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and corn imported : that is, there is a balance of trade to the amount of £5,000,000 established against us, which, to that extent, is a drain on our metallic resources. sent £5,000,000 worth of manufactures instead of the same amount of specie to North America to buy food, our exports on the whole would have been £10,000,000 instead of £5,000,000 ; and the difference of £5,000,000, instead of being a deduction from, would have been an addition to the metallic resources,—that is, the life-blood of the nation. It is because a great import of grain invariably leads to such an export of specie, that it is so hazardous a trade for a nation : it is because Sir R. Peel's policy contracted the paper currency at the very time that he sent the metallic abroad in quest of food, that he has brought such calamities on the State.
The Right Hon. Baronet's defence of his policy is mainly to be found in the following paragraph of his late able speech, in the close of the Currency Debate :
“I think there has been some misapprehension as to the objects contemplated by the Act of 1844. I do not deny that one of them was the prevention of the convulsions that had theretofore occurred in consequence of the Bank of England not taking due precautions as to the regulation of its issues. I did hope, after the experience of former crises, that the Bank of England would adhere to those principles of banking which the directors acknowledged to
be just, but from which they admitted they have departed. (Hear, hear, • hear.) I am bound to admit that in that hope, and in that object, I have
been disappointed; and I also admit, seeing the number of houses that have been swept away-some of which, I fear, were long insolvent—(Hear, hear)—and others which, being solvent, have suffered from the failure of other houses—I am bound to say that in that object of the Bill I have been disappointed. (Hear, hear.) It was in the power of the Bank to have, at an early period of the distress, raised the rate of discount, and to have refused some of the accommodation they granted between 1844 and 1846. (Hear, hear, hear.) I cannot, therefore, say that the defect is exclusively, or mainly, in the Bill—(Hear, hear)—but my belief is, that executive interference might have been given without the necessity of the authority of the noble lord.”—Morning Post, Dec. 2, 1847.
The observations which have now been made, show that these remarks are not only unfounded, but precisely the reverse of the truth. Had the Bank of England drawn in their discounts, and raised the rate of interest between 1844 and 1846, at the very time when the railway and free-trade work, into which Sir Robert Peel had plunged the nation, was at its height, what must have been the result ? Nothing but this : that the catastrophe which has
ensued would have come on two years sooner than it has actually done. The Right Hon. Baronet would have been prevented from making his emphatic speech on the admirable effects of his policy, and the diminution of crime, in the opening of the Session of 1846; he would have found the jails and the workhouses full enough, at the period of that glowing eulogium on free-trade policy and its effects. By making liberal advances to railway companies in 1844 and 1845, the Bank of England, and the other banks which followed its example, only enabled the country for a time to do the work upon which Sir Robert Peel had set it. By enabling, by similar advances, the manufacturers for two years longer than they otherwise could have done, to send a large export of manufactures abroad, the Bank, for that period, averted or postponed the catastrophe which must ensue in a commercial state, when its imports, for a series of years, have come greatly to exceed its exports. It is because the contraction of the currency, rendered imperative on the Bank by the Right Hon. Baronet's bill, has disabled our manufacturers from carrying on their operations to their wonted extent, that the import of the raw materials employed in manufactures has decreased during the last eighteen months to such an extent, our export of manufactures declined in a corresponding degree, and the drain of specie abroad to pay for the enormous importations simultaneously introduced, increased to such a ruinous extent.
Sir R. Peel reminds us of the great catastrophe of December 1825, and observes that that disaster, at least, cannot be ascribed to his Bank Charter Act, and that it arose from the everlasting tendency to overtrading in the people of this country. Again we thank the Right Hon. Bart. for reminding us of that disastrous epoch, which, in the still greater suffering with which we are now surrounded, had been wellnigh forgotten. We entirely agree with him as to the magnitude of that crisis, and we will tell him to what it was owing, and how it was surmounted. It was owing to Mr Secretary Canning, in pursuance of liberal principles, “ calling a new world into existence,” by violating the faith and breaking through the duties of the old one. It arose from the prodigious loans sent from this country
to prop up the rickety, faithless, insolvent republics of South America, and the boundless incitements held out to wild speculation at that period by “ Mr Prosperity Robinson,” especially in South American mining speculations. It arose from all this being done and encouraged by the Government, at the very time when the act of 1819, introduced by Sir R. Peel, compelled the Bank,--though drained almost to the last guinea, by the prodigious quantity of gold sent headlong to South America to support these speculations, induced or fostered by the Government,—to pay all its notes in gold. This was what induced the crisis. And what arrested it? Lord Ashburton has told us it was the issue of £2,000,000 of forgotten bank-notes, drawn out of a cellar of the Bank; but which sum, inconsiderable as it was, proved sufficient to arrest the consequences of the gold being all sent away to South America, in pursuance of Liberal principles, to prop up “healthy young republics,” carved out of the dominions of an old and faithful ally. Sir R. Peel, two-and-twenty years afterwards, has repeated the same error, by sending the gold to North America for grain in the midst of great domestic transactions, but he has not repeated the same remedy.
In truth, the system now established in regard to the bank by the acts of 1819 and 1844, necessarily induces that very feverish excitement in periods of prosperity, and sudden contraction in those of adversity, of the consequences of which Sir R. Peel so loudly complains. When the bank is obliged to accumulate and keep in its vaults so prodigious a treasure as £15,000,000 in prosperous times, and £9,000,000 or £10,000,000 in those of adversity, lying dead in its possession ; how is it to indemnify itself for so vast an outlay, without, whenever an opportunity presents itself, pushing its circulation to the utmost? The very interest of this treasure amounts, at 5 per cent, to above £700,000 a-year ; at 7 per cent, the present rate, it will reach a million. How is this sum to be made up, the expense of the establishment defrayed, and any profit at all realised for the proprietors, if paper, to a large amount, is not pushed out whenever an opportunity presents itself for doing so to advantage? Again, in adverse times, when
there is a heavy drain upon the establishment for buying foreign grain, or discharging adverse exchanges, how is the bank to avoid insolvency, without at once, and suddenly, contracting its issues ? The thing is unavoidable. Undue encouragement to speculation in prosperity, and undue contraction of credit in adversity, is to the Bank, since the acts of 1819 and 1844, not merely an essential preliminary to profit, but in trouble the condition of existence. Yet Sir R. Peel complains of the Bank doing that which his own acts have rendered indispensable to that establishment.
Sir R. Peel asserts that many of the houses which have lately become insolvent, have done so from excessive imprudence of speculation ; and he succeeded in eliciting some cheers and laughter from the House of Commons, by contrasting in some extreme cases the amount of the debts brought out on bankruptcy with the assets. Without deeming it necessary to defend the conduct of all the houses, the affairs of which have been rendered public by the vast corn trade and railway speculations into which he plunged the nation, it seems sufficient to observe, that all fortunes made by credit must, if suddenly arrested in the course of formation by such a contraction of the currency as we have lately experienced, exhibit the same, or nearly the same, results. Fortunes, with the magnitude of which the Right Hon. Baronet and Mr Jones Lloyd are well acquainted, might possibly, if they had been thrown on their beam-ends suddenly by such a tornado, have exhibited, when in growth, not a much more flattering feature. But the “ Pilot who weathered the storm” was then at the helm, and he weathered it for their fortunes not less than for those of the country. He aided commercial distress in adversity by increasing, instead of aggravating it by contracting, the currency. It is credit which has made us what we are, and credit which must keep us such. Had the monetary system of Sir R. Peel been adopted forty years ago, as the bullion committee said it should, we shall tell the Right Hon. Baronet what would have been the result. Great Britain would have been a province of France : the fortunes of all its merchants would have been destroyed : the business talents of Mr Jones Lloyd would
probably have procured for him the situation of cashier of the branch of the Bank of France established in London; and possibly the rhetorical abilities of Sir R. Peel might have raised him to the station of the English M. De Fontaine, the orator on the Government side in the British Chamber of Deputies, held under an imperial viceroy on the banks of the Thames.
Sir R. Peel admits his bill has failed in checking improvident speculation in the nation ; nor could he well have maintained the reverse, when the most extravagant speculations on record, at least in this island, succeeded, in the very next year, the passing of his bill. Experience has proved that it required to be suspended by the authority of the executive when the disaster came ; and the effect of that suspension has already been to raise the three-per-cents from 79 to 86. It is ineffective during prosperity to check imprudence ; it requires to be suspended in adversity, because it aggravates disaster. This is all on the Right Hon. Baronet's own admission. What good then has it done, or what can be ascribed to it, to counterbalance the numerous evils which have followed in its train ?
Sir R. Peel says the experience of the last half century proves, that every period of prosperity is followed by a corresponding period of disaster, and that it is under one of the latter periods of depression that the nation is now labouring. We agree with the Right Hon. Baronet that for thirty years past this has been the case, and we will tell him the reason why. It is because for that period his principles have been in operation. But there was a period before that when no such deplorable alternations of good and evil took place ; when the nation in prosperity was strong without running riot, and the government in adversity checked disaster, instead of aggravating it. It was the period from 1793 to 1815, when a currency adequate to the wants of the nation was supplied for its necessities, and our rulers had not yet embraced the principle that, in proportion as you increase the work men have to do, and enlarge their number, you should diminish their food. It was the period when Mr Pitt or his successors in principle were at the helm. Three commercial crises came on at that time, all occasioned by the abstraction of specie for the use of the great armies then