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they were obliged to pay all they In one of the papers composing that corowed, and whose only chance of profit respondence, the right hon. gentleman,

was in an uninterrupted continuance of credit. Of this panic no man could tell what might have been the consequences, if the Bank had not stepped in, and by their timely and liberal interference, saved the country from destruction. All this panic and all this distress, he attributed to over-trading and its natural results. This was a short history of the recent distress. He attributed it entirely to over-trading. It was an evil to which no legislative remedy could be applied. It could be cured only by the experience and example of those who had suffered. It was, to be sure, a sad lesson to those who had suffered; but it was to be hoped that it would have the effect of preventing them from embarking in such mad speculations in future. The two measures brought forward by government had, he believed, very little reference to the causes of the late distress. The first measure, as the hon. member for Taunton had justly remarked, would prove inefficient. If there were now only twenty-six banking establishments in England which possessed the full number of partners allowed by law, by what magical charm did ministers expect that their measure would be able to raise up banking establishments composed of a still greater number of partners? Besides, the evil was not that the present banking establishments wanted solidity. This was proved by the fact, that the number of bankers who failed who were unable to meet all their engage ments was very small. The evil in our present banking system was, the imprudence of bankers in the carrying on of their business-their want of knowledge, in fact, of banking. With respect to the second proposition of the right hon hon. gentleman; namely, that which enabled the bank of England to establish branch banks, it met with his hearty concurrence, and he sincerely hoped it would be carried into effect. Those establishments would naturally be more cautious with respect to the amount of their issues than country banks. One of the measures which ministers had in contemplation was, the putting a stop to the issue of one and two pound notes. The reasons which ministers gave for this measure were to be found in the correspondence which had lately passed between the first lord of the Treasury and the chancellor of the Exchequer on the one hand, and the Bank on the other.

and the noble lord his colleague, say, "It appears to us to be quite clear that such a measure would be productive of much good; that it would operate as some check upon the spirit of speculation, and upon the issues of country banks; and whilst, on the one hand, it would diminish the pressure upon the Bank and the metropolis, incident to an unfavourable state of the exchanges, by spreading it over a wider surface; on the other hand, it would cause such pressure to be earlier felt, and thereby ensure an earlier and more general adoption of the precautionary measures necessary for counteracting the inconveniences incident to an export of the precious metals." The allusion to the state of the exchange, in the paragraph which he had just read, was, in his opinion, quite beside the question. The unfavourable state of the exchanges was the effect of over speculation. It was, he understood, part of the plan of the government to invest commissioners with the power of regulating the issue of small notes. To that he most decidedly objected in a political point of view. When he saw the manner in which commissioners of the sinking fund were schooled by government-how they were at their beck and call, purchasing and selling only as government pleased-he must object to any arrangement which would give ministers the power of interfering directly with the currency. On this political ground, therefore, he would oppose the measure. He did not anticipate from a metallic currency those advantages which some persons seemed to think would be derived from it. He was of opinion, that such a currency as we possessed, before the suppression of the one-pound notes, was good, and might again be adopted with advantage. Money had been happily compared by Adam Smith to the high roads of a country, which did not produce one blade of grass, or one stalk of corn, but which were the means of circulating all the corn and all the grass produced in the country. Gold and silver, however, might be exported, and purchasing something else might add to the effective capital of a country, and set more labour in motion. The more the effective capital of any country was increased, the more was the means of its prosperity augmented. By substituting a paper circulation, therefore, for a metallic currency, we were saved the expense of maintaining the gold and silver in circulation, and production was augmented in proportion to the additional effective capital thus obtained. By persisting in maintaining gold and silver in circulation, a tax was, in fact, levied on the country, equivalent to the amount of all the profit which might be obtained by means of the additional capital. This was, he thought, a serious consideration, when applied to the proposal for suppressing the one and two pound notes. If this were satisfactorily made out, it could not, he thought, be advantageous to the country to substitute a metallic for a paper currency. It would change the relations of the country; it would cause the destruction of property; and it had not the support of any practice. It was at least an onerous remedy for the present distress, to suppress the one and two pound notes. He would, he repeated, deny that there was greater security to be found in a metallic than in a paper currency. The right hon. gentleman had himself destroyed that proposition by the sentence which immediately followed the one which he had already quoted from the correspondence upon pon the table. The passage to which he alluded was this :-"But though a recurrence to a gold circulation in the country, for the reasons already stated, might be productive of some good, it would by no means go to the root of the evil." The right hon. gentleman went on to say, in the same document, "We have abundant proof of the truth of this position in the events which took place in the spring of 1793, when a convulsion occurred in the money transactions and circulation of the country, more extensive than that which we have recently experienced. At that period, nearly a hundred country banks were obliged to stop payment, and Parliament was induced to grant an issue of Exchequer bills to relieve the distress. Yet, in the year 1793, there were no one or two pound notes in circulation in England, either by country banks or by the Bank of England. We have a further proof of the truth of what has been advanced in the experience of Scotland, which has escaped all the convulsions which have occurred in the money-market of England for the last thirty-five years, though Scotland, during the whole of that time, has had a circulation of one pound notes; and the small pecuniary transactions of VOL, XIV.

that part of the united kingdom have been carried on exclusively by the means of such notes. The issue of small notes, though it be an aggravation, cannot therefore be the sole or even the main cause of the evil in England." He did not require a stronger proof of the insufficiency of a bullion currency to afford security than the statements contained in the right hon. gentleman's own paper; from which it appeared, that in 1793 the greatest convulsion took place under a bullion currency, whilst Scotland, which had possessed a paper currency for the last thirty-five years, had never experienced any convulsions whatever. He was willing to rest his argument in favour of a paper currency entirely on the document to which he had referred. To look, however, to the present period-it would be evident, that no greater advantages resulted from a currency of bullion than from a currency of which paper formed a prominent part. Compare the situation of Liverpool, London, and Lancashire, which possessed a metallic currency, with other parts of the country where a currency of paper prevailed, and it would be seen, that the former had been exposed to greater fluctuations than the latter. He did in his conscience believe, that the whole of the recent distresses had been caused by over-trading. Such periods of speculation were not of very frequent occurrence; but still they had sometimes existed, and were recorded in the page of history. The period of the South Sea scheme was distinguished by speculations far more extravagant than any which the country had recently been witness to. Those speculations, as described by a person who was an eye-witness to them, appeared so enormous, so wild, so unsure, that, compared with these recent schemes, they were as a drop of water to the ocean. A very interesting description of the period to which he alluded was given in Macpherson's "Annals of Commerce." "From morning till evening," said the writer, "dealers in speculations appeared in continual crowds all over Exchange-alley, so as to choke up the passages through it. Not a week passed without fresh projects, recommended by pompous advertisements in all the newspapers, which were now swelled enormously, directing where to subscribe to them. On some, sixpence per cent was paid down; on others, a shilling; and some came so low as one

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shilling a thousand at the time of sub- | the crowd in Exchange-alley, that the scribing. Some of the obscure keepers same project or bubble has been known of those books of subscription, contenting themselves with what they had got in the forenoon, by the subscriptions of one or two millions (one of which the author particularly well remembers), were not to be found in the afternoon of the same day; the room they had hired

to be sold, at the same instant of time, 10 per cent higher at one end of the alley than at the other end. Amongst those many bubbles, there were some so bare-faced and palpably gross, as not to have so much as a shadow of any thing like feasibility. The infatuation was at

for a day being shut up, and their sub-length so strong, that one project was in

scription books never more heard of. On others of those projects, 2s. and 2s. 6d. per cent were paid down; and on some few 10s. per cent was deposited; being such as had some one or more persons of known credit to midwife them into the alley. Some were divided into shares, instead of hundreds and thousands, upon each of which so much was paid down; and both for them and the other kinds, there were printed receipts, signed by persons utterly unknown. Persons of quality of both sexes were deeply engaged in many of these bubbles; avarice prevailing at this time over all considerations of either dignity or equity; the males coming to taverns and coffeehouses to meet their brokers, and the ladies to the shops of milliners and haberdashers, for the same ends. Any impudent impostor, whilst the delusion was at its greatest height, needed only to hire a room at some coffee-house, or other house near that alley, for a few hours, and open a subscription book for somewhat relative to commerce, manufacture, plantation, or of some supposed invention, either newly-hatched out of his own brain, or else stolen from some of the many abortive projects of which we have given an account in former reigns, having first advertised it in the newspapers the preceding day, and he might in a few hours find subscribers for one or two millions (in some cases more) of imaginary stock. Yet many of those very subscribers were far from believing those projects feasible: it was enough for their purpose, that there would very soon be a premium on the receipts for those subscriptions; when they generally got rid of them in the crowded alley to others more credulous than themselves: and in all events, the projector was sure of the deposit-money. The first purchasers of those receipts soon found second purchasers, and so on, at still higher prices, coming from all parts of the town, and even many from the adjacent countries: and so great was the wild confusion in

the newspapers advertised thus: 'For subscribing two millions to a certain promising or profitable design, which will hereafter be promulgated." He would only mention two or three of the extraordinary speculations which were at this period set afloat. Amongst them was a scheme for improving malt liquors, and for breeding silk-worms. For this purpose 20,000l. were actually subscribed, and several large buildings erected. There was likewise another scheme, which must have been peculiarly attractive, that of making salt-water fresh; and another, which appeared somewhat extraordinary, was to bring fresh fish to London by sea. To such an extent did the spirit of speculation then prevail, that 60l. was frequently paid for permission to subscribe to an undertaking. He would beg the attention of the House to a passage in which the author described the termination of the frenzy: "The frailty of the whole South Sea scheme now too plainly appearing to all, the stock on the 29th of September had fallen to 175 per cent, and their bonds were at 25 per cent discount; whereupon there appeared great uneasiness and clamour amongst the monied men, which produced a great run or demand for cash at the Bank, and a greater one on the private bankers, who had generally lent out much of their cash on South Sea stock and subscriptions; in consequence of which several very substantial ones were obliged to stop payment for some time. And now, just when drowning, all people began seriously to reflect on the calamities brought on people in France but a few months sooner by the famous Mississippi stock or bubble; and, to draw a melancholy parallel, which reflections, made a few months sooner, would have saved many a worthy family from distress. Great clamour was also raised on account of contracts at high prices, for the third and fourth money subscriptions performable on delivery of the company's receipts, although no re

ceipts had ever been issued for them." Was not this account enough to prove, that the spirit of wild and ungovernable speculation was sufficient to produce a state of things such as existed at the pre-market having subsided," &c. He need

tinctly understanding, as it appeared to him, the way in which it applied. The passage to which he alluded, was that commencing with the words, "the panic in the money

sent moment? He had hoped that he should have been able to give his support to the measures proposed by ministers on the present occasion. On all questions of commercial policy, however he might differ from them on other subjects, he had desired to concur with them. He believed in his conscience, that the right hon. gentleman and his colleagues had adopted a system by which the commerce of the country would be fostered and extended. That system was not perfect at present; but he was convinced that it was that only just and substantial basis, which reason had long claimed and advocated, and which national greatness had long imperiously required.

Mr. Huskisson said, that, although he could not concur with all that had fallen from the hon. member who spoke last, as to the causes of recent events, he was bound to acknowledge that he had made a very clear and luminous statement on the subject. The noble lord opposite, and his hon. friend (the member for Taunton), had, in the course of their addresses to the House, made some observations which would afford him an opportunity of giving an explanation upon a

not ask his hon. friend, who, he believed, was in London about the middle of December, and was a witness of what was passing, whether there did not exist at that time, for two or three days, such a state of affairs in the money-market, such a complete suspension of all confidence, as, contradistinguished from commercial distress, rendered it impossible to procure money upon the most unobjectionable security? He appealed to every gentleman present connected with the city, whether it was not a fact, that, during forty-eight hours, it was impossible to convert into money to any extent at least, the best securities of the government? Persons could not sell Exchequer bills; they could not sell Bank stock; they could not sell East India stock; they could not sell public securities on the funded debt of the country. That difficulty did not arise from any rational idea of the insolvency of the government, or of the Bank, or of the other great corporate body, but from that panic to which his right hon. friends the chancellor of the Exchequer and the first lord of the Treasury alluded, in the passage which had been referred to, as having existed and be

point which appeared to be misunder-ing removed. Was the statement not true,

then, that the panic-that state of things which he had just described-had been removed? No one now heard of two or three London bankers stopping every morning. It was no longer impossible to convert good public securities into money. The operations of the Royal Exchange had resumed their ordinary course. Did lord Liverpool suppose that, when the panic in the money-market was over, the commercial transactions of the country would not be affected? No such thing. In the conversations which he had with lord Liverpool, his noble friend had stated, that the convulsions in the money-market must inevitably derange the ordinary transactions of commerce, and involve them in difficulties. The hon. member who last addressed the House seemed to be aware of the distinction which existed, between the operations of the moneymarket and those of commerce. If the difficulties which existed in the moneymarket a short time since had continued

stood. His hon. friend, the member for Taunton, had indulged in animadversions, harsh and unsupported, on what he was pleased to call the insensibility of the first lord of the Treasury and of his right hon. friend the chancellor of the Exchequer, in respect to the present distresses of the country. He was not sure, indeed, whether his hon, friend had not included the whole of the members of government in his censure. It was not necessary to vindicate the noble lord at the head of the Treasury from the imputation of a want of feeling, either for the difficulties of the country, or the distresses of individuals. He was sure that the noble lord must be aware of the extent of suffering, from the course of his official duties, and the daily intercourse which he must have had with those who were most competent to inform him of the state of affairs in the city. Both the noble lord and his hon. friend had commented very strongly on a passage in the correspondence between government and the Bank, without dis- for only eight and forty hours longer, he

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believed the effect would have been, to put a stop to all dealings between man and man, except by means of barter. It had very truly been observed, that the Bank, by their prompt and efficacious assistance, had put an end to the panic, and averted the ruin which threatened all the banking establishments in London, and through them the banking establishments and monied men all over the country. conduct of the Bank had been most praiseworthy, and had, in a great degree, saved the country from a general convulsion. He would take upon himself to say, that the Bank, throughout their prompt, efficacious, and public-spirited conduct, had had the countenance, advice, and particular recommendation of the first lord of the Treasury and his right hon. friend to assist them. Therefore he had a right to say, that his colleagues in their communication to the Bank, alluded to the state of the money-market only. It should be recollected, that his colleagues were addressing persons with whom they had been in constant communication from the commencement of the panic. They knew the extent of the distress which existed in the commercial interest; but they did not allude to it, because it was not immediately connected with that part of the subject to which they were directing the attention of the Bank. His hon. friend had inferred from what appeared in the correspondence, that government was ignorant of what was passing in Scotland. Could it be supposed that his noble colleague and his right hon. friend were so ignorant of the state of the country, as not to know that the greatest commercial distress at present existed in Scotland, and that the Scotch bankers, by their mode of affording discounts, were aggravating that distress? It was, however, quite consistent with that fact, that the system of Scotch banking afforded greater securities than the English system, and therefore it was desirable to introduce the former into this country. He did not know whether the noble lord opposite intended to subject the whole of the members of government to the charge of insensibility to the distresses of the country, but he could assure the noble lord, that there was no part of his speech in which he so cordially and entirely concurred with him, as that in which he had stated, that a system of currency which produced great and violent fluctuations in the price of commodities, was one which, however

it might affect the opulent merchant or the man of landed property, was most to be deplored, on account of the manner in which it operated to aggravate the distresses of the labouring classes. That was the opinion which he had uniformly maintained. It would be found recorded in the report of the bullion committee of 1810, and it had been stated by him whenever he had been called upon to deliver his sentiments on the subject. There was no part of the system of the currency at which he looked with greater anxiety, than the manner in which it prejudiced the interests of labourers, and particularly those employed in agriculture. It would take up too much of the time of the committee to enter into an exposition of the grounds of the opinion which he had formed on this point; but he conceived it to be one which the course of events had proved to be but too well founded. Hishon. friend, the member for Taunton, had observed, that he had never heard a speech so calculated to create disappointmentso inadequate to the occasion, as that of his right hon. friend. His hon. friend had followed up that remark by a dissertation-a very able one certainly-to which he had listened with great attention and in some parts with great satisfaction - on the general system of banking, in the abstract. His hon. friend then entered upon a statement of the difficulties under which he supposed the Bank to labour on account of the advances on Exchequer bills, and other advances, more or less of a permanent nature, made by the Bank to government. question was one of fact, it was material that it should be set right. His hon. friend was considered a great authority; and a statement going forth from him was likely to produce considerable effect. He wished therefore that the matter should be fairly stated. His hon. friend had stated the advances made by the Bank on account of the half-pay annuities at eight millions, forgetting that considerable sums were paid by government to the Bank, twice a year, on account of that transaction, which, if deducted, would reduce the amount advanced by the Bank to 5,400,000l. He was not then going to discuss the prudence of that arrangement; he was only desirous, that the matter should be correctly understood, because it was a little hard that his hon. friend, who had himself contracted for loans with government, should endeavour

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