable, they would have a less variable standard to measure all commodities by. In the first place, the Bank of England, if it had the power to pay in silver, would be able to get it out of every country in the world. Gold, on the continent, was an article of merchandise, whereas silver was not so, and was always to be procured. If a man had a bill of exchange upon Hamburgh, Amsterdam, or Paris, he might get either gold or silver for it; but if he got silver, and with that was obliged to buy gold, it was evident that by rendering gold scarce, he would create a

P

difficulty in procuring it. He contended, | harmony, and where there was seldom that in proportion to the facilities afforded more than a variation of 10 centimes to the Bank of England for making between them. They sometimes differed