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directors, and their commissioners of rule, to be applied in every dea throughout the country (who, in rangement of commercial relations. general, would be fellow merchants But, in truth, former instances did of the applicants) it was answered, not apply to the case which now that the commissioners for issuing existed; for, in all former instanthe Exchequer bills in 1793, the pre- ces, excepting perhaps one, the cedent on which the friends of such derangement had arisen, not as at a measure principally relied, were present, from the course of trade merchants of the City, with two itself, be it good or be it bad, but exceptions, and three of them were from the positive influence of poBank directors. Besides, it would litical events, during periods of be only what took place every day actual war, and had arisen, moreat the Bank, "to which merchants over, under the reign of the restricwere constantly repairing with tion on cash payments. But there bills and securities, for the
purpose was a great difference between the of obtaining cash. The Bank did adoption of such a measure, when not accept such securities without growing out of a political crisis, ascertaining the credit and respect- and the application of it to the reability of the parties; and what lief of commercial distress, when greater danger was there of injury the latter had connection to individual credit in the one case with any political emergency. than in the other? There was
Even the instance of 1793, to nothing to be ashamed of: the ne which the opponents of the cessity of relief was already pro- present arrangement claimed ; the applicants were sol- stantly referred, was, in a great vent; they had property to the degree, inapplicable. The differfull amount of the demands upon ence between it and 1826 was them; they did not ask credit this, that, whatever might have merely on personal security, but been the primary causes of the disthey gave for it more than its tresses which prevailed in 1793, amount in solid value'; and the the breaking out of the war had best proof that mercantile men a great and decided influence in themselves harboured no such ap- aggravating and prolonging them. prehensions, lay in the fact, that the There was then a great fluctuation different deputations from the of affairs, and much distress, ariscountry had expressed their una- ing, however, not from private nimous satisfaction with the are speculations, which the nature of rangement which had been adopted. trade itself would cure, but from
Again, the argument drawn public events which had produced from former issues of Exchequer the most serious consequences on bills to some similar ends was bad the mercantile world. That was in principle, and inapplicable in a derangement which was the conitself. Although recourse might sequence of public events, and gave formerly have been had to a par- the sufferers a claim on the governticular measure, it did not follow ment for relief; but the present that the measure was good, and pressure had been created by no ought to be repeated ; far less that public events, nor could such a a direct interference, which was al- claim properly exist in the eleventh together alien from the duties of year of profound peace. government, should become a sort had advanced to the agricultural
interest in 1822, the four millions office of their commissioners was which they craved; if we had lent almost unfrequented. The applicato Ireland in 1823, the million tions for advances were made with which she asked for, in her dis- the utmost moderation. None were tress; if, in the same year, we had required beyond what were absoadvanced to the West-Indian pro- lutely necessary; and, in every prietors the five millions which instance, the parties shewed the they wished to relieve their em- strongest desire to have only the barrassments;
and if we were now smallest sum which would suffice to lend five millions more for the to meet their immediate wants. assistance of the merchants; go The adoption of this measure vernment, in the course of four rendered it necessary for the secuyears, would have lent no less a rity of the Bank, to introduce a sum than fifteen millions ; and new bill, or rather to anticipate who would pretend that such a the operation of an act of the presystem was right; or that a single ceding session, regarding the law example, which led to such con- of principal and agent. By the sequences, ought to be followed, common law of England, an agent even if it were applicable ? or factor, holding goods of his prin
With one alteration, namely, cipal," and being in possession both that the Bank agreed to lend on of the goods themselves and of the collateral security, as well as on the documents relating to them, alsecurity of deposited goods—a though he might effectually sell change which would, it was the merchandize, yet he could not, thought, in some measure remove by the general rule, effectually the objection of injurious notoriety, pledge it; and, in many cases, by enabling the merchant who had where he had so pledged it, goods, to lodge them with private apparently in the character of friends who would be accepted as owner, the lender's claim had been personal securities--the measure disappointed by that of the real was immediately carried into exe
Accordingly, in 1811, cution. Commissioners were ap- when the Bank had made advances pointed by the Bank in the princi- on the security of deposited goods, pal provincial towns. These com it had been protected from this missioners were almost uniformly danger by a special provision. mercantile persons belonging to The evils of the general rule had the place for which they were been so severely felt in the merappointed ; and, although prudence cantile world, that, in the session required such an arrangement, in of 1825, an act had passed, modiorder that local knowledge might fying the law, and providing that secure prudence of procedure, yet goods pledged by a factor, should it greatly increased the unwilling- be as effectually pledged, in reness of many to disclose the state gard to the innocent lender, as of their affairs, their necessities, if the factor had been the real and their resources, to their own
But this act was not to local competitors. The whole sums come into operation till October applied for, fell far short of the 1826; it having been thought three millions which the Bank had proper to give foreigners, so much set apart to this object; and, in interested in the powers and some of the provincial towns, the liabilities of their agents in this
House, was principally devoted to striction was removed, the solid and general disquisitions on the history more extensive banks would not and fluctuations of the currency, fail, in time, to expel the smaller the sources of the existing distress, and weaker. In London, for the other remedies which might be example, no
paper circulation applied, and the conduct and in- existed, except that of the Bank fluence of the country banks. Lord of England. Yet this was not the Liverpool, while he admitted that effect of law, for no enactment prethe measures which government vented private bankers from cireuwas now carrying through were lating their own paper ; but they far from being perfect, and, in knew, that, if they issued notes, some individual details, might even these notes would immediately be be thought hard ones, begged the presented for gold, or Bank of House to recollect, that the char- England paper, and, therefore, tered privileges of the Bank of they declined the issue of them England stood in the way, and altogether. But in this country, prevented government from going the free and the restricted systems farther. · Government, he had no were united; we were in a state hesitation in saying, ought to go of restriction as related to every farther, and would go farther, but, thing good and substantial-in a at the present moment, it could do state of liberty as to every thing no more. The law as to the con rotten and bad. The law said to stitution of banks was absurd and any shop-keeper, however limited ridiculous in its nature, futile in his means,
"you may establish a its construction, and dangerous in bank ;" but, to persons of capital, its effects; but it had gradually willing to engage in a similar ungrown up into what it was, and dertaking, it said, “your company could be reduced only by time and shall not consist of more than six trouble within reasonable dimen- partners.” We ought either to sions or sound proportions. One impose wholesome restrictions, or of two systems might be adopted. leave banking in full and complete One was, to allow only a limited liberty ; and the present measure number of banks, or to exact from was an approach towards a system such as were permitted to exist, se of the latter kind. It might, no curities for their solvency.. This doubt, be represented as was in itself a wise and salutary measure. Imperfect it certainly system, and might be profitably was; and imperfect it must remain, followed, if circumstances would till the country should be freed admit of its adoption. It prevailed from its engagements with the in Massachusets, one of the most Bank, or the Bank should step settled and best-established states forward to release the country of America. That state allowed from such parts of its charter as only twelve chartered banks; and impeded the establishment of a so soon as any one of them became substantial system. It would be unable to pay in specie, its charter short-sighted in the Bank of Engwas forfeited.
The other system land to imagine, that its interests was one of unlimited liberty, which were engaged in retarding this was thought to be less objectionable desirable consummation. If the in itself, and to gain equally the Bank were to limit the circulation same end; because, when all rea of its notes to London and the
vicinity, no banks now existing, or It would not be easy to form such hereafter to be created, could in- establishments ; for people, in terfere with its prosperity ; while general, would be averse from ensuch a step would be attended with gaging in speculations, in which incalculable benefits, and would every one would be liable jointly enable government to place the and severally to the last shilling of banking
system of the empire on a his fortune. It was natural that a more secure foundation.
bank consisting of a few partners, The Earl of Lauderdale opposed each of whom could attend to the bill, and said that it was im some department of the business, possible to trace the late, and the should be better conducted than a existing embarrassments, to any more unwieldy establishment, the excess of paper currency, or to any most interested members of which speculations arising out of such an were sleeping partners ; and it excess; and that there was no could not be doubted, that, badlycircumstance connected with them managed joint-stock banking comwhich might not as well have oc- panies would produce as much miscurred, even if the circulation had chief and misery, as any system of contained as much gold as ministers currency, however vicious. The now seemed to desire. Their true example of Scotland proved deorigin was in the state of the money monstrably how unnecessary it market, and in the fall in the rate was to seek for security in a large of interest, which, from the anxiety number of partners. Scotland posto employ money profitably, na sessed thirty banks; of these seven turally led to speculation and over were chartered banks; of the rea' trading. The commissioners of the maining twenty three, only seven Sinking Fund purchased annually were joint-stock companies, and the about 5,000,000l.: every visit they rest, with one or two exceptions, did made to the Stock Exchange threw not consist of more than four, six, additional capital into the market, or eight partners. Yet the solidity created an increase of employ« of the latter had never been more ment, and a rise of prices ; for questioned than that of the former; the inevitable effect of the opera- their notes were as well established tion of the Sinking Fund was, the in circulation, and they had stood noble lord maintained, to diminish the storm with as much vigour. He the interest of capital.
could not conceive it, therefore, to influx of capital resembled the be just, or necessary, or expedient, to coming of a lottery prize of interfere in the present state of the 30,000l. into a country town; it country, with the exclusive privianimated the whole district with leges of the Bank of England. a rage for scheming and specula- Lord Ellenborough, likewise, could tion; and both argument and au not anticipate much good from thority shewed, that to this cause joint-stock companies ; and exthe existing difficulties of the coun- pressed his apprehensions lest, in try must be, in a great measure, if 1833, when the Bank charter not altogether, ascribed. The pro- would expire, great embarrassment, posed remedy, therefore, by allow- as to the course which it might be ing banks to consist of an unlimited deemed advisable to pursue, should number of partners, would not be arise from the existence of these efficient, and was not necessary, establishments, VOL. LXVIII,
In the committee, lord Liver- had agents, they had recourse to pool called the attention of the another expedient: they made an House to the expediency of insert- alteration in their notes, by ining a clause, authorizing the Bank serting the word "Dublin,” thus of England to establish branch limiting the payment in specie to banks throughout the country. that city alone. Moreover, as the There was no doubt that such a country banks were to be compelled power was vested in the Bank by to pay their notes in gold at the their charter; but a question had place where they were issued, it arisen as to the extent of discretion would be in vidious not to lay the with which they could clothe their same obligation on the branch agents. He did not think the estab- banks. The only difficulty was, lishment of branch banks would take that it would be necessary for the place to any great extent; yet it was Bank so to frame its notes, as to but right and prudent to give the ascertain at what particular place Bank the opportunity of trying the they had been issued : otherwise a experiment. He therefore proposed person taking a note to a branch a clause allowing the Bank
of Eng- bank might be told, that it had not land to carry on branch banks for been issued there, and that there
of issuing cash notes, he could not have gold for it; but and bills of exchange.
this obstacle, it was suggested, The adoption of this clause might be surmounted by the Bank rendered another proviso necessary, adopting a note of a particular deviz. a clause making the notes is scription for each of its branches; sued by the branch banks payable and perhaps to give the notes this at the place where they were is local character, would tend to sued; for, to lay individuals under lessen in some measure the inthe necessity of bringing or sending ducements to forgery. Lord Livertheir bank paper to London, before pool readily assented to the proreceiving gold for it, would be both posed clause, both because he inconvenient to the public and dis- thought it likely to prove a check ereditable to the Bank. Something on over-issues by the Bank, and of this sort had recently occurred because it was necessary to take in Ireland. The Bank of Ireland every precaution to prevent the poss had established branch banks in sibility of discredit being thrown on different parts of the country ; a any of these branch establishments; number of its notes had been pre for the slightest imputation on the sented at these new establishments security of a branch of the Bank to be exchanged for coin, and, for of England would be attended with a while, were paid in coin, till the far more serious consequences than Bank, finding this inconvenient, even the failure of a private bank. refused to pay any where but in A greater degree of opposition Dublin. The consequence was, was manifested to the bill, when it that some of the notes were pro came down to the House of Comtested, and legal measures adopte mons. It was there resisted both ed to recover the amount. Being by those who were hostile to the satisfied, however, that, the con- whole system on which ministers tract expressed on their notes were proceeding, and by those who being a general one, they were were over-chary of the privileges of bound to pay wherever they the Bank. The clause, it was said,