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them secure against possible demands, not so much for payment of their notes as of their deposits. Houses in London were applying constantly to the Bank for aid. Two bill-brokers had stopped, and the operations of two others were nearly paralyzed. The whole demand for discount was thrown upon the hands of the Bank of England. Notwithstanding this, as I before said, the Bank never refused a bill which it would have discounted at another time; but still the large mass of bills which, under ordinary circumstances, are discounted by bill-brokers, could not be negotiated. During that period, we were daily- I may say hourly-in possession of the state of the Bank. The Governor and Deputy-Governor at last said they could no longer continue their advances to support the various people who applied to them; that they could save themselves, that is, they could comply with the law; but that they could not do so without pressing more stringently on the commercial world. At this crisis, a feeling as to the necessity of the interposition of government appeared to be generally entertained; and those conversant with commercial affairs, and least likely to decide in favor of the course we ultimately adopted, unanimously expressed an opinion that, if some measure were not taken by the government to arrest the evil, the most disastrous consequences must inevitably ensue. Evidence was laid before the government which proved, not only the existence of severe pressure from the causes I have stated, but also that it was aggravated in a very great degree by the hoarding, on the part of many persons, of gold and bank-notes, to a very large extent; in consequence of which an amount of circulation which, under ordinary circumstances, would have been adequate, became insufficient for the wants of the community. It was difficult to establish this beforehand, but the best proof of the fact is in what occurred after we interfered. As soon as the letter of the 12th October appeared, and the panic ceased, thousands and tens of thousands of pounds were taken from the hoards, - some from boxes deposited with bankers, although the parties would not leave the notes in their banker's hands. Large parcels of notes were returned to the Bank of England cut into halves, as they had been sent down into the country; and so small was the real demand for an additional quantity of notes, that the whole amount taken from the Bank, when the unlimited power of issue was given, was under £400,000. The restoration of confidence released notes from their hoards; and no more was wanted, for this trifling quantity of additional notes is hardly worth notice. . . . Parties of every description made application for assistance to us, with the observation, 'We do not want notes; but give us confidence.' They said 'We have notes enough; but we have not confidence to use them. Say you will stand by us, and we shall have all that we want; do every thing, in short, that will give us confidence. If you think that we can get bank-notes, we shall not want them. Charge any rate of interest you please; ask what you like.'" (Mr. Spooner, "No, no!")"I beg pardon of the honorable gentleman; but I may be permitted to know what was actually said to me. I say, that what I have stated was the tenor of the applications made to me. Parties

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said to me, 'Let us have notes, charge 10 to 12 per cent for them; we don't care what the rate of interest is. We don't mean, indeed, to take the notes; because we shall not want them. Only tell us that we can get them, and this will at once restore confidence.' We have been asked what was the change of circumstances which induced us to act on Saturday, when we declined acting a day or two before. I reply, that the accounts which we received on Thursday, Friday, and Saturday, were of a totally different description from those which had been previously brought us. It was on Saturday, and not before, that this conviction was forced upon us; and it was not till then that we felt it necessary to sanetion a violation of the law."

Sir Robert Peel followed, in a more apologetic strain. As the responsible author of the Act of 1844, he was not a little chagrined at the result. It was unfair, he said, that he should be singled out as the great object of attack. The Act was not his own, but of Parliament. It had been alleged that it had been passed without due consideration; but the subject was one upon which Committees had sat for five years, and during their investigations had asked more than 14,000 questions, and received more than 14,000 answers. As nothing practical had come of them all, the government determined to pass some measure upon its own responsibility. If the one adopted were inadequate to its objects, he was ready to accept any provision necessary to render it so.

"There has," said Sir Robert, "been some misrepresentation respecting the object of this Act. I do not deny that one of the objects contemplated by the Act was the prevention of the convulsions that had heretofore occurred in consequence of the neglect by the Bank of England to take early precautions against the withdrawal of its treasure. I did hope that, although there was no imperative obligation on the Bank of England to take these precautions, that the experience of 1825, 1836, and 1837, would have induced that establishment to conform to principles which the Directors of the Bank acknowledged to be just, and which they had more than once professed to adopt for their own regulation. Sir, I am bound to say that in that hope, that in that object of the bill, I have been disappointed. I am bound to admit, seeing the extent of commercial depression which has prevailed, and the number of houses which have been swept away, some of which, however, I think, were insolvent long before the bill came into operation, and others of which became insolvent in consequence of the failure of those who were connected with them and were imprudent in their speculations, I am bound to admit, that that pur pose of the bill of 1844, which sought to impress, if not a legal, at

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least a moral obligation on the Bank, to prevent the necessity for measures of extreme stringency by timely precautions, has not been fulfilled. Sir, I must contend, that it was in the power of the Bank, if not to prevent all the evils that have arisen, at least greatly to diminish their force. If the Bank had possessed the resolution to meet the coming danger by a contraction of its issues, by raising the rate of discount, by refusing much of the accommodation which they granted between the years 1844 and 1846; if they had been firm and determined in the adoption of these precautions, the necessity for extrinsic interference might have been prevented; it might not then have been necessary for the government to authorize a violation of the Act of 1844. . . . The bill of 1844 had a triple object. Its first object was that in which I admit it has failed; namely, to prevent, by early and gradual, severe and sudden contraction, and the panic and confusion inseparable from it. But the bill had, at least, two other objects, of at least equal importance: the one to maintain and guarantee the convertibility of the paper currency into gold; the other to prevent the difficulties which arise at all times from undue speculation being aggravated by the abuse of paper credit in the form of promissory notes. In these two objects, my belief is that the bill has completely succeeded; my belief is, that you have had a guarantee for the maintenance of the principle of convertibility, such as you never had before; my belief also is, that, whatever difficulties you are now suffering, from a combination of various causes, those difficulties would have been greatly aggravated if you had not wisely taken the precaution of checking the unlimited issues of the notes of the Bank of England, of joint-stock Banks, and private Banks."

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Whenever there is an eccentric movement or disturbance in the money market, the Bank always comes in for censure. is always made the universal scape-goat. After such crises as those of 1847, 1857, and 1866, the censure is unmeasured. "The Bank should not have reissued its notes;" "it should long ago have refused to make any further loans;" "it should have contracted the circulation by the sale of its securities." The Bank can do nothing, nor does it attempt to do any thing, of the kind. It is the regular issuer and manager of the currency, and must issue it to every one who comes within rules established, not in periods of panics, but when the supply of money may have exceeded the demand. The public, not itself, is the judge of the amount of circulation required. It met all applications in 1847, 1857, and 1866; it can adopt no other rule. It says, to the government, in effect: "As we are to supply the circulation, we shall do so as long as we have a note in our till; you have provided the mode in which it is to be issued. When our notes are exhausted, you are to make

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further provision, or assume responsibility for the consequences." Such is the construction which has always been put upon the Act, both by the government and by the Bank; and this is the only logical one. If the currency is to be provided by legislation, such legislation must in some form be adequate to its objects. The mint must turn into coin all the bullion offered to it. The Bank in the same way must turn into notes all the securities of the proper kind offered to it. There is no more discretion in one case than in the other. The operations of society are not to be blocked by any such folly as that of 1844. When these are imperilled, the Act is but a straw in the current of a Niagara. Its suspension, which is a matter of necessity, is universally acquiesced in. No act, however, can be more revolutionary than for a government to arrest the operation of a law, and still continue it in full force on the statute-book. Such is the respect for order in England that such precedents are little to be feared. For the most commercial and one of the most intelligent people in the world, however, to make a public confession of their inability to deal with such a matter as the Bank, but by declaring it, when a crisis arises, to be absolved from the observance of its organic rule or law, implies an ignorance or an impotence certainly not very flattering to their national pride.

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Sir Robert Peel frankly admitted the Act of 1844 to be no safeguard against commercial or monetary disturbance. So far it was an entire failure. It was, however, he claimed, successful in guaranteeing the convertibility of the notes of the Bank into coin, and in preventing an aggravation of the panic by their excessive issue. As it was not the coin in the Bank which maintained its notes at par,-such coin at one time equalling only about one-third their amount, but the other provisions in their favor which have already been described, Sir Robert was reduced to one advantage only as resulting from the Act. As, however, deposits exert precisely the same influence as notes, in causing lavish expenditures and inflation of prices, which must always end in a panic greater or less in severity, it is not easy to see that any thing was gained by restricting the issue of notes, when deposits, which can always be created in unlimited amounts by Banks and bankers and their customers, were certain to take their place. He might

with equal propriety have congratulated the good fortune of a man, who, having become thoroughly intoxicated by the excessive use of brandy, of which he had a profuse supply, could not supplement his brandy by an excessive use of whiskey. Sir Robert's two advantages, therefore, have only to be very briefly analyzed to vanish in empty air.

The crisis of 1847 was no sooner past than the inevitable Committee or Committees - for in this case each House raised its own-was appointed "to consider the subject of the recent commercial distress." These Committees added some 10,000 more questions and answers to the 14,000 which had been put and received by previous ones, -all, or nearly all, upon the nature of paper money, and the constitution and conduct of the Bank. Lord Overstone, as usual, was the conspicuous figure.

Question 5126 (of the House Committee). "When the Act of 1844 was brought in, I think (said the Chairman) there was an impression, upon the minds of some parties at least, that the operation of the Act would tend to mitigate those convulsions when they came on, even supposing it was impossible that that Act, or any Act, could prevent them; there was an impression that they would be of a less sudden character than they were . before; was that your expectation?"-"My expectation was, that the Act would mitigate that portion of commercial pressure, which was justly attributable to the mismanagement of the circulation; and the only point upon which any difficulty could exist was in determining what portion of the pressure of the different crises. had really arisen from the mismanagement of the circulation, and what portion had arisen entirely from the ordinary excess of mercantile enterprise. I think the Act has completely realized all that was reasonably expected of it, and has verified every principle upon which it was established. I think that the pressure of 1847 would have been considerably more severe, postponed probably to rather a later period, but, when it came, much more severe, if there had been, in the early part of 1847, a power of mismanaging the circulation of the country; the Act of 1844, by preventing that power, brought on the pressure earlier, and by that means rendered the pressure much less severe than it would have been at a later period, and with the bullion reduced to a much lower amount."

Question 5127. "Will you allow me to call your attention to that part of the question which relates to the suddenness of the difficulties? I think there was an impression at the time of the passing of the Act, that, the withdrawing of the circulation being gradual, the pressure would be extended over a longer time, and that it would not be sudden, and the pinch would not be so great when it came. Do you think the Act has been effective in that respect, or that the

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